Can Government Consolidate Gold Bars in a National Crisis?
Some less reputable dealers claim that during times of national emergency, government can seize gold bullion for confiscation by the government. Unfortunately, this claim is false.
Governments often intervene to boost or slow the economy through policies like increasing money supply and devaluing currencies; however, confiscating private gold usually isn’t on their agenda. Luckily, there are strategies available that may reduce this risk.
Historical Background
Gold can provide an effective hedge during times of economic instability. Used as a store of value since ancient times, today gold remains one of the most sought-after investments available to us today. Unfortunately, some investors fear the prospect of confiscation on their precious metal investments; though this threat is minimal. Understanding its history and how it might influence future developments is crucial for long-term planning purposes.
President Franklin D. Roosevelt began seizing private citizens’ gold during the Great Depression of 1933 by signing Executive Order 6102 into law, which limited private ownership of gold to enable the Federal Reserve to strengthen its economic position through printing more money. Since FDR had little motivation for seizing private gold anymore; today the only reason the federal government could confiscate your precious metals would be if you possess rare numismatic items with higher collectible values than their gold content.
High Pressure Sales Tactics
If you have invested in gold to protect yourself against an impending financial crisis, the last thing you want is for it to be taken from you by the government and confiscated. Unfortunately, though, this threat of confiscation can be a source of considerable anxiety among retail precious metals investors who fear unsustainable debt levels and runaway central bank money creation. Unscrupulous dealers exploit this fear by selling expensive antique coins at exorbitant prices and encouraging the notion that such coins would be exempt in an event of confiscation.
Dealers usually refer to one specific exemption in President Roosevelt’s 1933 Executive Order calling in gold; that exemption specifically excluded “gold coins having recognized value to collectors of rare and unusual coins” from confiscation. Unfortunately, this myth has been perpetuated by telemarketers to create additional profits through selling older coins at higher premiums over spot price; any form of gold bullion could potentially be confiscated in dire circumstances by governments.
Conspiracy Theories
One prevailing theory claims that gold bullion may be confiscated during an economic crisis by government authorities; this claim has been used by bullion dealers as an aggressive sales tactic to sell expensive collector coins to novice coin buyers; such claims should be treated as high pressure sales techniques rather than truth.
Although it is technically possible for the government to request gold from certain individuals in certain circumstances, its enforcement would likely prove challenging due to several reasons. First and foremost, precious metal transactions often go unreported or are otherwise undocumented and cannot be easily tracked back through chain of ownership.
Second, the government already possesses significant amounts of gold stored away in its vaults – in particular the Federal Reserve has an underground vault with gold bars located five stories below Manhattan – which could potentially be called in during an emergency situation – however such action would send a bad message to citizens and signal that faith has been lost in their currency by doing so.
Legality
Gold confiscation can be disastrous for most people. It can result in financial penalties, loss of your bullion, or even jail time; so it’s essential that you recognize this is an imminent risk and plan ahead to protect yourself against it.
Many who believe a confiscation could not occur today point out that we no longer live under a gold standard system, yet this argument doesn’t hold water. Should a crisis become severe enough, governments have all sorts of means at their disposal for raising funds – including confiscating assets from private citizens – in order to pay their debts and their bills.
Governments typically only seize gold that has monetary uses such as coins and bars; jewelry generally falls outside this scope. Telemarketers that claim that their coins are safe from confiscation (and thus represent an excellent investment opportunity) often simply employ high pressure sales tactics to sell products they claim will protect the investor from government seizures.
Categorised in: Blog