It was on April 5, 1933, in the beginning days of the Great Depression, that President Franklin Roosevelt signed Executive order 6102 “forbidding the hoarding of gold coin, gold bullion, and gold certificates.”
The United States came out of World War I in 1918 a powerful nation as much of Europe lay in ruins. It flew through the “Roaring Twenties” in prosperity. However, during that time many invested in a climbing stock market and bought on margin without funds to cover any losses. When the stock market dipped in late 1928 individuals had to sell at hugely reduced prices to cover their losses in margin trading causing a disastrous plunge in stock values.
The problem involved the banking industry which, at the time, invested in stocks on margin and had too many poorly secured loans, similar to today’s situation. The nation’s economy ground to a halt and millions lost their jobs. Despite closing banks on a bank holiday the nation’s banking system was in jeopardy.
Seeing this situation evolve, many individuals turned their paper money into gold coins and gold certificates. They feared the sort of monetary collapse seen a few years earlier in Germany, where the paper currency became worthless.
In one stroke the President enriched the national treasury and devalued the dollar by confiscating gold. Before the confiscation gold was worth just over $20 an ounce and, after the government confiscated gold it declared that gold was $35 a ounce, devaluing the currency by 40%.
Roosevelt was a member of a wealthy old American family, steeped in capitalism. He did what he did believing that it was his only means of saving the American economy. This fact did not alleviate the distaste many felt as they were threatened with fines of $10,000 or 10 years in prison if they did not go to the local bank and hand in their gold.
Although many claim this could not happen again, the economic times today are worse than any since the great depression. When the government came for gold in 1933 it spared rare, collectable coins. Thus gold bullion has no precedent to be spared but certified rare gold coins have a legal precedent that could survive another confiscation.
For information on certified rare gold coin investments that could be spared a coming gold confiscation call one of our gold experts at 1-800-300-0715.