Confiscation of Gold Bullion

Is it possible that the government will once again confiscate gold as it did in 1933? Absolutely not. Remotely. Possibly. Probably. Definitely. Those are the answers you will find, each from a well-meaning and possibly well-informed source. Ultimately you must assess the risk for yourself, in light of the historical facts.

The First Gold Confiscation.

President Franklin Delano Roosevelt faced unprecedented challenges in the 1930s as the country wallowed in the Great Depression. In 1933 he issued Executive Order 6102 to confiscate publicly held gold bullion to shore up the dollar, which was then under the gold standard. For those interested in the details of this order, the full text has been attached at the end of this article.

Exception to the Order - and a Possible Portent.

One of the major exceptions to Executive Order 6102 is given in Section 2B: "gold coins having recognized value to collectors of rare and unusual coins." This was at best ambiguous, and the only attempt to quantify the definition came a decade after the order was lifted in 1974. The proposed legislation classified rare gold and silver coins as "collector coins from which the gross proceeds from a sale exceed more than a minimum 15% of the underlying precious metal content." One has to wonder why such clarification was deemed necessary so long after the need for it had expired.

The Legality of Confiscation is Not an Issue.

We must also consider the nature of executive orders. For example, following the passage of the National Industrial Recovery Act (NIRA) in 1933, Franklin D. Roosevelt created the National Recovery Administration (NRA) by a separate executive order. The NRA had far reaching effects on the country, even though it was ultimately invalidated by the Supreme Court in 1935. Executive orders, regardless of their constitutionality, can be in effect for years.

Why We Believe The Threat of Confiscation is Real

It is the opinion of our research team that confiscation remains a very real issue in the current gold cycle. In response to the recent financial crisis the government has had to infuse trillions of dollars into the economy. Dollars are fiat money, intrinsically worthless currency that is used only as a medium of exchange. Because the dollar is backed only by the good will of the United States government, there will always be a threat that holders of U. S. debt will demand repayment in tangible assets. Gold bullion might well be the only asset class that the government can readily take from its citizens to appease its creditors.

Historically no great country's currency has ever survived more than 100 years without losing 95% of its value. However, the value of gold has endured the rise and fall of countless civilizations. In these extraordinary times, it is only prudent to consider the possibility that the government might enact Draconian measures in times of crisis, regardless of whether they may eventually be reversed. We can only surmise which gold products might be exempt from future confiscation. However, our legal system is built on precedent, and the precedent here is Executive Order 6102.