Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

June 5, 1933: The Dollar’s Day of Infamy

  by    0   1

After the bombing of Pearl Harbor, President Franklin D. Roosevelt called Dec. 7, 1941, “A date that will live in infamy.”

When it comes to the US monetary system, June 5, 1933 should share that ignoble title, because that date marks the beginning of a slow death of the dollar.

Eighty-two years ago, the US went off the gold standard when Congress enacted a joint resolution erasing the right of creditors to demand payment in gold. The move was the culmination of actions taken by Roosevelt that year.

15 06 04 Franklin_Delano_Roosevelt_signs_Gold_Bill_1934


In March 1933, the president prohibited banks from paying out or exporting gold. In April of that same year, Roosevelt signed Executive Order 6102. It was touted as a measure to stop hoarding, but was in reality a massive confiscation scheme. The order required private citizens, partnerships, associations and corporations to turn in all but small amounts of gold to the Federal Reserve in exchange for $20.67 per ounce.

As Peter Schiff points out in his Classic Gold Scams report, despite hefty fines and long prison terms, the government did little to enforce the confiscation order:

Even in the heat of Roosevelt’s confiscation scheme, government troops did not break into people’s homes… Ironically, all the gold actually collected by the Treasury was willfully surrendered in a wave of misguided patriotism, while many ‘law-breakers’ simply kept their gold.”

15 06 04 exectuive order 6102

That’s an important point to keep in mind when coin dealers try to convince you that only their gold coins will remain safe in the next wave of confiscation. Fears of confiscation in today’s world are blown far out of proportion and should not dissuade you from protecting your wealth with highly liquid gold and silver coins.

The purpose of Roosevelt’s executive order was to remove constraints on inflating the money supply. The Federal Reserve Act required all notes have 40% gold backing. But the Fed was low on gold and up against the limit. By increasing its gold stores, the Fed could circulate more notes.

The very next year, the government raised the price of gold to $35.

President Richard Nixon put the final nail in the coffin when he slammed the “gold window” shut in 1971, severing the last ties the dollar had to gold. Nixon uncoupled gold from its fixed $35 price and suspended the convertibility of dollars into gold.

Roosevelt’s moves in 1933 set off a dollar devaluation that continues to this day. A paper offered during the American Economic Association’s 2013 Annual Meeting by Carmen Reinhart and Ken Rogoff reveals the devaluation of dollar after 1933.

In 1913, prices were only about 20% higher than in 1775 and around 40% lower than in 1813, during the War of 1812. Whatever the mandates of the Federal Reserve, it is clear that the evolution of the price level in the United States is dominated by the abandonment of the gold standard in 1933 and the adoption of fiat money subsequently. One hundred years after its creation, consumer prices are about 30 times higher than what they were in 1913.”

15 06 04 inflation since 1776

An article we recently published on the minimum wage illustrates the practical impact of dollar devaluation in our daily lives.

In 1964, the minimum wage stood at $1.25. To put it another way, a minimum wage worker earned five silver quarters for every hour worked. Today, you can’t even buy a cup of coffee with those five quarters. But the melt-value of those five silver quarters today stands close to $15!”

As David Stockman put it, Roosevelt’s moves culminating in the June 5 congressional resolutions “initiated a process of monetary deformation that led straight to Nixon’s abomination at Camp David, Greenspan’s panic at the time of the 1998 Long-Term Capital Management crisis, and the final destruction of monetary integrity and financial discipline during the BlackBerry Panic of 2008.”

The legacy of June 5, 1933 continues today. The dollar continues to devalue. That means over the long-term, the price of gold in US dollars will almost certainly continue to rise.

Get Peter Schiff’s latest gold market analysis – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Silver Demand in Auto Industry Expected to Surge and Other Silver News

The use of silver in the automotive sector is expected to surge in the coming years, according to the feature story in this month’s edition of the Silver Institute’s Silver News. With modern cars using more silver than ever in their advanced technology components, analysts project the auto industry will likely need nearly 90 million […]

READ MORE →

US National Debt Quietly Eclipses $28 Trillion

On March 1, the US national debt eclipsed $28 trillion with no end to the borrowing and spending in sight. It was just last fall that the debt surged above $27 trillion for the first time. In less than five months, Uncle Sam added another $1 trillion to its debt load. And there’s barely been […]

READ MORE →

Go Big on Silver With 1,000-Ounce Bars

Silver enjoyed a moment in the sun when the Reddit investors turned their attention to the white metal. Silver has since faded from the headlines but it remains an attractive investment option. As one portfolio manager put it, sub-30-dollar silver “is the most attractive macro-economic asset in the world.” For investors who want to go […]

READ MORE →

The Danger Lurking Behind Government Digital Currency

China made a big splash when it rolled out its digital yuan and it got a boost when China’s biggest online retailer announced it has developed the first virtual platform to accept the Chinese digital currency. But China isn’t alone in exploring the possibility of digital money. Sweden has developed a digital currency of its own […]

READ MORE →

Government Policy Changes Should Boost Indian Gold Market

Some policy shifts recently announced by the Indian government in its Union Budget will likely have a positive impact on the country’s gold market. India ranks as the second-largest gold-consuming country in the world, second only behind China. The three key policy changes that will likely affect the gold market are:

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now