Can Government Consolidate Gold Bars?
Many invest in gold to protect their savings and investments, yet many worry that the government could seize these precious metals at any moment.
Gold bar theft can be an extreme worry, but there are ways to combat it. We will discuss the history and security concerns related to confiscation in this article.
History
Gold confiscation is an ever-present risk in countries with oppressive governments, leading to many myths surrounding how best to safeguard precious metals at home from confiscation – often perpetuated by telemarketers offering expensive coins as protection.
Roosevelt’s Executive Order from 1933 is often misunderstood as exempting gold coins with recognized special value to collectors of rare and unusual coins; however, this exemption was only temporary and only applied to certain types of American coins. All gold can be seized at any time; therefore having unusual or rare coins doesn’t matter as long as they qualify as being numismatic.
Though gold confiscation has become much less likely, due to most major currencies no longer backed by it, motivation for confiscating it no longer exists as readily.
Legality
There is no historical precedent of governments seizing gold bars directly. However, during times of national distress or crisis governments have traditionally made it much simpler to seize people’s savings instruments like stocks and bonds from people’s savings accounts without touching hard assets such as gems, gold jewelry or precious metals held as hard assets – often leading to war/revolution fleeing safely from areas in need with valuables hidden on them. This led many families to flee war/revolution ridden countries carrying precious metals around their person in case it would otherwise be confiscated from them directly by authorities.
Many less reputable precious metals dealers and telemarketers will falsely assert that certain rare coins are exempt from confiscation; this claim simply cannot be sustained. The 1933 confiscation was due to an Executive Order which expanded World War I-era laws. Congress repealed this legislation in 1974 and President Gerald Ford officially reinstated gold bullion ownership as legal once more.
Additionally, since 1933 the global monetary system has experienced dramatic transformation. Most countries now use fiat currencies which makes seizing bullion more challenging. Furthermore, political landscape has been altered with an emphasis on property rights and civil liberties.
Risks
Modern governments typically do not resort to confiscating gold when seeking an economic response, instead opting for quantitative easing or negative interest rates as more likely approaches.
Even so, holding physical gold and silver poses real risks. If a government declares the ownership of your gold illegal, financial penalties and forceful confiscation could ensue. Storing your precious metals safely – for instance in an established precious metals company’s vault with strong regulations – could act as a good buffer.
Some less-than-reputable dealers and firms promote the false assumption that pre-1933 gold coins possess numismatic value and do not fall under confiscation, although this may technically be accurate; these coins tend to be far more costly and inconvenient for responsible gold bullion owners to hold, plus there’s always the risk they might get rehypothecated during bank bail-ins.
Conclusions
There have been instances of governments confiscating gold during times of crisis. One such instance occurred during President Franklin Roosevelt’s Nationalization of Citizens’ Gold Holdings by Executive Order in 1933, forcing people to give up their bullion in exchange for paper dollars; as part of this move, the official price of gold increased, leaving investors vulnerable and facing losses.
There are various strategies you can employ to safeguard your gold from potential confiscation in the future, one being keeping it out of banks’ reach and away from modern bail-in schemes which act similar to asset seizures.
Use legal structures like trusts and corporations to safeguard your assets. This strategy creates an extra barrier between you and your investments, making it harder for the government to seize them; however, tax implications must also be carefully considered by a competent advisor before taking this route.
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