UK Government Powers To Confiscate Deposits Faces Backlash

Today’s AM fix was USD 1,299.00, EUR 946.93 and GBP 783.76 per ounce.
Friday’s AM fix was USD 1,293.50, EUR 943.75 and GBP 780.02 per ounce.

Gold climbed $17.20 or 1.34% Friday to $1,303.50/oz. Silver rose $0.10 or 0.5% yesterday to $19.94/oz.   Gold and silver were both up for the week 0.84% and 0.76% respectively.

Gold added to gains on Monday following its biggest one-day jump in over three weeks on Friday, on investor concern after the poor jobs number Friday.

Gold in U.S. Dollars, 1 Year - (Thomson Reuters)

Gold surged 1.3% on Friday - its biggest percentage increase since March 12. Gold is not far from a one-week high of $1,306.50 hit in the previous session.

Iraq's central bank said on Friday its gold reserves had reached 90 tonnes, after buying 60 tonnes over the past two months to support the Iraqi dinar. 

Federal Reserve Chair Janet Yellen said last week that slack in labor markets showed accommodative policies will still be needed for some time which is also bullish for gold.

Gold in U.S. Dollars, 5 Year - (Thomson Reuters)

Silver for immediate delivery declined 0.7% to $19.83 an ounce in London. Platinum fell 0.8% to $1,438.50 an ounce. Palladium lost 0.6% to $786 an ounce. Palladium prices climbed above $800 on March 24, the highest since August 2011, due to concerns about Russian supply. Platinum and palladium had both gained in the previous six sessions.

Gold is 8.2% higher this year, rallying from its 28% fall in 2013 - its biggest annual decline since 1981.

UK Government Powers To Confiscate Deposits Faces Backlash
Last week, we covered the very under reported but important story about how the UK government now has powers to raid banks accounts and confiscate deposits.

On Saturday the Financial Times covered the story and the fact that the hitherto unnoticed measures are now facing scrutiny and a backlash.

“George Osborne is facing a backlash over plans to give HM Revenue & Customs unprecedented powers to dip into taxpayers’ bank accounts to seize unpaid tax debts,” according to the FT.

MPs, banks and charities want robust safeguards over powers that will allow the Revenue to order banks to pay outstanding debts from taxpayers’ bank accounts, following fears that the measure could be used inappropriately and cause hardship.

Andrew Tyrie, who chairs the Treasury select committee, said the MPs intended to hold further hearings into the new powers, which he said could set a worrying precedent.

Many banks want judicial oversight to apply to the new powers, as they worry about being caught between irate customers and the tax authorities.

“HMRC doesn’t have the best record of getting things right,” a banking source told the FT.

The idea was previously floated in a 2007 consultation, but it was dropped after widespread criticism over the adequacy of the safeguards, the possibility of creating hardship and the risk of HMRC error.

John Thurso, a Liberal Democrat MP on the Treasury select committee, criticised Mr Osborne for slipping the measure out in the Budget in just two paragraphs. “Any advance of powers by the state needs to be resisted unless they can justify it,” he said.

Patrick Stevens, director of tax policy at the Chartered Institute of Taxation, was sceptical that the legislation could be drafted in a way that would apply only to the wealthy. He said: “There are lots of very unsophisticated people out there with more than £5,000 in a bank account. We are truly worried about the vulnerable.”

Robin Williamson, of the Low Incomes Tax Reform Group charity, said he was very concerned about the risk of hardship: “As always the financially savvy ones will find ways around this. The ones that will be caught are the vulnerable.”

“The victims will be people with just enough money to go after but not enough to hire lawyers to fend it off”- said Liberal Democrat MP, John Thurso.

The surreptitious and somewhat underhanded manner in which the legislation was slipped in should give pause for concern. In that way, the measures are similar to the developing bail-in legislation in the UK which is gradually coming into place without any public debate or informed discussion.

Preparations are being put in place by the international monetary and financial authorities, including the Bank of England for bail-ins. The majority of the public are unaware of these developments, the risks and the ramifications.

Download our Bail-In Guide: Protecting your Savings In The Coming Bail-In Era (11 pages)