Keep Your Hands off My Gold!
To be exact, the date was March 9, 1933. And what to do in a serious emergency involving "hoarding" of gold and silver? Confiscate the offending "hoards," naturally. To be fair, Roosevelt only ordered the partial confiscation of gold and silver bullion. When "subjects of the United States" (which included my grandparents) turned in their bullion, they received U.S. dollars in return, at the official price of US$20.67/ounce. Once the operation was reasonably complete, the confiscatory part occurred: the government unilaterally revalued gold at US$35/ounce. The revaluation was possible because this operation occurred in the days before currencies traded on the open market. Currencies were fixed in value, generally in terms of specific weights of silver and gold. The U.S. dollar, for instance, had an official value of US$20.67/ounce, set in 1834, until Roosevelt devalued it 40% in 1933. The question I'm often asked is, "could gold (and silver) confiscation happen again?" And, if so, "what can I do about it?" The answer to the first question is, "yes, definitely." The legal authority Roosevelt used to confiscate your parents' or grandparents' gold and silver - the "Trading with the Enemy Act" - remains on the books. Indeed, in a remarkable letter written in 2005, the Treasury Department claimed that it had the power to confiscate gold, silver - and everything else. What might lead to a second gold and silver confiscation? President Roosevelt's issued his 1933 emergency order when the U.S. dollar was still backed by gold. At that time, both individual citizens and foreign central banks could exchange U.S. dollars for gold. Today, no holder of U.S. dollars is legally entitled to exchange their dollars for gold at the U.S. Treasury. Indeed, only a small minority of U.S. citizens own precious metals in any form. However, if a day ever comes where foreign countries demand that the U.S. Treasury pay its debts in gold - not in U.S. dollars - a second confiscation could occur. I don't see a second confiscation as particularly likely, simply because so few Americans own any gold or silver bullion. The takings would likely be so slim it simply wouldn't be worth the effort. Answering the second question is a lot harder. What are the best ways to protect yourself against such an event? One of the most important precautions is to not keep precious metals in a U.S. safety deposit box. President Roosevelt ordered all safety deposit boxes sealed when he issued his March 9, 1933 gold confiscation order. My grandparents couldn't retrieve their holdings from their safety deposit box until government thugs had rifled through it. Also, beware of investing in U.S.-based exchange traded gold funds. In the event of a second gold confiscation, Treasury agents would clean out any U.S. vaults these services used almost before the ink was dry on the emergency order. Some coin dealers claim that numismatic (collector) coins would be exempt from any future government confiscation of gold and silver. This claim is based on the terms of Roosevelt's 1933 emergency order, which specifically exempted "coins having recognized special value to collectors of rare and unusual coins." Some firms say that premiums of at least 15% over the spot price of bullion magically turn coins "numismatic." This notion is based on a proposed federal regulation issued in 1984, but never adopted. Other dealers claim that coins 100 years or older are automatically converted to numismatic status. It's beyond me why anyone takes these claims seriously. Why would a government that stole its citizens' property in 1933 be consistent when it does so again? Nothing obliges the federal government to pay by the same set of "rules" it imposed 75 years go. Nothing obliges the federal government to honor the terms of a proposed regulation issued a quarter century ago. And naturally, those rules can change at any time. However, should such an exemption again come into existence, U.S. law (which could naturally be swept away by legislative or executive fiat) does stipulate which specific coins are "numismatic." The 1985 legislation that authorized production of the coins now known as gold and silver Eagles stipulates that these coins are to be considered "numismatic items." Therefore, if you believe that numismatic coins would be exempt from a future gold (or silver) confiscation, you should consider purchasing the only coins specifically defined in U.S. law as "numismatic." In addition to gold and silver Eagles, keep some gold and silver bullion outside the United States, preferably in a safety deposit box or a private vault. That way, if a second confiscation occurs, your holdings won't be immediately affected - although I suspect you'd still be required to comply with the order. Copyright © by Mark Nestmann
Mark serves as president of his own international consulting firm, The Nestmann Group, Ltd. The Nestmann Group provides international wealth preservation services for high-net worth individuals. Mark is an Associate Member of the American Bar Association (member of subcommittee on Foreign Activities of U.S. Taxpayers, Committee on Taxation) and member of the Society of Professional Journalists. In 2005, he was awarded a Masters of Laws (LL.M) degree in international tax law at the Vienna (Austria) University of Economics and Business Administration. |
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Not many Americans are still living who remember the day that President Franklin D. Roosevelt declared that the "hoarding" of gold and silver bullion by "subjects of the United States" constituted a "serious emergency."
Mark Nestmann is a journalist with more than 20 years of investigative experience and is a charter member of The Sovereign Society’s Council of Experts. He has authored over a dozen books and many additional reports on wealth preservation, privacy and offshore investing.