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Should I Be Worried About Gold Confiscation?

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This article was submitted by JD Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.

One of the common questions we hear from gold buyers is, “Is it possible that the government might come after my gold and confiscate it?”

In a time when the governments are waging a war on cash, it’s not hard for people to imagine that a war on gold is next.

There is some precedence for this, after all. On April 5, 1933, Franklin D. Roosevelt’s Executive Order 6102 “[forbade] the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” Americans who owned gold were told to deliver their gold to the bank and in exchange receive paper dollars of equivalent value, $20.67 per ounce at the time.

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To be very clear though, contrary to common belief, the government did not conduct a widespread seizure of gold, nor did it go door-to-door nor systematically raid safety deposit boxes. While a $10,000 fine and ten year prison sentence threatened the masses into obedience, only a handful of sting operations were conducted against a few offenders to serve as an example.

While the fear of a modern-day door-to-door confiscation is understandable, the fact of the matter is that it holds little weight, and is highly improbable within the current political and financial landscape in the US. The conditions that prompted the confiscation of 1933 are no longer relevant in today’s financial system, nor would a confiscation be successful.

In 1933, the United States found itself in the thick of the Great Depression. With widespread business and bank failures, people began to rush to get their money out of the banks before it could disappear. The government felt it had no recourse but to use inflation and fiscal stimulus to revive the economy, encouraging investors to put their money back into the economy.

Inflation was not easily achieved under a gold standard. At the time, there was a 40% gold reserve standard. The government confiscated gold to increase gold reserves and make it possible to increase the money supply. The confiscation of 1933 was not a tactic to raise revenue, but a monetary move to increase inflation.

We live in a different time today. Unlike in 1933, there is no gold standard and the Federal Reserve has complete authority to expand the money supply with no reserve requirements. In other words, the government doesn’t need your gold. The fed has unrestricted ability to implement monetary policy at its own discretion.  There is a vast array of tools in the fed’s monetary belt, whether that’s another quantitative easing strategy, or a newer strategy akin to the “bail-in” as utilized in Cyprus in 2013, or a “haircut” on bank or retirement accounts. The alternatives to gold confiscation offer much lower hanging fruit for a hungry government.

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A widespread seizure of gold would be no less difficult today than in the 1930s. Gold sales remain unregulated in the United States, so when a person purchases physical gold or silver, there is no reporting conducted, nor is there reporting when a person sells physical gold or silver, except for specific bullion products and thresholds. No one is completely certain what percentage of Americans own physical gold or silver, nor does anyone know who those individuals are. Gold confiscation would be incredibly cost-inefficient, impossible to implement, and a political suicide tactic for any politician foolish enough to consider it.

Gold remains the premiere safe-haven asset, unmatched it its level of security, privacy, and liquidity. Gold owners should take comfort knowing that gold is safe to own and avoid the scams of “confiscation-proof collectibles” and similar bullion products that use the fear of gold confiscation as prime marketing to sell high-profit coins.

If you don’t own physical precious metals, it’s time to switch into physical gold and silver; they are the only money that governments can’t control and unlike the dollar, they aren’t going anywhere.

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13 thoughts on “Should I Be Worried About Gold Confiscation?

  1. I will consider it a miracle if my post sees the light of day, because silver WAS taken by EO 6814 on August 9, 1934, see front page of the NY Times August 10, 1934, priced at 50.01 cents per ounce and here is 312 pages of proof from the Commercial & Financial Chronicle, New York Times and many other sources http://cache.silver-investor.com/charlessavoie/cs_summer09_PreciousMetalsConfiscation.pdf
    By the close of February 1937, 113,031,000 silver ounces were taken by the Treasury Department. Silver—-was never taken? I continue to rub my eyes at “experts” saying so.

  2. Ron says:

    He’s right, there is little chance of confiscation because the United States is no longer on the gold standard. And even if the USA were to go back on the gold standard there is still over 8,000 tons of gold in Fort Knox … yes I believe the gold is there, albeit the Fed may not have all the gold they claim to have. If that were not enough gold they could easily buy how ever much more they needed from private citizens, especially if the price were to go up, and then just add the cost to the national debt. Any cost to the government would be quickly offset by golds upward spiraling price. And besides, whats an another couple hundred billion to the government when they’re already 20 trillion in debt? BUT, we also live in a far more letigeous society than we did when FDR confiscated gold in the 1930’s … if they were to now try to confiscate gold there were would be one mother loving class action lawsuit against the government.

  3. Nick Elway says:

    I meant to just disagree with “silver never was”
    You could be right that “We live in a different time today”. Right or wrong, we shouldn’t have to wait too many years to find out.

  4. bob gelder says:

    Why would the government mint gold coins and then sell them to the public for decades, only to attempt to confiscate them later? If anything, they would impose a large tax when individuals sell their gold to a brokerage.

  5. Mitchell says:

    Despite this poorly researched and factually incorrect article. Prepare for gold, silver and precious metals confiscation. Directly in contrast to the article, the 1933 gold confiscation was a revenue generator. After the confiscation, gold was repriced and the profit was given to a new government arm called the Exchange Stability Fund. The most powerful us government branch which is never mentioned, not even here.

  6. Jeanne says:

    There are no reporting requirements, but they don’t need that. They already have a record of anyone who has bought metals online — in the NSA’s bulk data collection records.

  7. Dawn says:

    True US debt is over $210 trillion when you include unfunded liabilities. I am not sure why people rarely include the unfunded debt when they speak about these things b/c from what I understand that too has to be paid – by the people of course and not by those who is mostly responsible for this financial mess, not only in the US, but the world.
    If WE are NOT going to make those responsible accountable, then WE deserve ALL the sht that’s coming.

  8. Robert says:

    Another note on the incorrectness of the article is that Jim Rickards says that the money supply didn’t even come close to being maximized before confiscation. Therefore, confiscation was for other reasons. Another observation is the misunderstanding of the commentators that “lawsuits” will temper the government action. The government has shredded the constitution and the Dept of Justice is a joke (Hillary). Good luck hoping to get justice. I notice that the banksters are not in jail.

  9. Jake says:

    I too tend to disagree on many levels. First, I do not believe that the US still has gold in Fort Knox. The US Government has blocked any attempt at an audit or anything else, “since 1973”. In 1933, Americans believed that their government was just, and people had a stronger sense of “doing the right thing”. Today, no such tendency exists, so gold and silver would be more difficult to confiscate. But at the same time, government has become less accountable and more lawless, so public outrage, Congressional appeals or Class Action Lawsuits will go nowhere. When the economy crashes this time, it’s the dollar that will lose most of its value and there is only one way I know of to get that value back in the short term. Backing by gold and silver.
    Further, Obama has carefully crafted several Presidential Orders allowing government to confiscate your stored food, fuel, etc. in the even of a national emergency. And they (he) gets to determine the definition of a National Emergency. So I remain concerned, but not deterred.

  10. MaS says:

    Valuables taken by force = robbery.
    Taken – 20.67; then jacked the sell price to 35.00 per oz.
    The writer should be caned?

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