Can the Government Take My Gold?
Precious metals investors understandably share a genuine concern that the government could seize their gold, particularly given its unsustainable debt levels and ongoing central bank money creation.
Although America no longer uses gold as backing for its currency like in 1933, its government may still try to seize your gold through a windfall profits tax.
When countries find themselves in financial difficulty, governments may attempt to take control over people’s assets by seizing bonds and stocks from citizens – as these instruments may become worthless due to currency devaluation (something the government could engineer). Instead, governments often request gold from residents which is uncontrollable by them.
While we no longer abide by a gold standard and the government doesn’t confiscate assets like they did under Roosevelt, it remains vitally important that one understands that governments may change rules and laws at any time – this applies even for alternative investments like digital gold.
Many telemarketers will recommend European coins as less vulnerable to confiscation due to an executive order issued by Roosevelt that exempted “gold coinage having special value to collectors.” Unfortunately, this is only an urban legend; the US government still requires reporting transactions over $10,000 and to protect your gold best you should store it abroad in a country which prioritizes bank secrecy and privacy such as Austria.
Gold confiscation might seem remote, especially given that governments rarely confiscate other instruments like stocks or savings accounts. But if you are investing in physical gold as part of an attempt to safeguard against economic or monetary crises, then understanding its potential risks should not be overlooked.
One of the most infamous cases of “gold confiscation” occurred during the Great Depression when President Franklin D Roosevelt issued an Executive Order nationalizing citizen’s gold holdings and forcing them to sell it at well below market rates for paper dollars at well below their market rates – although technically this didn’t constitute confiscation as citizens were compensated for their bullion holdings.
Telemarketers often claim they’re selling coins exempt from government confiscation, yet this claim can be misleading. Even if it is rare and numismatic, governments can require you to report any purchase worth more than $10,000 and require reporting by individuals purchasing bullion coins instead. To protect your investment and avoid reporting requirements altogether it is recommended that bullion purchases should be chosen over coin investments.
Gold cannot be confiscated directly by governments like stocks, bonds and savings accounts can. Instead, governments typically request citizens hand over their precious metals in exchange for paper money.
Although governments occasionally impose taxes on gold, this practice is rare and would present significant political risk as many owners of this precious metal are wealthy and support political leaders through donations or other forms of support.
Investors must pay sales tax in their state of residency. Some states provide exemptions when it comes to investing in precious metals as investments or purchasing large amounts of rare coins, so investors should always research local tax laws prior to making any purchases. Unscrupulous dealers may try using threats of possible confiscation as leverage to raise prices in order to appear more expensive to potential buyers.
Smart investors know that gold can be an asset worth investing in during times of economic instability. Unfortunately, however, governments can seize your gold should they feel it necessary; thankfully there are steps you can take to lessen this risk of confiscation.
Storing gold outside your country of residence is one way to decrease its likelihood of confiscation, while keeping jewelry or coins stored with it is another means. That is why so many people wear large gold chains; this isn’t a sign of wealth but simply an attempt at protecting their investments from possible confiscation.
Although it is unlikely that a major country would confiscate gold today, no one knows what lies in store in the future. Being prepared and developing an anti-confiscation plan are critical components to survival in today’s uncertain economic climate.
Categorised in: Blog