A lawsuit over billions of dollars of unclaimed savings bonds is brewing over whether the Treasury Department or the States should be able to confiscate the minimal remaining value of these certificates of confiscation.  This article will be written from the first person perspective of the victim who has been robbed after investing in these 'risk-free' assets issued by the United States Treasury.

DILIGENT SAVER

In 1965, being a diligent young man my parents rewarded me for graduating from High School by buying me a $75 United States Savings Bond. Following this pattern of savings while I was in the United States Army in 1969 I saved $6.25 per month so that I could buy a $25 dollar savings bond each quarter.

Upon hearing the news of unclaimed bonds being confiscated by either the States or the Treasury Department therefore today, October 19, 2009, I cashed in these United States savings bonds. The original face value of these 3 bonds was $125 Dollars. I paid $93.75 for these in the 1960's.

If I had used gold and silver to buy these same bonds then it would have cost me 2 ounces of gold and 24 ounces of silver.  When I cashed these in today I received $825.11 which consisted of $93.75 in principal and $731.36 of interest.  The value of gold today is a $1,063.90 per ounce and silver is $17.81 per ounce.  Thus the $825.11 dollars represents 47 ounces of silver and no gold.  But that is not all.

TAXES

From the $825.11 dollars there is $731.36 of interest.  At approximately 30% tax rate that amounts to about $219.41 of tax liability.  Therefore, the net amount received is $605.70 and will purchase a mere 34 onces of silver.

OPPORTUNITY COST

If I had kept the gold and silver that I could have bought these United States savings bonds with back in 1965 and 1969 then I would have two ounces of gold and about 24 ounces of silver.  I could sell that bullion for about $2,850. What is wrong with this picture?

LYING GOVERNMENT

Newsmax reports, "The Treasury Department counters that it indeed tries to find owners of the unclaimed bonds, and says it has a Web site where people can simply type in their Social Security number to see if they have one."

Diligent Saver responded, 'Despite paying significant amounts of taxes for decades and using both a Social Security number and valid address while filing I never received a single communication from the Treasury Department about these outstanding savings bonds.  Nevertheless, they were extremely diligent notifying me when they thought I owed more taxes.'

CONCLUSION

There are significant assets available that may be confiscated by the government as unclaimed property.  The Treasury Department does have a tool to locate these certificates of confiscation.

 While many argue that these types of assets are 'risk-free' this example plainly illustrates that these assets are subject to payment, counter-party and political risks.

On the other hand, gold and silver are immune to all of those risks except political.  For example, during some of the time period at issue the Ancient Metal of Kings was considered so dangerous by the United States government that it was illegal for residents in the Land of the Free to own.

But this is typical of fiat currency and the governments which issue it.  Neither the paper tickets nor costumed officials should be trusted.  In every case throughout history their paper coupons have over time proven to be merely certificates of confiscation.  And to think the Chinese own $2T of these silly little coupons!

DISCLOSURES:  Long physical gold, silver and platinum with no position in the problematic GLD or SLV ETFs.