What Kind of Gold Cannot Be Confiscated?
People often keep some of their wealth in gold bullion to protect against possible confiscation of assets by governments, though unfortunately there are no legal protections against this happening.
The misconception that certain kinds of gold are exempt from confiscation stems from Roosevelt’s Executive Order calling in gold, which excluded coins recognized for special value to collectors of rare and unusual coins. Telemarketers promote this myth so as to sell high-priced coins more easily.
Coins
One of the primary concerns among gold investors is that their precious metals could be confiscated by government, particularly for those purchasing bullion as an insurance policy against economic or monetary instability.
Though confiscation is relatively uncommon today, it has happened before. Most notably during the Great Depression in 1933 when President Franklin Delano Roosevelt signed Executive Order 6102 nationalizing gold and mandating citizens to turn in all coins and bullion to the federal government.
The Order did not apply to numismatic gold, often sold by precious metals dealers to make higher premium “collectable” coins seem more valuable. However, it was changed in 1959 to allow confiscation when necessary “for the protection of currency or public credit”. Luckily for most countries participating in global finance systems today and having signed international agreements that may prevent outright nationalization attempts of gold.
Bullion
Many gold investors seek to protect their bullion investments from banks in case of a crisis, due to fears about government confiscation. It’s important to remember that governments typically only seize coins and bars during times of emergency; jewelry tends to remain out of reach since its discreet form makes it hard for officials to seize it quickly.
Bullion can be an ideal investment as a tangible asset that you can store safely at home, acting as both an inflation hedge and wealth preservation mechanism. Bullion also allows you to protect your wealth and escape banking system’s hold over it.
There have been reports that certain coins cannot be confiscated, yet these claims lack credibility. Telemarketers use such claims to promote expensive coins; often citing Roosevelt’s executive order as proof. Unfortunately, however, this claim is false as Roosevelt’s order exempted only certain numismatic coins with special collector value from confiscation; gold bullion was still subject to confiscation laws.
Jewelry
Gold confiscation refers to when the government takes away an individual’s gold bullion or coins in exchange for an agreed upon sum of paper currency, and has occurred numerous times throughout history, typically during times of extreme economic distress.
Roosevelt’s Executive Order does contain an exception for rare coin collectors, but this was never enforced. Since then, certain telemarketers have perpetuated the myth that certain old American gold coins cannot be confiscated.
Unfortunately, these claims are unsubstantiated; buying expensive old or collectible coins to try and avoid confiscation is not an effective strategy.
Since 1933, much has changed in terms of global monetary system. Most countries now utilize fiat currency systems instead of seizing gold to stabilize currencies; alternative policies like quantitative easing or negative interest rates are more likely to be employed during times of financial instability; these measures tend to be less controversial while providing just as much stabilizing effect for economies.
Precious stones
One of the primary concerns of precious metals investors is the possibility of confiscation. The prospect of buying gold to protect yourself against financial crises only for it to be taken away is unsettling for those worried about global debt levels, runaway government spending and central bank currency creation.
Luckily, it seems unlikely to occur anytime soon. First of all, confiscation is extremely rare; the last instance occurred during 1933 during the Great Depression; although technically this wasn’t considered confiscation but rather nationalization since citizens received compensation for their gold holdings.
Second, in advanced economies today, confiscation only applies to monetary metals like coins and bars; confiscation does not target jewelry as an asset class if any precious gems are included within it; keeping your bullion stored safely within an established refiner can provide another layer of defense.
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