If you’ve visited a few gold selling websites, you might be under the impression that the most imminent threat to the few remaining Americans interested in saving and investing is gold confiscation.
Are You Concerned About Losing American Gold Value, Because of Confiscation by the Government? Here are the facts.
I’ve been told that people who collect and hold gold are fanatics. I don’t consider myself fanatical, only prudent. I will try to present the relevant facts from an unbiased viewpoint.
In 1933, President Roosevelt issued Executive Order 6102, prohibiting the private holding of gold. It required US citizens to turn their gold bullion over to the Federal Government, or face a $10,000 fine. That’s close to a million dollars today, or 10 years imprisonment.
For private citizens, the order listed the following exemption: Gold coins in an amount not exceeding in the sum of $100, which was about 5 troy ounces per person. Also included were gold coins having rare and unusual value.
True numismatic coins are very rare coins that collectors purchase for their historical and aesthetic qualities. These coins might retail for $100,000 or much more, while only containing $1,400 worth of gold. Even if the value of the gold in the coin changes, the gold content is only a tiny fraction of the coin’s actual worth.
If your purpose for buying gold is to protect yourself in an economic collapse, you should buy bullion, not numismatics. If however, you appreciate the coin’s numismatic qualities, you should pay the premium for it, knowing it will also lose more of its value in really bad times.
Is gold likely to be confiscated again?
In 1933, the United States was still on a gold standard, meaning every 20.67 paper dollars could have been “redeemed by the bearer on demand” for a troy ounce of gold.
Since Roosevelt had many public works projects to finance, he confiscated gold, and then devalued the currency so the exchange rate became $35/oz. Americans immediately saw a 40% drop in value in their money.
During this time, foreign governments holding US banknotes were also exchanging them for actual gold, because we were under a gold standard. Gold at that time was commonly owned by Americans.
If Roosevelt had devalued the dollar without first confiscating American citizens’ gold, then whatever savings people had in physical gold would have been immune from this deceptive act.
After Nixon eliminated the gold standard in 1971, gold is no longer considered a currency. The printed paper dollar has been the only legal tender for over 40 years, so it must be accepted for payment of all debts.
Unlike having a standard, non-inflatable value for our currency as in Roosevelt’s time, the US president no longer needs to confiscate gold to devalue the dollar. Now, money is simply printed to finance excessive government spending.
If the federal government decided to default and needed gold to pay off its creditors, it already holds most of the gold available in this country. Raiding private gold holdings would certainly be a very last resort. If Washington for some reason were to choose the confiscation route, we’d already be in complete chaos. The entire free market economy would have quit functioning.
The best protection in this case would be to have your gold stored safely at home or off shore, not in a safe deposit box at a bank. It would be too easily seized when stored in a bank, should we ever reach that level of dysfunction.
Even in the heat of Roosevelt’s confiscation plan, government troops didn’t ever break into people’s houses. All the gold collected by the Treasury was willfully surrendered in misguided acts of patriotism.
In the end, you should just buy the gold you like, and store it prudently. Learn from our collective past mistakes, and never, ever give it to the government.
If you are interested in buying gold or silver bullion at the lowest price, check out BullionVault.
If you are interested in learning more about rare American coin, or foreign coin collecting and investing see NumisMaster from Krause Publications.