Gold investors frequently worry that their precious metals could be confiscated by government authorities during economic crises, a legitimate concern as many governments have historically taken measures such as confiscation.
However, the government can only seize your assets if you decide to voluntarily give them back, such as when President FDR nationalized Americans’ gold holdings in 1933.
What is confiscation?
Confiscation refers to the permanent seizure and transfer of assets through legal or administrative channels that take place with no recourse from their owners to return them (UNCAC 2017; Geller 2013). All those with interests in said assets at the time of confiscation forfeit all their rights to them (UNCAC 2017; Geller 2013).
As part of anti-money laundering measures, confiscation has recently seen increasing attention. International instruments and 40 FATF recommendations include legal provisions enabling confiscation of proceeds derived from criminal activity; however, this has raised many concerns as to its efficacy in practice.
For instance, confiscated property may not consider the rights of third parties such as lien holders and purchasers or family members wishing to transfer ownership. Furthermore, extended confiscation can rob criminals of economic benefits they gained through unlawful activities as well as reduce their socioeconomic status – leaving them living in poverty or without an heir.
Why is it a concern?
As gold owners, many of us may worry that in the future governments may attempt to seize our precious metals – an understandable fear given how gold has traditionally served as a buffer against financial and monetary crises.
Notably, confiscation is less likely to occur with bullion than with other precious metals; government agents would have much greater difficulty finding and seizing hidden gold bars and coins than bullion would.
Additionally, most people who own gold are residents of developed nations that offer strong protections for private property rights and it’s highly unlikely that any government would target foreign holdings of precious metals as it did back in 1933.
What can I do to protect my gold?
Since 1933, when an economic crisis hit, government authorities have not confiscated gold from private citizens. Even then, most individuals turned over their bullion voluntarily while providing compensation to those who did not.
Some less-than-reputable precious metals dealers, firms and websites claim that numismatic coins are exempt from confiscation due to an executive order issued during Roosevelt’s presidency, but this is false. A better way to safeguard both your investment and privacy would be storing gold in various locations – diversification is key when protecting both.
Another great way to safeguard precious metals is stowing them away in a safe deposit box at your local bank. This method works especially well when protecting bullion, rare coins and expensive jewellery; when storing gold at home however, discretion should always be practiced; decoy safes or video recording can help make theft harder.
What is the best way to store my gold?
Home storage may seem like the easiest solution, but this has its drawbacks. Being more visible makes you an easier target; gold may also be vulnerable to fire or theft and most homeowner policies do not cover precious metals.
As another option for storing gold, bank safe deposit boxes provide excellent security but restrict access. Only during bank hours can you gain access to it; additionally it may prove costly.
Consider placing your gold in a depository outside the U.S. This will not only safeguard against government confiscation, but will also guarantee it continues as a viable long-term investment. Although no strategy is foolproof, storing your bullion outside the United States can reduce exposure while increasing protection. Having some gold held personally while others through trusts or corporations will increase both protection and privacy.
