I Can’t Pay Taxes – It’s The Constitution!

A Queensland driver has tried in vain to argue it is “impossible” for him to pay a speeding fine because the Australian constitution states the government can accept only coins made of gold or silver as payment for debts.

Indeed, section 115 of the Commonwealth of Australia Constitution Act states: “The state shall not coin money nor make anything but gold and silver coin a legal tender in payment of debts.”

Leonard William Clampett tested the weight of constitutional law in Brisbane Magistrates Court in September last year, after he was snapped by a speed camera driving at 73km/h in a 60km/h zone on Wardell Street, Enoggera.

He argued he could not pay a $200 speeding fine, because “there is no gold and silver coins in common circulation”.

“It’s logical when you look at the paramount legislation in this country, that no matter what money they [the police] request or you award them, I can’t pay,” he told Magistrate Sheryl Cornack.

“I haven’t been able to pay a lot of things over the years. Fifteen years, I haven’t paid any income tax because it’s not possible to pay it.

“I haven’t paid for instance a couple of companies. I haven’t paid Crown Law Queensland $12,500 they claimed from me, because of section 115 of the Commonwealth Constitution.

“It is paramount law in this country, but somehow or other, certain people don’t seem to catch onto that …

(Photo credit: Wikipedia)

“A state, as opposed to the Commonwealth, cannot compel you to pay in other than gold and silver coin. Fairly simple.”

Police prosecutors called on an expert from Melbourne, who was required to travel to Brisbane and review the evidence, to confirm the roadside camera was working accurately when it photographed Mr Clampett speeding.

Despite his argument, Ms Cornack found Mr Clampett guilty and ordered he pay the $200 fine, as well as $76.90 in court costs.

She also ordered Mr Clampett pay police prosecution’s out of pocket expenses, totalling $3500, in obtaining the expert witness.

But, three weeks later, Mr Clampett fought to have Ms Cornack’s ruling overturned by the Supreme Court.

He applied for a judicial review on the grounds no court had previously defined the terms of the constitution.

“My claims, and the action sought based thereon, are as well for the Queen as for myself,” Mr Clampett wrote in his application.

However, Supreme Court Justice Martin Daubney said the basis of Mr Clampett’s argument “has long been discredited”.

“None of the reasons advanced by the applicant amount to any good reason for having instituted the present application,” he stated in a written judgment, published this week.

He did not comment further on Mr Clampett’s argument regarding constitutional law.

Justice Daubney dismissed Mr Clampett’s application.

Related articles

• Utah Expands Legal Tender in the State (mb50.wordpress.com)
• States To Use Gold and Silver as Legal Tender (activistpost.com)

Gold and Silver Prices Weekly Outlook for April 16-20

It’s was a good year so far for bullion traders as the prices of both gold and silver didn’t do much or well during passing months. Last week gold price started off strong but soon changed direction and decline and finished the week only slightly above its initial starting price for the week. Silver price has done even worst and declined on a weekly scale. The renewed fears and concerns in Europe and the possible slowdown in the U.S labor market may have been among the factors pulling gold and silver prices up during last week. This sentiment may continue this week as there are several U.S related reports including housing starts, Philly Fed and existing home sales. If these reports will be positive or better yet very positive then I speculate bullion prices will decline; alternatively if ECB President will talk of another LTRO or SMP, and if Germany will continue to show growth (on Tuesday German ZEW economic sentiment report and on Friday German Business Climate Survey) then the Euro may rally which will bring gold and silver prices up again. So which of these events will prevail in affecting bullion? When in doubt go with the U.S especially when it comes to gold and silver.

  Here is a short overview and a forecast for the upcoming week of April 16^th to 20^th; this includes a short description of the main news items, public speeches, and events that may have affect precious metals prices during last week.

In this projection I use charts and a fundamental analysis to examine how the upcoming events and financial publications during the upcoming week may affect the daily percent changes of gold and silver prices.

Gold price slightly increased during last week by 1.85%; Silver price, moderately fell on a weekly scale by 1.07%;

During last week the U.S jobless claims showed an increase in initial claims; this news may have helped precious metals prices to rise. But by Friday China’s GDP came out and showed a growth of only 8.1% – the lowest since 2009. This news turned the direction of gold and silver and they sharply decreased on Friday.

The U.S PPI and CPI also were published on Thursday and Friday, respectively but didn’t seem to have much effect on bullion prices.

During last week the Euro edged down against the U.S dollar by 0.15% (on a weekly scale); on the other hand, other “risk” currencies such as the Australian dollar slightly appreciated against the U.S dollar during said time. The opposite direction of the Euro/USD compared with the direction of AUD/USD may have been among the factors to pull gold and silver prices into different directions and thus present an unclear trend during last week for both metals.

The video link above provides a broad outlook for the main news, public speeches and events that may affect gold and silver prices during the week of April 16^th to April 20^th; the video includes reviewing the main reports, events, decisions and news items that will come out during the upcoming week. Some of these reports and events include: U.S. retails sales monthly report, U.S housing starts, Canada’s rate decision, ECB President speech, MPC meeting, Philly Fed Manufacturing Index, U.S existing home sales monthly update and U.S. jobless claims weekly update (just to name a few).

For further reading:

• Gold and Silver Prices Outlook for April 2012
• What Are the Potential Outcomes for Gold Price in 2012?

Tags: Gold prices forecast, silver price outlook April 2012

Gold and Silver Prices Finished the Week Falling –Recap April 13th

Precious metals prices changed direction and after they had sharply rose on Thursday, they have finished the week falling. Crude oil prices also changed direction and slipped. Natural gas prices (spot price) also declined while the future price remained flat. The Euro traded sharply down against the U.S. dollar, along with many other currencies including the Australian and Canadian dollar.

Here is a summary of the changes in precious metals and energy commodities for April 13th, 2012:

Precious Metals:

Gold price sharply declined by 1.21% to $1,660.2; Silver price also decreased by 3.49% and reached $31.39. During April, gold edged down by 0.7% and silver by 3.37%.

The Euro/USD fell yesterday by 0.83% to 1.3078; furthermore, the U.S Dollar sharply depreciated against other exchange rates such as the Aussie dollar.

Oil and Gas:

WTI price slipped by 0.78% to $102.83 per barrel; Brent oil also decreased by 0.15% to $121.58 per barrel;

Following these changes, the difference between Brent and WTI oil prices settled at $18.75/bbl. During the month, WTI declined by 0.18% and Brent oil declined by 1.8%.

The Henry Hub future (May delivery) remained unchanged again at $1.98/mmbtu; the Henry Hub spot price declined to $1.86/mmbtu; the difference between the spot and future reached $0.12/mmbtu, i.e. Contango. A Summary of Changes for April 13th:

The table below includes: closing prices, daily percent changes, and daily changes:

For further reading:

• Gold and Silver Prices Outlook for April 2012
• Weekly Outlook for April 9-April 13
• Gold and Silver Prices Weekly Outlook for April 9-April 13

Tags: Gold price, silver prices

Does Gold Investing Pay?

Gold Investing yields no income. But does it make life cheaper in future…?
 
WHAT’S THE POINT of investing?

Plenty of people below 50 today – and a good many older – might well wonder, says Adrian Ash at BullionVault.

Two stock market crashes, two recessions and a global house-price slump make the last decade a worse advert for investing than One Direction are for clean-living youth. Yes, silver and Gold Investing stand out in contrast, but they don’t actually yield any interest. Nor do cash, bonds, Treasuries or stocks anymore.

But while the point of investing might be hard to see today, its purpose is plain:

“Investing [is] the transfer to others of purchasing power now with the reasoned expectation of receiving more purchasing power – after taxes have been paid on nominal gains – in the future.”

So says Warren Buffett, grand old sage of stock-market investing, defending his methods (and attacking Gold Investing despite its 10-year outperformance of everything else but silver) in his recent letter to shareholders. Put another way, investing aims to make life cheaper in future, in terms of what you’ve already amassed today.

Put in $10 and get $20 back – with inflation failing to eat all your gains – and you’re ahead. Like Buffett says, it’s real purchasing power that matters. So here’s what US citizens have been up against over the last 65 years.

In the raw, this chart says you now need $2.30 to enjoy the quantity of goods and services you got for 25¢ back in 1957.

Few people keep their spending cash under the mattress, however, and time was banks paid interest. So here’s how holding cash in the bank has performed as a way of beating the cost of living. The chart also shows how Gold Investing compared, too.

As you can see, putting cash in the bank has helped defeat inflation over the long term, even after you’ve paid tax on the income. But it hasn’t stopped the cost of living from rising in between, and it hasn’t worked anywhere near as well as Gold Investing instead – again, with tax deducted from the nominal gains, just as Warren Buffett reminds us (and applied at the current 28% rate across time to keep things simple).

Of course, the official Consumer Price Index is subject to doubt. The methodology has mutated so much, it’s hardly the same index today as it was in the late ’90s, let alone six decades ago. So here’s how the same two investments – cash on deposit and gold, both after tax – have helped cut the cost of commodities, as measured by the CRB Continuous Commodity Index.

Yes, the CCI index has also been subject to change, but the raw inputs remain the most heavily used natural resources (crude oil, copper, wheat etc) and the computational changes are tiny next to the mutation of the official Consumer Price Index.

As you can see, Gold Investing has indeed paid off over the long run. It’s also beaten cash-in-the-bank, too. But not always. Gold has lost purchasing power – the purpose of investing, remember – when cash has gained it. Gold has become more valuable in terms of “stuff” when cash has lost value.

Looking to make Gold Investing pay today…? Slash your costs without risking your property by using world #1 online, BullionVault…

Gold Investment in 2012: The Bullish and Bearish Signals

Key factors from this week’s GFMS ‘Gold Survey 2012′…

THIS WEEK saw the launch of ‘Gold Survey 2012′ by Thomson Reuters GFMS, the world’s foremost research firm focusing on precious metals. For those weighing up the pros and cons of making a Gold Investment this year there were both bullish and bearish signals, writes Ben Traynor at BullionVault.

Here are some highlights:

Bullish Signals

1. Gold Investment demand is expected to set a new record in 2012

GFMS expects Gold Investment demand to be the main driver of Gold Prices this year, as it was in 2011. Furthermore, the consultancy expects investment demand for gold to set a fresh all-time high of close to 2000 tonnes in Gold Bullion terms.

A key driver of Gold Investment, says GFMS, is likely to be ongoing loose monetary policies adopted by the world’s central banks.

“A corollary of all this monetary largesse,” says GFMS’s global head of metals analytics Philip Klapwijk, “is fears about resurgent inflation, and that becomes all the more likely if oil prices motor higher should tensions get any worse between Iran and the US.”

2. Physical Gold Investment demand continued to be strong last year

Investment demand for physical gold saw “an excellent performance” last year, Klapwijk told the audience at the London launch of ‘Gold Survey 2012′.

Europe, China, Thailand and the Indian subcontinent all saw growth in physical gold bar investment (investors in North America, as Klapwijk pointed out, tend to prefer Gold Coins to Gold Bars).

On a global level, combined demand for coins and bars was 1543 tonnes – a 30% gain on 2010, and a new all-time record. Indeed, the majority of Gold Investment in 2011 took the form of physical investment, GFMS says.

The significance of this is that investments in physical gold tend to represents “stickier” investments than other forms of getting exposure to the metal (for example buying Gold Futures) – meaning it would probably take more for such investors to exit the positions they’ve built.

 That said, there is obviously a limit to most investors’ stickiness. A lot will depend on whether, as GFMS expects, the economic environment will continue to be supportive of Gold Investment, with negative real interest rates and fears of inflation prevailing in most parts of the world.

3. Scrap supply appears to be flat

On a global level, scrap supply fell by around 50 tonnes 2011 – equivalent to almost two thirds of the year’s Gold Mining production growth. This was the second consecutive year-on-year fall for scrap supply.

Only Europe saw significant growth in scrap Gold Bullion supply last year (old jewelry, gold watches etc.), most likely the result of distressed selling prompted by the Eurozone crisis.

North America and Latin America meantime posted modest scrap supply growth. East Asia and the Indian subcontinent meantime saw scrap supply fall, as did the Middle East, where it dropped by over 100 tonnes.

Although GFMS says it expects scrap supply to rise this year, another traditional source of supply – central banks – is expected to be absent (see below). GFMS points out there was a “secular increase” in supply from scrap, producer hedging and official central bank sales between 1987 and 1999 – a factor which it reckons contributed to the lackluster Gold Price during that period. 

By contrast, supply from these sources has been flat since 2000, despite a sharp jump in scrap supplies at the onset of the financial crisis. This period in flat supply has broadly coincided with gold’s bull market.

4. Central banks are expected to keep Buying Gold

GFMS expects central banks to remain net gold buyers this year, although there may be a slight dip on last year’s figure, with net official sector buying having risen 491% year-on-year in 2011.

The swing to net buying by central banks is a key factor behind the flat supply picture of recent years that was noted above. Signatories to the Central Bank Gold Agreement have made what GFMS calls “trivial sales” in recent years, while emerging market central banks have been Buying Gold in significant quantities.

Bearish Signals

1. Gold Mining supply is expected to continue growing this year

Worldwide gold mine production rose for the third year running in 2011. Last year saw an annual gain of 2.8%, or 78 tonnes.

New Gold Mining operations contributed 47 tonnes of supply, while Africa was the region that saw the strongest growth, increasing production by 51 tonnes (despite its largest player, South Africa, seeing a five tonne drop).

Gold mine production has entered a “new era”, Klapwijk told the London launch, with GFMS expecting a further 3% growth this year. 

2. A lot of Gold Investment is required just to maintain current prices

Rising mine supply contributes to what GFMS terms the gold market “surplus” – the difference between combined mining and scrap supply and fabrication demand (jewelry plus industrial uses).

GFMS estimates that this leaves a “surplus” of gold supply equivalent to around 110 tonnes. Gold Investment therefore needs to take up that slack.

At current prices “purchasers of bullion need to take gold to the tune of $130 billion out of the market for it to clear,” said Klapwijk this week. One attendee at the launch asked whether there might be a case for saying many western investors are now overinvested in gold.

Klapwijk agreed such a case could be argued, and that many wealth investors interested in gold have probably already built their positions. He also pointed out that institutions such as pension funds and sovereign wealth funds – where Gold Investment remains relatively rare – could still offer some scope for growth.

3. Hedging activity by miners can now only be a source of supply

For much of the 1980s and 1990s, gold miners would hedge their price risk by selling future production forward to lock in the current price, adding to current supply and putting downwards pressure on the Gold price.

This process went into reverse as the bull market got underway. With Gold Prices rising, producers began to de-hedge, buying back positions and thus contributing to gold demand.

Measured as the total outstanding forwards and loans, plus gold options positions weighted according to their sensitivity to movements in Gold Futures (i.e. an option’s delta), producers’ overall hedging position last year was equivalent to 157 tonnes of Gold Bullion. Last year was the first year in over a decade that net hedging was positive, the producers in aggregate adding six tonnes to their combined position.

By contrast, hedging positions were equivalent to around 3000 tonnes in 1999 and 2000. Most of the de-hedging – which contributed to the demand side – appears to have been done.

“[Producer hedging] cannot be a source of demand in future,” said Klapwijk.

“It can only be a source of supply. The question is: how much supply?”

Klapwijk noted, however, the most of the hedging seen last year appeared to be related to specific mining projects, adding that there seemed little appetite for strategic hedging against a fall in Gold Prices.

4. Gold jewelry demand is expected to fall again

Gold jewelry fabrication demand fell 2.2% in 2011 – though given the rise in Gold Prices, the fact that the fall wasn’t larger led GFMS to describe this source of demand as “resilient”.

The bulk of fabrication demand was again accounted for by developing countries, where gold jewelry is often bought for investment as much as adornment purposes. 

Although most of the world’s regions saw a fall in gold jewelry fabrication in tonnage terms, there was a slight gain in Russia and more significant growth of around 40 tonnes in East Asia, which “boils down to China” said Klapwijk.

Despite this eastwards demand pull, though, GFMS expects gold jewelry consumption to fall again this year, citing high Gold Prices and a slowdown in global growth. Jewelry consumption however “is still expected to remain above 2009′s historically depressed level” says GFMS.

The Outlook for Gold Prices

Weighing up the above factors, and many more besides, GFMS forecasts an average Gold Price in 2012 of $1731 per ounce, with a range of $1530 to $1920. 

Klapwijk adds that “a push towards $2000 is definitely on the cards before the year is out, although a clear breach of that mark is arguably a more likely event for the first half of the year”.

Of course, short-term gains are not the primary reason most people make a Gold Investment, especially not those Buying Gold in physical bullion form. From developing nations in the East to the quantitatively eased economies of the West, people are turning to gold as a vehicle for defending the value of their wealth and an insurance hedge against tail risks. 

The dynamics behind most Gold Investment will continue to play out well beyond the end of this year.

Thinking of investing in gold?…