bank vault with gold bars
When you hear about gold confiscation happening in America, it probably sounds like a scare tactic. This is especially the case if you’re hearing it from someone trying to sell you bullion. Precious metal investors should keep in mind, though, that it actually has happened before.
Back during the Great Depression, a single executive order removed citizens’ rights to own gold. There were some exceptions to the new policy, but they were few and far between. And even after the Depression ended, Americans spent decades unable to own the yellow metal.
At Silver Gold Bull, one of our top priorities is to ensure precious metal investors are as informed as possible. This ensures they’re able to make smart investment decisions. And if you’re just getting into this world, recognizing gold confiscation and the risk of it reoccurring is vital.
When the stock market crashed and the Great Depression began, America was still on the gold standard. In modern times, the government can just print more money to help a damaged economy. While we were on the gold standard, though, we had to have the gold to back it up.
This meant the ability of the U.S. government to inject money into the economy was seriously hindered. Those who had invested in gold knew that doing so would help in situations like this. Unfortunately for these folks, the government knew the same thing.
This is why President Franklin D. Roosevelt issued Executive Order 6102. This order included several requirements:
There were various exemptions to the law. Industrial, professional, and artistic uses typically qualified for exemptions. Coins that held collector’s value were also exempt from gold confiscation. Unfortunately, most people faced stiff penalties for ownership.
After buying citizens’ gold for $20.67 an ounce, the Gold Reserve Act raised the price to $35. The profit from this action funded the Exchange Stabilization Fund — an emergency reserve that has boosted the American economy during some of its most troublesome times.
The issuance of this order was certainly a long time ago, but it remained in effect until the end of 1974. It was then that President Gerald Ford legalized ownership of the precious metal — just over three years after America dropped the last remnant of the gold standard.
The Great Depression seems like the distant past to most people. This may make gold confiscation seem like an “Old World” problem we don’t have to worry about. In reality, there are a few modern examples of confiscation as well. In fact, millions of Americans witnessed these firsthand.
Australian gold coins are among the most beautiful coins you’ll ever see. Back in 1959, though, the country passed the Banking Act. Within the pages of this law, the government granted itself the ability to confiscate private citizens’ gold.
The only condition for this confiscation was for the governor to decide that it was “expedient so to do, for the protection of the currency or of the public credit of the Commonwealth.” Anyone who acquired gold had just one month to turn it over to the Reserve Bank of Australia.
Wrought items and certain coins were exempt from this gold confiscation, but owners of these items were only allowed to sell them to the reserve bank. This law stayed on the books until 1976, so it wasn’t quite as long as America’s confiscation timeline.
Many people who say gold confiscation couldn’t happen now point toward the lack of a gold standard. This is a logical belief since this standard was a major contributor to America’s seizure order. Great Britain had been off the gold standard for over 30 years, though, when it passed its restrictions.
The country’s currency’s value had dropped precipitously since the 1930s. Due to economic fears, many people began storing their bullion overseas. In order to stop the Pound Sterling from losing additional value, the government said private citizens could only own four precious metal coins.
The only way around this was to secure a collector’s license and prove to the Bank of England that you met the definition of “collector.” This law stayed on the books until 1979, so it wasn’t exactly short-lived.
The big lesson to take from this is that there’s modern day precedence for gold confiscation — even with the gold standard being long gone.
It’s scary to think of the government threatening penalties for not turning over your gold. We’ll go over a few strategies to avoid this later in the guide, but the most important thing to know is that modern gold confiscation is unlikely.
This certainly doesn’t mean it can’t happen, but there are a variety of issues that make it improbable. When you understand the following factors, you’ll feel safer in gold ownership.
While the previous section demonstrates that gold confiscation is extremely unlikely, no one can ever say it’s impossible. Unfortunately, this has led to many older Americans getting conned out of their money by slick salespeople.
When you hear of gold coin scams, you likely envision counterfeit items. In reality, many American companies sell very real coins for very unfair prices. They typically target older citizens with this scam, and they warn them about the potential for confiscation.
Instead of simply telling them that gold confiscation could happen, though, they list which coins might have protection. Their estimations could be true, but it becomes an issue when they sell coins at inflated prices. Victims think they’re securing their future, but often, they simply lose their savings.
Avoid falling victim to these scams by buying from reputable dealers.
Many gold coin scams base their entire system on ways to protect against gold confiscation. These aren’t scams because they claim protection is possible — but because they charge inordinate prices for common bullion coins.
In reality, there are a few ways to protect yourself from the potential of bullion seizure. These strategies have a basis on both history and international law. That means there’s solid reasoning that these methods will work.
When the U.S. implemented its gold confiscation plan, it excluded collectible gold coins. This was a logical move since the country needed to focus on building up gold reserves and not owning rare coins.
If you choose to protect your investment by buying rare and vintage gold, though, remember that the past doesn’t always predict the future. If confiscation occurs again, there’s no guarantee it will go by the same rules as last time.
Additionally, never pay more than what a coin is worth. You can expect to pay a premium above spot value, but don’t fall for the insanely inflated prices offered by gold scam companies.
Even if the U.S. government implemented a surprise gold confiscation strategy tomorrow, they’d have no control over foreign countries. This is why many people choose to store their precious metals in bullion vaults stationed in foreign countries.
Can you imagine America knocking on Canada’s door and saying, “give us all the gold in that vault”? Pretty unlikely, right? And even if they did, what are the chances it will work? That’s why Silver Gold Bull has bullion storage vaults throughout Canada and even Singapore.
It’s been nearly a century since the U.S. government first hindered citizens’ ability to own gold. When something goes that long without reoccurring, we tend to view it as a sign that it will never happen again. Unfortunately, we can’t know for sure that gold confiscation won’t resurface.
The silver lining to this potentially dark cloud is that confiscation is unlikely. There are a variety of factors that would make such a move illogical. And even if a situation arose where the move made sense, there are a variety of ways you can protect your investment.
At Silver Gold Bull, we believe our clients have every right to keep the precious metals they purchase. That’s why we offer gold coins with a collectability factor along with safe international storage. Visit our Gold Bullion Purchase page today to see everything we offer.
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