India planning gold confiscation and gold market interventions?

<div style="text-align: justify;">Gold investors are well aware of the restrictions India imposed on its gold market, like increasing import duties. In this post I want to step back and have a look at what India has done, and more importantly, what policy options it may still have up its sleeve.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Our starting point is the Reserve Bank of India's January 2013 <a href="http://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/RWGS02012013.pdf">Report of the Working Group to Study the Issues Related to Gold Imports and Gold Loans by NBFCs</a>. Within its 224 pages are the following recommendations (direct quotes):</div><ul><div style="text-align: justify;"></div><li><div style="text-align: justify;">further hike in the import duties may have to be contemplated to dissuade gold imports</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">restrictions on carrying of gold and gold jewellery by incoming Indian community from abroad ... may also have to be reviewed to ensure that bringing gold into the country less attractive option</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">entities importing bulk gold through banking and non-banking channels can be asked to an export obligation based on a certain percentage of imports of the gold</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">bank finance to purchase gold may be prohibited</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">Modified Gold Deposit Scheme (gold taken as a deposit is recycled for meeting domestic demand and given back at the time of maturity)</div></li><div style="text-align: justify;"></div></ul><div style="text-align: justify;">The above points have now been implemented, below are those which have not yet been implemented.</div><ul><div style="text-align: justify;"></div><li><div style="text-align: justify;">Inflation Indexed Bonds ... introduce savings schemes and instruments that can provide real returns with high liquidity</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">Gold Accumulation Plan (the product is a saving plan catered to even small buyers of gold in which the gold imports are deferred till the time of actual delivery of gold)</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">Gold Linked Account (the entire transaction takes place outside India and import of gold is not involved)</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">Gold Pension Product (the customer surrenders gold to the bank on agreement to receive streams of monthly pension till his death)</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">Setting value or quantum limits for canalising agencies and banks to import gold</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">trying to channel the existing supplies of scrap gold in the country into the financial system</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">Gold Bonds and Gold Deposits Schemes that may encourage gold holders to deposit their idle gold holdings with banks</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">expanding financial inclusion in extending gold jewellery loan</div></li><div style="text-align: justify;"></div></ul><div style="text-align: justify;">In respect of all the various paper gold type products, it is worth noting <a href="http://www.mineweb.com/mineweb/content/en//mineweb-gold-news?oid=206630&sn=Detail" target="_blank">this story</a> which reports that the Indian central bank had <i>"sent letters to some of the country's richest temples asking for details of their gold"</i>. The head of an opposition party <i>"said the RBI wanted to 'take possession' of the gold and maybe sell it for dollars"</i> but the central bank said there was <i>"no proposal under its consideration to convert idle gold into bullion at this juncture"</i>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">The general rule, of course, that politicians first deny what they later introduce, just as the Finance Minister <a href="http://www.reuters.com/article/2013/08/19/india-gold-timeline-idUSL4N0FE13120130819">said</a> on January 30 that there were <em>"no plans for additional taxes or curbs on gold imports"</em>. </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Furthermore, a Reserve Bank of India regional deputy general manager was <a href="http://www.khaleejtimes.com/kt-article-display-1.asp?xfile=data/international/2013/September/international_September378.xml&section=international">quoted</a> as saying that there interest extended beyond temples" <i>“We sought the details as part of a statistical exercise to gather details of the gold in the possession of all places of worship and other public bodies. We started the process with temples. We had planned to cover the places of worship of other communities, trusts and establishment in subsequent phases".</i></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Some temples do <a href="http://articles.economictimes.indiatimes.com/2013-09-05/news/41802604_1_gold-bars-gold-import-pure-gold">already deposit</a> gold with Indian banks, earning interest of around a few percent. Below are the amounts held by three temples I've picked up from various reports:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Tirumala Tirupati Devasthanam - 116,643oz / 3.6t</div><div style="text-align: justify;">Tirupati - 72,339oz / 2.25t </div><div style="text-align: justify;">Sri Krishna - 16,075oz / 0.5t</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So there is a fair amount of gold just held across many temples, let alone private individuals. The reported objective of these gold schemes is to lend the gold to the extensive Indian jewellery industry, which hold significant amounts of gold as work in progress stock. This I don't see as a problem, because the gold is not being sold and stays within the country. It also helps to consolidate gold as money.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">However, utilising investor stocks of gold this way does not really solve India's import problem, as all it is doing is replacing gold loans given to importers and jewellers from overseas bullion banks with internally funded sources. This only provides a one off benefit as the gold flows out of India only as the bullion bank loans are repaid. Thereafter India still needs to import gold on an ongoing basis.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">This leads to the key, in my mind, recommendation from the report, which was the <em>"setting up of Gold Corporation or Gold Bank in India"</em>. The purpose of this entity is to (direct quotes, my emphasis):</div><ul><div style="text-align: justify;"></div><li><div style="text-align: justify;">provide refinance to institutions lending against the collateral of gold</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">retailing functions in gold including pooling of idle gold in the system</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">be empowered with wide-ranging activities related to the entire spectrum of <strong>gold policies</strong></div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">make official purchases and <strong>sales of gold</strong></div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">may issue gold bonds and <strong>collect the gold stocks</strong></div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">be to <strong>mobilising domestic non-official gold holdings</strong>; channelise them into a centralised pool over a period of time and to deploy them in a productive manner in the best interests of growth and development of the country</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">be authorized to buy and <strong>sell gold on their behalf</strong> and on behalf of their clients</div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">be empowered to <strong>handle the country's gold reserves</strong></div></li><div style="text-align: justify;"></div><li><div style="text-align: justify;">be given powers to import, export, trade, lend and borrow gold and <strong>deal in gold derivatives</strong></div></li><div style="text-align: justify;"></div></ul><div style="text-align: justify;">One could argue that if you plan to "mobilise" (cough cough) domestic gold holdings, then you first need to know where and how much gold is held in places of worship, trusts and establishments. Then you can utilise this gold to implement the "entire spectrum of gold policies". Lets just hope India's CAD improves, otherwise the Reserve Bank of India may feel it needs to implement more of the report's recommendations.</div>

Gold investors are well aware of the restrictions India imposed on its gold market, like increasing import duties. In this post I want to st...

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Can US Govt seize Perth Mint client gold?

<div style="text-align: justify;">You may be interested in <a href="http://gyroscopicinvesting.com/forum/index.php?topic=3173.msg43451#msg43451">my response</a> to this comment left in the <a href="http://gyroscopicinvesting.com/forum/index.php?topic=3173.0">Permanent Portfolio Discussion Forum</a>:</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><i>"Perth is good, but I trust Australia less than Uncle Sam. ... If I put my assets in Australia, I not only need to worry about Australia's government seizing my assets in times of their need... but I also have to worry about the US State Departments ability to basically extradite the assets back (and me personally) to the United States under the guise of fraudulent transfer or tax evasion when Uncle Sam is in need."</i></div><div style="text-align: justify;"> </div><div style="text-align: justify;">It in I discuss the one occurance we have had of a request by US authorities for a client's gold to be handed over to a US court.</div><div style="text-align: justify;"> </div><div style="text-align: justify;">Unrelated - this is my new favourite blog <a href="http://www.papermoneyshield.com/">Paper Money Shield</a> who's mission is <i>"Defending paper money from the rigorous attacks of precious metal advocates."</i></div>

You may be interested in my response to this comment left in the Permanent Portfolio Discussion Forum : "Perth is good, but I trust Au...

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Citizens Electoral Council of Australia

<div align="justify">Somehow I got on to the CEC's email list recently and have been receiving unsolicited press releases every week. Thought I'd check out their <a href="http://www.cecaust.com.au/">website</a> to see exactly what their policies were. My attention was drawn to their proposal for a new national bank and out of curiosity I did a search on the word GOLD in their <a href="http://www.cecaust.com.au/pubs/pdfs/Draft_Legislation_for_National_Bank.pdf">draft legislation</a>.<br /><br />Interestingly, in Section 40(3), they are including the very same affronts to freedom that are in Part IV of the existing Banking Act 1959, namely making it illegal to own/hold gold. They have pretty much kept the wording of the sections I noted in my blog on <a href="http://goldchat.blogspot.com/2008/11/australian-gold-confiscation.html">gold confiscation</a>.<br /><br />After unsubscribing from their email list, I emailed them at <a href="mailto:cec@cecaust.com.au" title="mailto:cec@cecaust.com.au">cec@cecaust.com.au</a> and suggested they read the work of Professor Fekete to understand the importance of allowing private ownership of gold. Haven't had any reply as yet.</div>

Somehow I got on to the CEC's email list recently and have been receiving unsolicited press releases every week. Thought I'd check o...

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Confiscation Update

<div align="justify">The text of former West Australian Premier Richard Court's Vista Public Lecture Series 2008 <a href="http://www.sat.justice.wa.gov.au/_files/Justice_series_Federation_22_10_08.pdf">address</a> is now available. It is worth a read and has a handy short history of WA attitudes to Federation. Some key quotes:<br /><br />"Joel Fitzgibbon, the Federal Member for Hunter and the current Minister for Defence, said in presenting the Inaugural Edmond Barton Lecture this year, that an ideal reform of our Federation would be the abolition of the States.<br /><br />At the time I said I could offer my 100% support for this proposition with just one proviso – that Western Australia secedes just prior to the States being abolished!"<br /><br />"So in the three decades after Federation, with a population of around 400,000 there was growing dissatisfaction with the Commonwealth’s fiscal and legislative dominance and control.<br /><br />1930 we were in the Great Depression and just prior to this discontent coming to a head. In 1932 the Western Australian Government decided to hold a referendum on seceding from the Federation on the grounds of unfair financial treatment.<br />This referendum was held on 8th April 1933 and it was 2-1 majority in favour of secession from the Commonwealth.<br /><br />On 24th May 1935 a Joint Select Committee of the House of Lords and Commons resolved it was not proper for the Western Australian petition to be received because the United Kingdom Parliament could – as a matter of Constitution priority – only dissolve the Commonwealth at the request, and with the consent, of the Commonwealth. That consent had not been provided."<br /><br />"Western Australia accounts for 35% of the nation’s export income."<br /><br />"I am not advocating secession, but if you read “The Case for Secession” which is very thick and “The Case Against Secession” which is very thin that was prepared in the 1930’s, the case for secession today will be even stronger if this financial imbalance is allowed to continue."<br /><br />I have updated the original gold confiscation post and will continue to do so as I want it to be the definitive research on the topic.</div>

The text of former West Australian Premier Richard Court's Vista Public Lecture Series 2008 address is now available. It is worth a rea...

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Constitution, Confiscation and Gold

<div align="justify">I have amended the confiscation blog with the text below and posted it here for those who have already read the blog so you don't miss it.<br /><br />What if Western Australia did not want to secede or there was not enough public support to do so, but still wanted to stop gold confiscation by the Federal Government. One possibility is for the State to make gold coins legal tender. They would therefore cease to be just gold and become currency.<br /><br />Section 115 of the <a href="http://www.comlaw.gov.au/comlaw/comlaw.nsf/440c19285821b109ca256f3a001d59b7/57dea3835d797364ca256f9d0078c087/$FILE/ConstitutionAct.pdf">Australian Constitution</a> states "A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts." I interpret this as a State shall not coin money, period, but can make (with "make" as make law, not "manufacture") gold and silver coin legal tender.<br /><br />Now if a State cannot make coins, how does the Perth Mint get away with it. It does so by going to the Treasurer and getting approval to do so under the <a href="http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/framelodgmentattachments/C1D36D7DD47B45FBCA257364001E88A6">Currency Act 1965</a>. With the Mint's gold and silver coins, as well as sovereigns, already out there could not a State pass a law to make those gold and silver coins legal tender at their market value, not face value? Interestingly, there is no definition of "coin" so maybe sovereigns and Eagles and Maples could be included, although coin usually means "legal tender" otherwise it is a "medallion".<br /><br />According to this <a href="http://en.wikipedia.org/wiki/Section_51(xii)_of_the_Australian_Constitution">Wikipedia entry</a>, "Section 51(xii) of the Australian Constitution gives the Commonwealth Parliament the right to legislate with respect to “currency, coinage, and legal tender.” with Section 51 powers able to be legislated on by the states, although Commonwealth law will prevail in cases of inconsistency. Section 115 effectively makes the concurrent power in section 51(xii) exclusive to the Commonwealth. Despite this, coins of the Australian pound were not introduced until 1910. From 1901 to 1910 the states could not issue tender and the Commonwealth had not issued tender, so private currency was used as the common medium of exchange whilst the British pound sterling was the national unit of account."<br /><br />This then raises the question of whether Western Australia making those existing gold and silver coins legal tender would "inconsistent" with Commonwealth law.<br /><br />Part V of <a href="http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/framelodgmentattachments/C6ABB60CB7F77F69CA2574F000805C0E">Reserve Bank Act 1959</a> states that banks or persons (but no mention of States) shall not issue bills or notes intended for circulation as money but otherwise makes no restrictions on any other legal tender.<br /><br />I have looked at the Currency Act 1965 and cannot find any section prohibiting a State from declaring gold and silver coins legal tender. Section 22 prohibits persons from making coins. Section 16 says that "a tender of payment of money is a legal tender if it is made in coins that are made and issued under this Act", which the Perth Mint's coins are.<br /><br />See also the Reserve Bank of Australia's comments on <a href="http://www.rba.gov.au/CurrencyNotes/LegalFramework/legal_tender.html">legal tender</a>.<br /><br />Therefore I see no inconsistency with Commonwealth law if a State passes a law making existing gold and silver coins (at their market value) legal tender. However, there is a catch. Section 23 states that "the Governor‑General may, by Proclamation, call in any coins issued under this Act or the repealed Acts before a date specified in the Proclamation."<br /><br />So if the West Australian Government attempted to make the Mint's coins legal tender to stop the Commonwealth's moves to confiscate gold, the Commonwealth could just call those coins in.<br /><br />Now while this investigation seems to have achieved nothing, it does raise one useful point - Section 23 is effectively another confiscation mechanism, but with the implication that it can be used not just to recall gold coins but also any Perth Mint silver coins. Note also that any proof/collectible coins issued by the Perth Mint are also done so under the Currency Act 1965 so numismatic coins clearly have no protection. Therefore, while coins have advantages when moving between countries due to their legal tender status, that legal tender status puts them at risk of confiscation, so one should prefer bars to coins if one is concerned about confiscation.</div>

I have amended the confiscation blog with the text below and posted it here for those who have already read the blog so you don't miss i...

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Australian Gold Confiscation

<div align="justify">Gold confiscation is an important issue that strategic investors need to have a view on – the circumstances in which you are most likely to need your wealth safe haven is also when the risk of a Government wanting to take it away from you may be the highest. All of the discussion on this matter is US-centric and I do not recall ever seeing any commentary on the possibility of confiscation in other countries. It is a pertinent question because a fair number of Americans store their gold offshore on the simple basis that if the US Government did it once, they will do it again.<br /><br />Having said that, it would be my contention that all countries have a confiscation risk on the basis that we are dealing with politicians after all – QED. The confiscation issue is therefore one of relative risk: which country is less likely to resort to gold confiscation. Being Australian, I can only focus on the likelihood of the Australian (Federal) Government confiscating gold. I would welcome discussion of this issue by locals in other countries, particularly the UK and Switzerland, given the large amounts of gold held in those countries.<br /><br />The confiscation question was often raised by the clients I spoke to while working in the Perth Mint’s Depository. I should note that most of the USD 1.5 billion worth of precious metals stored by the Depository is held by foreigners. In fact, 45% of the Mint’s Depository clients are American. While some of this analysis will be specific to Australia, there will also be a fair amount that is generic to any country so hopefully this will be of use to those without gold in Australia as well.<br /><br /><em>Economic Strength</em><br /><br />Governments confiscate gold because they need to strengthen their reserves, which is a nice way of saying no one will accept their currency and they need something of value to trade for the things the country needs. This statement raises two factors to consider. Firstly, how strong is the economy of the country, how resilient is it likely to be in the face of a deteriorating and hostile world economic environment? Secondly, how self sufficient is the country?<br /><br />My simple answer to these two questions is to note that Australia is a commodity currency. We export a lot of raw material commodity stuff and food that other countries want. Sure, like many western countries, we have a reduced manufacturing capability but we can always build up that capability, whereas some countries cannot just make iron ore appear out of their ground. I therefore consider Australia relatively lower risk on this factor. We can be self sufficient. Sure we might have to do without plasma wide screen TVs, but at least we can feed ourselves.<br /><br />A related issue is what gold holdings will the Government look to control when it decides it needs the asset of last resort. My view is that they are not going to bother with knocking on people’s doors to confiscate private holdings when Australia’s mines can churn out between 200 to 300 tonnes per year. The real threat is the control of mine output (i.e. buying gold at the “official price”) or nationalisation of mines as this is where the real dollars are.<br /><br /><em>Legal Mechanism</em><br /><br />At lot of the commentary on US confiscation speculates on the likely legal form the confiscation will take, such as will numismatic coins be exempt and so on. If laws have to be passed, then opposition may be possible or at least there would be some delay within which you can prepare.<br /><br />In this respect Australia has a relatively higher risk because Australian law already has a mechanism in place to require delivery of gold to the Reserve Bank of Australia (RBA) - Part IV of the <a href="http://www.comlaw.gov.au/Current/C2011C00034">Banking Act 1959</a>. There is no need for the Government of the day to have to rush new legislation through that may attract public comment or opposition. All that is required is the Governor General to proclaim that Part IV shall come into operation. The ease with which this can occur is a negative mark for Australia. A small consolation is that we have certainty as to the legal form this confiscation will take.<br /><br />As a side note for those not versed in Australian constitutional law, the Governor General is a figurehead role and is not elected. They are appointed by the Government of the day and, by convention, act on the instruction of the Government and Parliament. Most Australians would be aware, however, that the words “by convention” are crucial, as on 11 November 1975 the Governor General dismissed the Government of the day. It is therefore theoretically possible that the Governor General could bring Part IV into force against the wishes of the Government if he/she thought that it was “expedient so to do, for the protection of the currency or of the public credit of the Commonwealth” (Section 40(2)). Having said that, I would consider such a scenario unlikely on the basis that doing so would require the cooperation of the public service and result in radical changes in the operation of the gold industry. As the Governor General does not have any control over the public service or any public mandate, they would need the cooperation of the Government of the day if the proclamation was to have any practical effect.<br /><br />Before you rush to deliver your gold to the RBA, note that Part IV is currently “suspended”. My blog of <a href="http://goldchat.blogspot.com/2008/08/history-of-gold-controls-in-australia.html">04 August</a> details the suspension by way of a transcription of a press release by the Treasurer on 30 January 1976.<br /><br />It is worth noting that the Act only refers to gold, not silver. I guess this is because gold is more compact, in value per weight/volume terms, and thus is easier to transport between countries in settlement of transactions. For example, one tonne of gold is equivalent to 75 tonnes of silver (at least at today’s prices). This is positive for silver, and one can imagine that in a gold confiscation scenario that people will flock to silver for wealth/inflation protection if they cannot achieve it with gold. It is therefore likely that the silver price will move rapidly upward relative to gold.<br /><br />So let’s look at our enemy in detail:<br /><br /><strong>Section 41</strong> – you will not be allowed to export or take gold out of the country.<br /><br /><strong>Section 42</strong> – you have to deliver gold you hold at the time of the proclamation or any that subsequently comes into your possession within one month. Only exemptions are gold used as part of your profession or trade or coins less than $50 in total value. The section mentions “prescribed amount” but $50 is mentioned in the attachment to the press release. Note that the section refers to the “gold content”, not “face value”. In practice this means legal tender coins or numismatic coins offer no protection and given the small value, is effectively full confiscation. The US 1933 confiscation had an exemption for gold holdings below $100 (see <a href="http://www.safehaven.com/article-13447.htm">this article</a> by Roland Watson for more details. Mr Watson notes that the 1933 confiscation was not confiscation as such, but a prohibition against hoarding. He also speculates that the exemption was a way of getting the average wage earner on board, as it did not confiscate their small holdings, only the "evil hoarders".<br /><br /><strong>Section 43</strong> – gold so delivered is the RBA’s, period. Any interest that someone has in it is extinguished. RBA must pay for it and will pay the deliverer. If you had an interest in that gold, you have to get your money off the deliverer. What this means is that a custodian must deliver gold held on behalf of others, and it will only get money in return, which is all it can return to you.<br /><br /><strong>Section 44</strong> – this has very interesting wording. First off it says the price is the price as fixed by the RBA. This doesn’t sound too good, as it allows for the RBA to set a really crappy price. However it says “... or, at the option of the person delivering the gold, such amount as is determined in an action for compensation ...” In practice this means that you will get the market value, as if the RBA’s price is too low there is a case for compensation.<br /><br />If you think that getting market price doesn’t sound too bad, it is worth remembering that in the US after confiscation the official price of gold was increased, thereby denying the previous holders the benefit of that increase in value. While there is no official fixed price anymore, some posit that the same will be achieved by central banks first manipulating the price lower then confiscating it at this “free market” price.<br /><br />In any case this is a bit irrelevant because you only end up with paper money and if you wanted that you would not have bought gold in the first place.<br /><br /><strong>Section 45</strong> – this says that you are not allowed to buy or sell gold, unless authorised by the RBA. The interesting thing about unallocated is that the gold has already been bought and thus it may be legal for the Mint to allow clients to collect their unallocated gold on the assumption that as good citizens they are requesting it so they can dutifully hand it over to the RBA, of course. This will depend upon the interpretation of “or otherwise obtain gold” within the context of the section, which is titled “limitation of sale and purchase of gold”.<br /><br /><strong>Section 46</strong> – essentially restatement of s42(1)(b), OK to have gold you are working on if that is your job. I take this to mean jewellers and other manufacturers are exempt by default.<br /><br /><strong>Section 47</strong> – OK to hold wrought gold. As “wrought” means “made in a skilful or decorative way” I take this section to mean jewellery is exempt. I think this is potentially a significant loophole as those denied bars and coins would create demand for other forms of jewellery that could also be “tradable” that creative jewellers (or a creative Mint) would undoubtedly meet.<br /><br /><strong>Section 48</strong> – the RBA can exempt anyone from any or all of these sections.<br /><br />In summary, Part IV is very extensive. You can’t buy, hold or sell gold unless it is a legitimate part of your trade or in the form of jewellery. However, the phrasing of the law is all around physical as it mentions “delivery” of gold in your “possession” Combining this with section 46 raises an interesting speculation on interpretation of the law and its consequences for metal held with the Perth Mint.<br /><br />Under section 46, given the Mint’s role in refining gold that the Government wants and also supplying industry with industrial forms of gold, I think it can be assumed that it would get an exemption from having to deliver its working stocks of gold. Note that this metal is what backs the unallocated precious metal liabilities of Depository clients, so the conclusion is that unallocated metal would not be confiscated. In support of this, unallocated metal liabilities are not “physical” so would fall outside the law as they cannot be “delivered” to the RBA. Certainly the Government may close this loophole, but in the extreme environment we are considering this oversight may be missed by the bureaucrats as they scramble to negotiate with an antagonistic mining industry on how the new system will work and getting real physical gold into the hands of the RBA.<br /><br />My experience with the implementation of the Goods and Services Tax (GST) some years ago supports my position that unallocated will be left alone, at least initially. In discussions with tax officials the whole concept of unallocated, location swaps and such was considered suspiciously, as some bogus “construct” to hide the real transaction going on. As such they focused on physical metal movements and when title passed. I am confident that the bureaucrats responsible for implementing Part IV will similarly see industry “jargon” as a cover up and instead prefer to take what they will see as a clear-cut approach: do you have a legitimate business reason to hold gold, if not hand it over.<br /><br />For this reason, and of some irony considering that a number of client’s consider allocated “safer” than unallocated, there is no potential for ambiguity with allocated metal. It is physical and has to be delivered, no matter that it is someone else’s metal as section 43 points out.<br /><br />As a counterpoint, if people are not allowed to hold gold then the Perth Mint’s operations will be radically reduced as there will be no need for coins or bars (except 400oz bars) and it may be hard to justify holding as much physical backing the unallocated as they currently do. While the Mint may be able to branch out into 24ct jewellery or other product lines to take up the slack, it is doubtful this could be on the same scale as the coin and bar operations.<br /><br />In summary, the best that can be said is that there is no doubt that allocated/custodial holdings are confiscatable but that unallocated is a grey area.<br /><br /><em>Management</em><br /><br />By “management” I mean how will the senior management of your custodian (which for most people means the Perth Mint) react to the confiscation. For example, in respect of the unallocated question, will the Mint roll over and voluntarily hand over unallocated metal (or the “paper” claims), or will they not bring it to the attention of the bureaucrats.<br /><br />This is a difficult question to answer and one can only look to the material published by your custodian to infer what their “philosophy” is or how strongly they feel about gold’s role and protecting your rights.<br /><br /><em>Secessionism</em><br /><br />One factor unique to West Australia that needs to be considered in respect of gold held in that state is the highly probable emergence of the idea of self governance or secession from the Commonwealth should the Federal Government confiscate gold. One thing that struck me when I moved from Sydney to Perth was the “them and us” attitude of West Australians, evidenced in their use of “the Eastern States” to refer to the rest of Australia. I have no doubt that enacting Part IV will be seen by many West Australians as confiscation of “their” gold by the Federal Government and not in the interests of the state.<br /><br />If you consider this farfetched, read the following Wikipedia page <a href="http://en.wikipedia.org/wiki/Secessionism_in_Western_Australia">http://en.wikipedia.org/wiki/Secessionism_in_Western_Australia</a>. This 2005 <a href="http://www.abc.net.au/stateline/wa/content/2005/s1458431.htm">TV interview</a>, with veteran state MP Norman Moore, a former Court Government minister, is a neat summary of the feelings of some West Australians:<br /><br /><span style="font-size: 85%;">REBECCA CARMODY: As this issue has cropped up, I’ve heard politicians of both persuasions talking about secession. Would Western Australia be better off just to simply break apart?<br /><br />NORMAN MOORE: Absolutely. I have no doubt that Western Australia would be one of the most successful countries in the world if it was a separate country.<br /><br />REBECCA CARMODY: Is this something we should be seriously contemplating?<br /><br />NORMAN MOORE: Yes, we should be talking about it. We should be talking about it very thoroughly and in a very mature way. Let’s look at what the consequences are for Western Australia if it was a separate country. We have enormous resources. We’ve got a tremendous potential future as separate country if we were to secede. To achieve that would be very difficult indeed because you actually require a constitutional amendment, I understand, which would probably not be supported by the other States because they get 30 per cent of their revenue from Western Australia.<br /><br />REBECCA CARMODY: You don’t think it is likely to happen, but it is a fallback position for Western Australia.<br /><br />NORMAN MOORE: There was always a unilateral declaration of independence which has been used in other parts of world. I suspect it wouldn’t happen in Western Australia. I think that Western Australians need to start talking about a future as a seceded separate nation. At the end of the day, under a centralist system in Canberra, Western Australia will always be the biggest loser. We are a long way away - out of sight, out of mind. Federal politicians simply rely on Western Australia to produce a huge amount of wealth, but, beyond that, they would not know much about what goes on here at all.</span><br /><br />Consider also this Vista Public Lecture by Hon Richard Court AC, former Premier of Western Australia <a href="http://www.sat.justice.wa.gov.au/_files/Justice_series_Federation_22_10_08.pdf">"How will the Federation look in 2020"</a> where he says “I am not advocating secession, but if you read 'The Case for Secession' which is very thick and 'The Case Against Secession' which is very thin that was prepared in the 1930’s, the case for secession today will be even stronger if this financial imbalance is allowed to continue.” It also has a short history of Western Australia's attitude to Federation and notes that "in 1932 the Western Australian Government decided to hold a referendum on seceding from the Federation on the grounds of unfair financial treatment. This referendum was held on 8th April 1933 and it was 2-1 majority in favour of secession from the Commonwealth" but it was rejected only "because the United Kingdom Parliament could – as a matter of Constitution priority – only dissolve the Commonwealth at the request, and with the consent, of the Commonwealth. That consent had not been provided."<br /><br />See also this April 2010 report by ABC News: <a href="http://www.abc.net.au/news/stories/2010/04/30/2887478.htm">Tax review stokes WA secession whispers</a><br /><br />While secessionist sentiments are currently in the minority, it is my view that confiscation would fan the feelings of being “ripped off”. The sort of dire economic circumstances that would induce the Federal Government to confiscate may also be the extreme circumstances in which the State Government, with the likely support of everyone involved in the gold mining industry, would consider it in the best interest of the state to secede. I would further speculate that with significant amounts of gold in the ground, and an operating Mint, there is a good chance that the country of Western Australia would consider a gold backed currency – in times when currencies are failing the only way for a new country to establish the worth of its money would be to back it with gold.<br /><br /><em>Gold Currency</em><br /><br />What if Western Australia did not want to secede or there was not enough public support to do so, but still wanted to stop gold confiscation by the Federal Government. One possibility is for the State to make gold coins legal tender. They would therefore cease to be just gold and become currency.<br /><br />Section 115 of the <a href="http://www.comlaw.gov.au/comlaw/comlaw.nsf/440c19285821b109ca256f3a001d59b7/57dea3835d797364ca256f9d0078c087/$FILE/ConstitutionAct.pdf">Australian Constitution</a> states "A State shall not coin money, nor make anything but gold and silver coin a legal tender in payment of debts." I interpret this as a State shall not coin money, period, but can make (with "make" as make law, not "manufacture") gold and silver coin legal tender.<br /><br />Now if a State cannot make coins, how does the Perth Mint get away with it. It does so by going to the Treasurer and getting approval to do so under the <a href="http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/framelodgmentattachments/C1D36D7DD47B45FBCA257364001E88A6">Currency Act 1965</a>. With the Mint's gold and silver coins, as well as sovereigns, already out there could not a State pass a law to make those gold and silver coins legal tender at their market value, not face value? Interestingly, there is no definition of "coin" so maybe sovereigns and Eagles and Maples could be included, although coin usually means "legal tender" otherwise it is a "medallion".<br /><br />According to this <a href="http://en.wikipedia.org/wiki/Section_51(xii)_of_the_Australian_Constitution">Wikipedia entry</a>, "Section 51(xii) of the Australian Constitution gives the Commonwealth Parliament the right to legislate with respect to “currency, coinage, and legal tender.” with Section 51 powers able to be legislated on by the states, although Commonwealth law will prevail in cases of inconsistency. Section 115 effectively makes the concurrent power in section 51(xii) exclusive to the Commonwealth. Despite this, coins of the Australian pound were not introduced until 1910. From 1901 to 1910 the states could not issue tender and the Commonwealth had not issued tender, so private currency was used as the common medium of exchange whilst the British pound sterling was the national unit of account."<br /><br />This then raises the question of whether Western Australia making those existing gold and silver coins legal tender would "inconsistent" with Commonwealth law.<br /><br />Part V of <a href="http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/framelodgmentattachments/C6ABB60CB7F77F69CA2574F000805C0E">Reserve Bank Act 1959</a> states that banks or persons (but no mention of States) shall not issue bills or notes intended for circulation as money but otherwise makes no restrictions on any other legal tender.<br /><br />I have looked at the Currency Act 1965 and cannot find any section prohibiting a State from declaring gold and silver coins legal tender. Section 22 prohibits persons from making coins. Section 16 says that "a tender of payment of money is a legal tender if it is made in coins that are made and issued under this Act", which the Perth Mint's coins are.<br /><br />See also the Reserve Bank of Australia's comments on <a href="http://www.rba.gov.au/CurrencyNotes/LegalFramework/legal_tender.html">legal tender</a>.<br /><br />Therefore I see no inconsistency with Commonwealth law if a State passes a law making existing gold and silver coins (at their market value) legal tender. However, there is a catch. Section 23 states that "the Governor‑General may, by Proclamation, call in any coins issued under this Act or the repealed Acts before a date specified in the Proclamation."<br /><br />So if the West Australian Government attempted to make the Mint's coins legal tender to stop the Commonwealth's moves to confiscate gold, the Commonwealth could just call those coins in.<br /><br />Now while this investigation seems to have achieved nothing, it does raise one useful point - Section 23 is effectively another confiscation mechanism, but with the implication that it can be used not just to recall gold coins but also any Perth Mint silver coins. Note also that any proof/collectible coins issued by the Perth Mint are also done so under the Currency Act 1965 so numismatic coins clearly have no protection. Therefore, while coins have advantages when moving between countries due to their legal tender status, that legal tender status puts them at risk of confiscation, so one should prefer bars to coins if one is concerned about confiscation.<br /><br />Also, as one reader has pointed out, the "calling in" could be done at the face value of the coins, which would not normally be much of an issue with base metal circulating currency but obviously a problem for gold and silver coins because the face value is much lower than the market value.<br /><br />It would be interesting if US law had a similar call in provision regarding its legal tender, as this would put to bed the idea that numismatic coins would be protected from a US confiscation. This <a href="http://cmi-gold-silver.com/gold-confiscation-1933.html">article by CMI</a>, which is the most comprehensive I can find on US confiscation, does not mention it but nevertheless concludes that numismatic coins provide no extra protection over bullion coins or bars.<br /><br /><em>Let Sleeping Dogs Lie?</em><br /><br />In closing, I do not feel it is inevitable that confiscation will occur in Australia, or specifically Western Australia. I hope I have shown that the potential political situation is much more fluid. However, we do have dormant legislation that can be brought into existence without any need for debate in Parliament, which I do not consider a good thing. The question I leave you with is should we leave the sleeping dog or agitate for Part IV to be removed?<br /><br />Asking for it to be removed may draw attention to its existence and provoke a review of it and possible change to remove any loopholes, although this would have the benefit of revealing the Government’s attitude to gold, allowing for individuals to prepare. Leaving it means we know what we will have to deal when/if it happens (this assumes you feel there are actionable loopholes) and in the meantime not draw any more attention to gold ownership.<br /><br /><strong>Other articles on confiscation</strong> (this will be added to from time to time, so please check back here if you are interested in this issue).<br /><br />This <a href="http://sitekreator.com/Optimist/confiscation.html">article on silver confiscation</a> asserts that silver is more likely to be confiscated because there are no large industrial stockpiles and silver is needed in many industrial applications, causing great economic problems if silver ran out/increased in price significantly.<br /><br /><a href="http://www.gata.org/node/5606">This correspondence</a> between GATA and the U.S. Treasury Department on confiscation, where Treasury says that the Government "has the authority to prohibit the private possession of gold and silver coin and bullion by U.S. citizens during wartime, and, during wartime and declared emergencies, to freeze their ownership of shares of mining companies" and indeed "to<br />seize or freeze just about everything else that might be considered a financial instrument"<br /><br />Adam Hamilton's (Zeal LLC) <a href="http://www.zealllc.com/2004/hydra11.htm">Gold Confiscation Hydra 1.1</a> considers the risk of confiscation at 1% because:<br /><br />1. There are vast structural differences between the gold environment of 1933 and today;<br />2. It would be the final coup de grace slaughtering the fragile US dollar; and<br />3. Fearsome social implications from Ruby Ridge and Waco style shootouts between armed goldbugs and "Federal Gold Police".<br /><br /><a href="http://fofoa.blogspot.com/2009/08/confiscation-anatomy-different-view.html">Confiscation Anatomy - A Different View</a> by FOFOA: "... if the US ever put gold back on the table through another confiscation of its citizens' gold, the BIS would call in all of its outstanding claims in gold at the rate of $42 per ounce ... Under international law, the US is still an OUTLAW when it comes to gold! This is why gold is off the table."<br /><br /><a href="http://www.goldmoney.com/gold-research/will-governments-confiscate-gold.html">Alasdair Macleod</a>: "Confiscation requires the gold itself to be surrendered, which presumably would be the objective if a government is to add to official holdings. If gold ownership is merely banned, it is a different matter. A bullion bank holding gold in an unallocated account would almost certainly be unable to deliver physical gold if required to do so by the American government, but it would be able to close out the account for cash."<br /><br />Interesting point about unallocated being closed out for cash in a confiscation. A possible reason why it may happen - if there is a (physical) run on bullion bank unallocated accounts, Governments may confiscate as cover to protect bullion banks from failure rather than any desire for the metal themselves.<br /><br />Further quote: "The international nature of gold would probably require all G10 or even G20 members to agree to similar actions against their own citizens. It seems unlikely that all governments would agree to this, unless they all had their backs hard against the wall.<br /><br /><a href="http://blog.milesfranklin.com/more-on-gold-confiscation">Miles Franklin</a>: "But, if the unlikely were to occur, in the very unlikely event that our government issues a recall order, they would want to get the most people possible to comply with the least resistance. Since they can create all the money necessary to acquire it, with a keystroke, it makes sense that they would offer a fair and very high price for the gold – and quite possibly even offer an extra incentive like a provision where no taxes were paid on the gains. This isn’t so far-fetched since many people would be forced to liquidate outside of their own time frame and would face tax consequences that in some cases would not be to their benefit. If they didn’t make it easy and somewhat fair, many people would flaunt the law and the government would NOT get their hands on the gold they desire."<br /><br /><a href="http://www.jsmineset.com/2012/10/30/gold-confiscation-rumor-control/">Jim Sinclair</a>: "I am sick of all this confiscation talk of gold and even gold companies. It emanates from gold people who do not know or understand the history of gold. We condemn MSM for inaccurate, false and misleading news. I condemn gold writers who practice sensationalism, who offer their opinions as if they were facts and simply make things up out of thin air as if they were insiders privy to things that no one else is. Right now leaders of this community are printing stuff as misleading as MOPE or MSM ever have.<br /><br />Eric De Groot put what I have been trying to teach you perfectly today. In the 1930s gold was to the monetary system what QE is today, a means of increasing the supply of money for Fed and Treasury discretionary use. The US Secretary of the Treasury and President Roosevelt set the gold price higher at their daily breakfast together arbitrarily. Higher because to create money then the system required a higher value of gold to have more money outstanding. This is why Roosevelt ordered the confiscation of gold in order to unfold his type of monetary stimulation, his QE. This is what confiscationophiles simply do not know.<br /><br />Your fears and the outrageous untrue statement by the Scottish hedge fund manager are based on totally wrong reasoning and misunderstanding. Gold was not confiscated because it was going up in price. Gold’s order of confiscation came as a tool of monetary stimulation in order to create monetary creation in order to attempt to increase employment. The order of gold confiscation had nothing whatsoever to do with punishment of the gold holders. It preceded the then big run up in the gold price. Believers in confiscation, because they are incorrect on its basis, are totally wrong in predicting it. Those that predict confiscation of anything gold love sensationalism and benefit somehow from scaring the dickens out of you unnecessarily."<br /><br />Note 31 Jan 2014: Regarding the physical gold backing client unallocated gold, this gold is on the balance sheet of the Perth Mint, which means the Perth Mint owns the gold and has a liability to Depository account holders. Given our ownership, this means that the State government owns the gold. Part IV only talks about "persons" which I doubt would include State governments.<br /><br />So for the Federal government to get the physical gold backing unallocated accounts, it would have to use <a href="http://en.wikipedia.org/wiki/Section_51(xxxi)_of_the_Constitution_of_Australia">Section 51(xxxi)</a> of Australia's consitution which allows for "the acquisition of property on just terms from any <b>State</b> or person" - so the confiscation would be against the State government and not unallocated account holders directly. This would make it a Federal vs State rights issue and feed any secessionism movement.</div>

Gold confiscation is an important issue that strategic investors need to have a view on – the circumstances in which you are most likely to ...

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A History of Gold Controls in Australia

<div align="justify">Below is the text of a press release and attachment that deals with a topic that you won't find much information about on the internet. I'm typing it out so that it becomes available and searchable. Next week I'll discuss what this means for the likelihood of gold confiscation occurring in Australia. In the meantime, I'll leave you to ponder the fact that Part IV of the <a href="http://www.comlaw.gov.au/ComLaw/Legislation/ActCompilation1.nsf/framelodgmentattachments/18B20C78549DF1DFCA25747F007CA3BA">Banking Act 1959 </a>has only been "suspended".<br /><br />PRESS RELEASE No 29<br /><br />EMBARGO 6.00pm<br /><br />STATEMENT BY THE TREASURER, THE HON PHILLIP LYNCH, M.P.<br /><br />PRIVATE OWNERSHIP AND SALE OF GOLD BY AUSTRALIAN RESIDENTS<br />SUSPENSION OF PART IV OF THE BANKING ACT<br /><br />The Treasurer, Mr Phillip Lyncy, said today that Commonwealth restrictions on the freedom of Australian residents to own, buy and sell gold in Australia had been removed.<br /><br />He added that current restrictions on the purchase of gold coins had also been removed.<br /><br />Australian residents could now export and import gold subject to normal exchange control and customs procedures.<br /><br />Mr Lynch pointed out that legislation existed in some States to regulate gold buying and some dealings in gold.<br /><br />The Treasurer was commenting on the effect of the suspension of Part IV of the Banking Act 1959-1974 by His Excellency the Administrator in Council on 30 January.<br /><br />In terms of this part of the Banking Act, gold, apart from wrought gold and gold coins to a limited extent, had to be delivered to the Reserve Bank of Australia within one month of its coming into a person's possession.<br /><br />The legislation had restricted the sale of gold in Australia only to the Reserve Bank or a person authorised by the bank.<br /><br />It had also prohibited the export of gold without the Reserve Bank's permission.<br /><br />Mr Lynch said the reasons for these restrictions on gold dealings by Australians no longer existed.<br /><br />The role of gold in the international monetary system had declined substantially in recent years.<br /><br />Similar restraints were not placed by the Commonwealth on dealings in silver, precious stones or other like forms of investment.<br /><br />He noted that several other developed countries, including the United States and Japan, had removed restrictions on the private ownership of, and dealings in, gold.<br /><br />A number of European countries also had no restrictions on gold holdings.<br /><br />The Treasurer also pointed out that the Industries Assistance Commission, in its report on the "Production of Gold" dated 5 Jun 1975, had expressed doubts that the continued existence of the restrictions on gold transactions in Australia served any useful purpose.<br /><br />Submissions received from the Gold Producers' Association (GPA) had pressed for removal of restrictions on gold marketing in Australia.<br /><br />The Association welcomed the Government's decision to suspect Part IV of the Banking Act.<br /><br />The Reserve Bank had been holding discussions with the GPA, the Banks and gold refiners to ensure that the marketing of Australia's gold was not disrupted.<br /><br />The Treasurer said that gold producers, for the time being, would still be able to take their gold to banks or to refiners as they had done in the past.<br /><br />However, if they wished they could now also sell their gold in other ways.<br /><br />The industry would, in future, have greater flexibility in the disposal and marketing of its output.<br /><br />Mr Lynch mentioned that investment in gold was not risk free and it involved significant costs such as storage, insurance and assaying.<br /><br />An outline of the history of gold controls in Australia is attached.<br /><br />30 Jan 1976<br />CANBERRA ACT<br /><br />ATTACHMENT TO PRESS RELEASE ON PRIVATE OWNERSHIP AND SALE OF GOLD BY AUSTRALIAN RESIDENTS<br /><br />GOLD CONTROLS IN AUSTRALIA - HISTORY<br /><br />Australia, like most countries was on the Gold Standard before the First World War. Currency notes were circulated alongside, and were freely convertible into, gold coins. There were no restrictions on the import or export of gold. Legislation existed in some States to protect gold miners and to regulate the buying and smelting of gold.<br /><br />The War disrupted the operations of the Gold Standard because of the physical difficulties of shipping gold and the special problems involved in financing the War effort. In 1915 Australia followed the United Kingdom in leaving the Gold Standard. Gold exports except with the Treasurer's consent were prohibited until Australia returned to the Gold Standard along with the UK in 1925.<br /><br />In 1929 falling export prices and the cessation of long-term borrowing abroad called for special measures to conserve Australia’s overseas funds. The Commonwealth Bank Act in 1929 provided for the Bank (of which the Reserve Bank of Australia is the legal successor) to requisition all Australian gold in return for Australian notes. Formal action was never taken under this legislation but it marked the beginning of the end of holding of gold by banks and the public in Australia. In fact, there were no Commonwealth restrictions on the ownership and sale of gold between 1925 and 1939. Banks voluntarily accepted deposits with the Commonwealth Bank in return for their gold.<br /><br />The outbreak of World War II again called for special Commonwealth gold controls. In 1939 regulations under the Defence Act provided for the acquisition by the Commonwealth Bank of newly won and other gold; regulations under the Customs Act prohibited the export of gold from Australia without authority.<br /><br />After the war these controls were continued in the Banking Act and with some modifications were exercised by the Reserve Bank until today.<br /><br />Until 1931 new-mined gold was added to the Commonwealth Bank’s stocks. The Bank made gold available to meet domestic industrial demand; exports were strictly controlled. The effect was to centralise gold in the Commonwealth Bank’s hands as part of Australia’s international liquidity.<br /><br />In 1951 a premium over the official IMF price for gold emerged in world markets. Arrangements were made for Australian producers to obtain this premium for gold sold overseas. The Gold Producers’ Association was formed specifically for this purpose. In practice the Commonwealth Bank allowed the Association to repurchase the gold for sale overseas provided the foreign exchange earnings were returned to Australia and thus added to our international reserves. The Bank continued to retain sufficient gold to meet domestic demand.<br /><br />In the 1960’s the gold premium rose markedly. For a time the major countries (not including Australia) sold gold to the free market to keep the price down. This was abandoned in 1968 when the major central banks agreed (Washington Agreement) not to add gold to their official reserves by way of purchases from the private markets. Australia was not a party to the Agreement but co-operated in it. Hence, the Reserve Bank held Australia’s gold reserves virtually constant and although the legislation required newly-won gold to be delivered to it, in practice the Bank returned it to the producers. Gold producers were permitted to export gold and sell to domestic industrial users. These arrangements continued until the suspension of Part IV.<br /><br />EFFECTS OF SUSPENDING COMMONWEALTH CONTROLS<br /><br />One effect of suspension is that gold producers (and the Reserve Bank) are freed from the requirement to pass newly-mined gold bank and forth between them.<br /><br />More importantly suspension widens the market for sales of gold by the producers. Hitherto, they have been free to meet export demands but have been limited domestically to sales for professional and trade purposes. Now, so far as Commonwealth Law is concerned, they may sell to any person within or outside Australia. Concurrently of course, the previous Commonwealth restrictions on who may buy, hold and deal in gold are withdrawn. Although imports were not controlled, imported gold was subject to delivery to the Reserve Bank. Gold may now be imported free of this control.<br /><br />Restrictions on the holdings of gold coins also have been withdrawn. Hitherto holdings of coins with an aggregate gold content of more than $50 required the prior consent of the Reserve Bank. The Bank administered their provision so as to enable genuine collectors to improve their collections and to permit dealers to meet the needs of genuine collectors.<br /><br />While the Commonwealth restrictions have been removed there is still legislation in some States dealing with gold. Essentially legislation in Victoria, South Australia and Western Australia requires gold buyers or gold smelters in those States to hold a State licence. Certain classes of industrial users of gold are exempted from the licensing provisions. It will, of course be up to individuals wishing to buy gold to comply with State legislation.<br /><br />MARKETING ARRANGEMENTS<br /><br />The Reserve Bank has been in touch with the main parties concerned with the handling of Australian gold to ensure a smooth transition to the new situation. These parties are the representatives of the producers themselves (the GPA), the four refiners (including the Perth Mint which is the major refiner) and the Australian banks who have handled the transmission of much of the gold from mine to refiner.<br /><br />In practice, newly-won gold hitherto has been sent by the producers to the refiners either direct or through one of the Banks. The refiner paid the producer the official price less assay and refining costs; the refiner received the official price for the gold from the Reserve Bank. Similarly, the Reserve Bank informed the Gold Producers’ Association of the gold available for sale and recouped from the Association the official price. The GPA then sold the gold domestically or overseas at the ruling market price and passed the premium over the official price back to the original producers.<br /><br />In future, the steps involving the Reserve Bank will be omitted, and, as a technicality, the refiners and banks will not be agents of the Reserve Bank in this connection. Otherwise, there will be no essential change in the handling of newly-won gold because of suspension of Part IV. Eventually, of course, the greater freedom in gold trading may lead to new practices.<br /><br />CANBERRA ACT<br />20 January 1976</div>

Below is the text of a press release and attachment that deals with a topic that you won't find much information about on the internet. ...

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