Can Government Seize Gold Bars?
Although governments have never taken possession of gold bullion from citizens without paying compensation, people sometimes speculate it could happen as part of high pressure sales tactics used by bullion distributors.
Today, few major countries are backed by gold. While confiscating large amounts of bullion may be challenging, in certain circumstances such actions might become necessary.
History
In 1933, during the Great Depression and as part of a plan to devalue the dollar and stimulate economic activity, the US government confiscated private citizens’ gold and other precious metals under justification from Article V of the Fifth Amendment which states: “No private property shall be taken without just compensation”.
But the primary goal was to prevent another financial crisis and restore faith in currency. Since then, however, the world monetary system has evolved considerably with governments now having access to much more tools for dealing with economic crises; and social trends have shifted with an emphasis placed on individual property rights and civil liberties.
As such, it has become more difficult for governments to seize your gold today than it was nearly 100 years ago; but confiscation still may occur during times of extreme crisis, leading to various myths regarding how best to safeguard it.
Risks
Gold confiscation might sound terrifying, but it’s actually extremely unlikely. Even during times of economic distress, government officials would likely face harsh resistance if they attempted to seize precious metals. Furthermore, since gold trades internationally it makes controlling its price even harder for one government alone.
Though investing in gold may present lower risks than investing in other forms, it remains wise to take safeguards when doing so. By diversifying investments and keeping up with legal and political developments, as well as securely storing metals you can help reduce risks of confiscation of your precious metals.
Avoid high pressure sales tactics from unscrupulous bullion dealers and conspiracy theories suggesting buying rare coins to protect against confiscation. Such claims often serve to maximize profits for gold distributors; moreover, history demonstrates that gold confiscations targeted monetary metals rather than jewelry; therefore purchasing old or rare coins with the hope of protecting against confiscation would only waste your money.
Strategies
Purchase gold and silver bullion from a reliable precious metals dealer can reduce the chance of confiscation in the future. Numismatic coins may be even more beneficial as they serve a separate function that makes them less susceptible to confiscation.
Investors frequently fear their government seizing their gold and other assets. But the odds of this occurring are relatively slim given most nations have abandoned the gold standard and switched to fiat currencies that don’t depend on physical gold reserves for stability; this eliminates any need to confiscate precious metals as part of an emergency currency reserve boost or prevent capital flight in an economic downturn.
Politics have changed with an emphasis on individual property rights; thus, confiscating gold owned by private citizens would likely spark an angry backlash that is not in the government’s best interests.
Conclusions
Gold confiscation is unlikely today as governments tend to find other means of controlling their economy during times of economic distress. But it isn’t out of the realm of possibility that governments could outlaw bullion ownership if debt levels become unmanageable and there is an urgent need for monetary reform; should that occur, people would either have to comply or face severe penalties and forfeiture of precious metals held within.
Many telemarketers market gold coins as being non-confiscable based on the misconception that Roosevelt’s 1933 Executive Order 6102 exempted rare collector coins from confiscation; but this claim collapses when put under further examination; there is no law or Treasury department regulation to support such claims; rather it’s simply an effort by sellers of precious metals to maximize profits and drive sales volume. Even Roosevelt’s Order excluded numismatic gold coins and bars at that time since governments wanted money over precious metals.
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