Not So Safe Deposit Boxes

Much more troubling to me than the crummy economic fundamentals we address so often in this missive and in The Casey Report, are the growing police state and the complete disregard of individual liberties we see both here and abroad.

This news story out of the U.K.:

The raid that rocked the Met: Why gun and drugs op on 6,717 safety deposit boxes could cost taxpayers a fortune

More than 500 officers smashed their way into thousands of safety-deposit boxes to retrieve guns, drugs and millions of pounds of criminal assets. At least, that’s what was supposed to happen. Adrian Levy and Cathy Scott-Clark investigate.

What really happened was that the vast majority of those caught up in the raids (called Operation Rize) were innocent. They had their lives turned upside down and many have been forced into legal trench warfare with police lawyers and told they must prove how they came by the contents of their boxes.

To quote the article:

… This is also a story told through secret legal papers, including confidentiality agreements struck with some vault depositors whose cases threatened to topple the entire operation. Although the police told a judge that 'nine out of ten' of all of the thousands of box-holders were probably criminally minded, criminally connected or felons, the paper trail reveals that perhaps only as few as ten per cent of the boxes have any connection to serious crime…

More worryingly, according to eminent lawyers and barristers, Operation Rize has seen the Yard employ unethical tactics, driving a coach and horses through the new POCA legislation, leaving the Met facing a raft of legal actions that could potentially cost taxpayers millions of pounds. 

Rize is a juggernaut veering out of control,' said one barrister who helped advise on POCA during its passage through Parliament, 'and now a sharp tool that we badly needed to drain criminal cash has been tarnished, potentially damaging it and inhibiting its use'.

Within days of the raids, the police set up a helpline to deal with potential inquiries. They were overwhelmed by the response. One detective told Live: 'Everyone presumed we had bagged a load of villains who would not dare claim their iffy property. But thousands of the box-holders complained.'

Some of the box-holders contacted lawyers. These were people far removed from the criminal underworld. Many had been with the company from the beginning, drawn to the likeable Jewish businessman who ran it. Leslie Sieff founded the company in 1986, although by the time Operation Rize unfurled he'd been bought out by developer Milton Woolf. 

Many of the clientele were families who had fled turmoil, pogroms, coups and wars and long had a cultural preference for locking away money and jewels, building up a vehement distrust for the integrity of traditional banks. Here, stepping down the spiral staircase at the back to the darkened boxes below, they felt reassured that their most important possessions were safe.

One survivor of Nazi Germany in his seventies told us how he had placed a bag of diamonds there - security if ever he or his descendents needed to run again.

'My wife and I had escaped from Germany with nothing but these gems,' he said. 'She sewed them into our clothing before we crossed occupied Europe, reaching Britain by ship when the jewels were snipped out and locked up.'

There was a rabbi too, Yitzchak Schochet, of Mill Hill Synagogue, who said: 'Safety deposit boxes are supposed to be confidential. The whole situation was very unsettling and an intrusion of privacy.'

Another client, an Indian millionaire entrepreneur with connections to the House of Lords, described how he was 'treated like a convicted man just because I had wealth in cash'.

A Hindu priest described to Live how his family's valuables had been carried in the Sixties from Madhya Pradesh, India, to London 'in a gunny sack'.

Among the possessions seized by the police were elaborate handcrafted bracelets, gold rings set with uncut stones, and a bejewelled wedding tikka ornament to be draped on the forehead of a new bride. 'These items had always been in our family,' the priest said, 'We had cash in there too. But now we had to prove how we bought them and where that money, saved over the years, had come from.'…

You can read the entire article here.

The takeaway: I bet there’s more, not less, of this kind of activity to come. So be extra careful where you stash your valuables.

Before moving on, let’s take a quick look at Privacy International’s leading surveillance societies in the EU and around the world.

If you want a better look at the image, please click here. If you’re too enthralled with this missive to go anywhere, I’ll tell you what the colors mean.

Blue = “Consistently upholds human rights standards”

Dark Green = “Significant protections and safeguards”

Light Green = “Adequate safeguards against abuse”

Yellow = “Some safeguards but weakened protections”

Red = “Systemic failure to uphold safeguards”

Pink = “Extensive surveillance societies”

Black = “Endemic surveillance societies”

So, you can see on the map that while Europe generally falls between yellow and pink, the U.S. and most of Asia is covered in black. I bet most people in the U.S. would be shocked to learn that theirs is considered a worse surveillance society than Europe… I know I was.

Why Gold Has a LONG Way to Go

By Jeff Clark, Casey’s Gold & Resource Report

A couple weeks ago, I had my TV tuned to a business show that loves to give predictions on the markets and the economy. On that day, one of the program’s regular guests declared it was time to “short” gold, that it had reached its top, and that the precious metals bull market was over. I’ll try to be nice in my rebuttal.

So, what was his reasoning: technical analysis of wave counts? falling demand? a telling ratio? sun spots? No, he noted that upscale department store Harrods in London began selling gold bullion and coins “over the counter,” ergo, the top was in. Nice try, “Bert,” but this is amateurish. You really shouldn’t be playing with the big boys if that’s the basis of your call.

Yes, gold will someday put in a top, and since the gold price is largely determined by psychology, the end of the bull run will be marked by behavioral types of signals. But calling a top in gold now is like declaring that WWII was over because the Allies won a small skirmish in early1942. To have made such a statement, based on a small, isolated event, ignored the greater forces that had yet to play out and would have made any journalist or military strategist look foolish indeed.

And here’s why Bert looks equally silly today…

If the top were in, we’d be in the midst of an all-out Mania. Are we? Do you get the impression there’s a rush into gold by the greater public right now? Are headlines blazing on the covers of major magazines pronouncing gold as the new investment king? Has Wall Street gone gaga over gold and silver? I ask because these are the true signs that a trend has entered its final blow-off top and would signal it’s time to get out.

I decided to put Bert’s prognostication to the test, and I invite you to play along.

First, I struck up casual conversations with my friends, neighbors, relatives, acquaintances, my wife’s co-workers – heck, even my seatmates on airplanes – angling to learn how much gold they were hoarding, about the killing they were making in gold stocks, and how they were getting rich from all their precious metal investments. (In fairness, I had to exclude my dad, who is an award-winning gold panner, but he’s the only one.)

I found no one – not one person – who is actively investing in anything gold or silver, let alone rushing to buy or hoard the stuff. I had two people who confided that they did own gold, but in both cases it was inherited. A few were curious how they would go about doing such a thing, and fewer asked if I thought they should. Most everyone looked at me blankly when I asked; they didn’t seem to know what I was talking about. When I got a reaction like that, it was pointless to ask about gold stocks. Of the handful I did ask, most had never heard of Barrick Gold, the world’s largest gold producer.

Now ask yourself the same thing: how many of your family, friends, neighbors, and co-workers are buying gold and silver coins? Are any of them giving you hot stock tips about a fantastic gold producer, or telling you about the latest gold discovery made by a company in China? Have any fellow investors told you they’re dumping their brokers because they can select gold stocks better on their own? Anyone telling you they’re going to night school to learn the gold mining business?

Next, I surveyed a large sampling of print media looking for some of these signals that Bert must have spotted. Over the past couple weeks, not one of the major business magazines I reviewed had anything on the cover about gold or silver. Further, there were no articles on precious metals, such as the best ways to buy or store all this gold everyone is buying that surely signals the top is in.

One magazine ran an article about ways to prepare for inflation, and gold wasn’t even mentioned! I did see an ad from the U.S. Mint in another, along with a couple small ads in the back that said they had the best prices on bullion (right beside the teasers for buying a Russian wife), but that was it. Even the portfolio allocation models recommended in the articles made no specific mention of precious metals (one recommended a “resource” fund, but their discussion of it was centered around energy investments).

Other than the articles you seek out, how many mainstream magazines do you see extolling the virtues of gold and silver on their cover? How many bestsellers are prominently displayed at your nearest bookstore that scream at you to buy gold stocks? Are you getting fed up with all the junk mail you get about gold and silver?

Last, I went out of my way to look for stories on gold and silver on TV and radio. About all I could find were the same ads that popped up after last year’s Super Bowl commercial by Cash4Gold. A couple programs quote metals prices, and I was able to find another that actually used the word “gold” in a sentence. It might just be me, Bert, but I can’t find any news anchors talking about the latest gold discovery or that “must own” gold stock. No in-depth special reports from investigative journalists on the hot Canadian junior mining sector. Nothing on my radio about the best ways to store all the silver every smart investor has been buying.

How about you – are you feeling bombarded by TV and radio ads and segments on precious metals? Do you have the clear impression gold and silver are the hot new investing trend around the world? Are you Tivo-ing certain TV shows because of all the great info they provide about picking the next great gold stock?

If we were in a Mania, Bert, all of this would be happening. But it’s not. Those who buy gold coins in the U.S. are still largely viewed as members of a fringe group. There is no public discussion on gold, no insider tips on the latest hot gold stock, no special reports on how to store all the bullion you’ve collected. The psychology isn’t on our side yet. One signal does not a Mania make.

Last and perhaps most important, Bert, are you sure the dollar is done falling? You’re absolutely convinced we won’t see price inflation? Our current debt load won’t pose any future problems? No more worries about foreigners buying all that debt? Obama and Bernanke really have saved the day? 

Bert, send me your shorted gold positions, I’ll buy them from you. And although the gold price could see a correction in the near term, and several more along its journey to “the top,” remember that battle in early1942 and all that had yet to occur before the war was over.

And one more thing: when you finally become breathless to buy gold stocks, I just might be ready to sell them to you.

Are you convinced you have the right gold and silver investments for what lies ahead? For just $39/year, you can be sure you have the best gold and silver stocks, along with specific recommendations on the best places to buy bullion. Check out Casey’s Gold & Resource Report.

Chris again. Thanks for that wonderful article, Jeff. And with that, I must run.

A quick look at the screens and I see that the Dow and S&P 500 are about even, while oil is up to about $78.77/bbl and gold is down to $1,037/oz.

Chris Wood
Casey Research, LLC