Reprinted from 04/05/2007 on the BullionVault web site.
DID YOU SEE that the US Department of Justice indicted on-line firm e-Gold on charges of money laundering, conspiracy and operating an un-licensed money transmitting business?
The US government claims e-gold’s easy-to-use private transaction service makes it easier for criminals to launder money. For good measure, the Feds added that a digital payments system in gold would be favored by terrorists, child pornographers, and other real or imagined enemies of the nation-state and civil society.
Did it occur to the Feds that maybe people want to use gold as money because they have no confidence in the fraudulent, counterfeit product currently printed by the US Treasury?
Governments fear gold because it competes with their own paper currency as a viable and preferred means of exchange AND a store of value. So, under the guise that only people with something to hide would use a digital payment system backed by gold, the US government is hoping to obscure what the very existence of a company like e-gold signals: a growing lack of trust in the money of the American government.
The huge bull market in resources and resource stocks is also a sign of U.S. dollar diversification. Investors and foreign governments are storing (and hoarding) their wealth in more tangible sources of value rather than US currency or bonds. If anything, the Department of Justice’s attack on e-gold is a sign that officials in Washington are getting nervous.
They don’t want any competition for the dollar. They have lawyers and jails and are willing to use both.
Incidentally, we asked a lawyer friend of ours who works for the Department of Justice what he thought of this case. Off the record he wrote:
“I wonder how, with all that anonymity [in the creation of e-gold accounts] the government will show that the company knew that they were receiving money from these illicit sources. This is the crux of the case. Knowingly receiving stolen property is a crime and having any involvement with kiddie porn is probably enough for a jury to convict anyone, but I would venture a guess that every bank in the world, without exception, possesses proceeds from criminal gains. However, most depositors don’t inform the teller where the deposited money came from.”
The US government has ruined American money. It is the biggest fraudster of them all. People are seeking alternatives like e-gold to protect themselves from the government’s monopolistic debasement of the currency. Trying to make alternatives to that money illegal or criminal doesn’t change the fact that the money is suspect. It just alerts the public that something is horribly wrong with America’s currency.
This is good for gold, if you can keep it.
Formerly editor of Strategic Investment with Lord William Rees-Mogg, Dan Denning is an independent investment analyst now based in Melbourne, from where he edits the Australian edition of The Daily Reckoning. He is also author of the best-selling The Bull Hunter (Wiley & Sons).