HOW TO ACQUIRE GOLD
J. Richard Duke
Duke Law Firm, P.C.
More Americans are learning that gold and silver are real money, notwithstanding the contrary position of governments. They are learning that the creation of fiat (let it be done) currency and fractional reserve credit out of thin air and backed by nothing debases the currency, reducing purchasing power. As a result, they are turning to gold and silver for insurance.
Please look at the U.S. dollar and see at the top the words “Federal Reserve Note.” This shows that a dollar bill is not money but debt (notes). Money, unlike currency, is backed by something of real value. Money is always currency because it can be used to purchase other items that have subjective value, but currency is not always money because it does not have value in and of itself. So the U.S. dollar, through digital entries, can best be described as currency and not money. When this article refers to gold, it also includes silver.
This article discusses the primary methods of acquiring and storing gold or silver outside the U.S. More Americans are wanting to store their gold not only outside the U.S., but outside the banking system. Private vaults outside the U.S., allow direct delivery of gold, gold bars, and gold coins to storage facilities.
The most common method of acquiring gold outside the U.S. is by direct purchase and storage by the individual. Individual purchases avoid the cost associated with a foreign entity or trust. The other methods include acquiring and storing gold through a foreign entity and/or foreign trust.
Individual purchases of gold provide no asset protection benefits against potential future claims of creditors. Foreign entities and foreign trusts provide asset protection benefits that may be used by Americans with adequate liquidity and wealth to pay for the formation of the entities or foreign trusts.
A foreign limited liability company (LLC) may acquire and store gold in its name. Foreign LLC ordinances or statutes provide for LLC protection (limited liability protection). Foreign LLCs are better entities for asset protection purposes than foreign corporations. This is because LLCs (foreign or domestic) provide for the “charging order” protection. For example, if a third party has a judgment against a member for the member’s personal liability, the judgment creditor can charge the member’s interest and receive the income distributed for an LLC in discharge of the liability. The second part of the charging order disallows the judgment creditor from obtaining assets of the LLC equal to the ownership percentage of that member in order to avoid disruption to the other members. Prior to the charging order, a judgment creditor could levy against the assets of the entity equal to the percentage ownership of that member.
A foreign trust provides the maximum asset protection if operated properly and the settlor does not control the foreign trustee. One of the benefits of a foreign trust that may be available with respect to the U.S. Government is discussed below.
A trust is are not an entity or contract; it is a relationship. A trust does not have officers, directors, partners or members. A trust consists of the settlor who forms (settles) the trust, and the trustee that is the legal owner of the trust assets and holds those assets in a fiduciary capacity for the benefit of third parties (beneficial owners or beneficiaries). Foreign asset protection trust laws prohibit the trustee from distributing trust assets to a beneficiary under an “event of duress.” An events of duress includes, among other matters, claims filed against a beneficiary.
One of the requirements for a valid trust is that the trustee, as legal owner of the trust assets, diversify the investments. Thus, the trustee of a foreign trust must include one or more investments other than gold. An LLC is not required to diversify investments.
Please note that under common law the beneficial interests (beneficiaries) take precedence over the legal ownership of the trustee so that if the trustee becomes insolvent, the creditors of the trustee have no right to the assets in trusts that the trustee administers. It is the “relationship”—the concept or definition of a common law trust—that gives preference to the beneficial interests over the legal ownership of trust assets by the trustee.
The federal government most likely can require assets, including gold owned by a domestic LLC, to be distributed to the U.S. members and then turned over to the government. Whether the government can take the same action with respect to a foreign LLC with foreign assets, including gold, is unclear.
Executive Order 6102 signed on April 5, 1933, by President Franklin D. Roosevelt was for “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” This Executive Order declared a national emergency and prohibited the hoarding of gold coin, gold bullion, and gold certificates within the Continental U.S. by individuals, partnerships, associations and corporations. Please note that a trust, which is not an entity but a relationship, was not included.
In conclusion, it is recommended that those who want to provide some life insurance during their lifetimes should consider the purchase of gold, gold coins, and/or silver.