I would like to solicit other views about an issue that I'm grappling with for the past several weeks. This is probably the best place of all to ask. ;-)
First, some pertinent background for perspective: I've followed the metal markets since 1985, and have followed it pretty much on a daily basis since 1998. I use the term "followed" in both cases in the passive sense. I never traded metals... I only maintained a close awareness of them. Furthermore, I never actually owned any metal until 2008, when I finally "woke up" and stopped defending this miserable system in which we find ourselves today. I say this as someone who had "Gone Galt" back in 2001. I shut down a consulting firm I ran and retired (went on strike) because of the massive amounts of horse manure that I would have to wade through in order to get anything accomplished -- courtesy of our friendly Imperial Federal and State Governments.
My aversion to metals was the result of buying into the notion that metals were "dangerous investment vehicles." While I understood some of the aspects of how government can literally sap the desire to create jobs and wealth in favor of pursuing leisure, I remained so utterly ignorant of the importance and role of precious metals until many years later.
At present, I hold "physical" metal in allocated depositories in several locations in the United States and abroad, and a small portion of REAL physical metal where I can easily access it if needed. I'm under no illusions about the metal held in depositories. While I can and have audited these holdings, I believe it may very well disappear in a SHTF scenario. Right now though, this stuff stays in depositories.
As the situation in the United States plays out, things must -- by necessity -- get worse. The fundamentals of the situation are deteriorating, and the insanity increases daily. This government-supported fascistic feeding frenzy on our freedom, liberty, and purchasing power are ever-growing, and will never be sated... no matter how high the debt ceiling might be raised. But with this said, I don't believe that a SHTF scenario is a likely one. It is a possibility most certainly, I just don't believe it will be a likely possibility, that's all. Also, I don't hold metal today under any illusion that it is any kind of "investment," but rather a store of value of my past productive effort and creativity. Nothing more. (Furthermore, I have never looked at any home I've lived in as an investment either... it was an asset that provided UTILITY, nothing more. The longer I used it, the less it costs over time.)
Okay... with that said, I have a hard time envisioning some transformation to the use of silver bullion to buy groceries, gas, or other necessities. I don't believe bartering metal for goods is something that is going to transpire, as it is horribly inefficient. Yes, I believe metal is money, but I just don't see how it's going to take hold as an accepted medium of exchange in this brain-dead environment.
One idea posited by some is that a new currency will be required when the FRNs lose their purchasing power completely -- when nobody wants to hold it any longer. This is an inevitable conclusion to fiat money, but it is also a situation that TPTB probably have also anticipated. I don't believe they're stupid... filthy, lying, scumbags YES; stupid NO.
Let's assume a new currency arises from the ashes of the FRN, but this time it is backed by precious metal -- say it is gold for the sake of argument. In order to conduct commerce, the "currency du jour" is going to be needed -- much as FRNs are now. In order to obtain these, metal would have to be redeemed -- and capital gains taxes would have to be paid at the rate of exchange, given how this metal is priced with respect to the old currency. (By the way, I don't know how the typical brain-dead American without any metal is going to manage to function... this is a mystery to me, but I must assume that people wake up at some point).
Governments don't "just forget" about taxes... especially capital gains taxes on monetary metals. I also expect these taxes to rise to stratospheric proportions in the coming months (or years?) as this system continues to fail.
So here's my question, which I believe I have answered -- but don't fully feel confident about it. This is why I ask the two questions here:
1. If metals are used to protect our savings from the ravages of inflation, isn't a capital gains tax on our metal holdings a guaranteed way to shoot that plan in the foot? I must assume that buying metal and being abused on the tax issue is better than not buying metal at all (basically, having 50% of your metal holdings after tax must be better than having 100% of worthless currency following a reset, right)?
2. Is there anyone from Argentina following these forums who can shed light on precisely what occurred in that nation when they went through these spasms of "government run amok"?
Without a model, I'm pretty much guessing as much as the next person... but action must be taken with the best available information at the time -- and this has been done. I just want to ensure I get it right, and share that knowledge with others for their benefit as well, if possible.
Thanks for hanging in there and reading this... it's very much appreciated in advance! :)