Gold has long been valued for its beauty, value, and luster; it stands as a symbol of purity, wealth, and royalty.
While confiscating private gold was possible during 1933, such an action is less likely today because the US dollar no longer relies on gold reserves as collateral.
Although gold investors face uncertainty in today’s uncertain world, they don’t face the same threat of confiscation as paper money holders in 1933. Under true confiscation measures, you would lose both your bullion and any compensation due to it.
But if you own rare or collectable coins, things could get sticky. Telemarketers sometimes use Roosevelt’s Executive Order as justification to exempt “gold coins with special value to collectors of rare and unusual coins from confiscation,” yet this argument crumbles under scrutiny.
Truth be told, the government doesn’t need or want your gold in the first place; inflation can still cover debts and meet obligations without it – even after Nixon closed the international gold window in 1971 and no longer backs our dollar with gold backing – meaning confiscating your gold would likely make little difference in terms of repayment or obligations met.
Some gold dealers promote the belief that certain kinds of coins cannot be confiscated in a future financial crisis, due to an executive order issued in 1933 exempting “gold coins with recognized special value to collectors of rare and unusual coins,” though it didn’t define exactly which coins fall under that umbrella term. Telemarketers perpetuate this misconception so as to facilitate sales of high-priced coins more efficiently. Furthermore, government regulations only require reporting purchases exceeding $10,000 cash purchases.
People fear confiscation because it has happened throughout history: dictators such as Saddam and the Soviet Union took away citizens’ assets without compensation; now that we no longer use gold standard money, governments may find other means of taking your wealth; therefore it is vitally important that you have a plan in place regarding what would happen with your gold in such cases.
Gold bullion is the safest and most liquid form of metal to own, providing an anti-inflation hedge against currency depreciation or volatility as well as acting as an “insular hedge” during times of geopolitical turmoil and fears of government debt defaults.
Rare coin sellers perpetuate the misconception that certain old U.S. gold coins cannot be confiscated due to the 1933 Executive Order which exempted “gold coins having recognized special value to collectors of rare and unusual coins”. However, most old US gold coins such as $20 Libertys and St Gaudens considered bullion by PCGS and NGC grading services are considered bullion and should therefore remain out of circulation.
Governments historically seized private ownership of gold during times of economic crises. Unfortunately, that option no longer exists as many countries no longer rely on gold as currency backing. This scenario illustrates one aspect of macroeconomics called “Trilemma,” in which governments must either control interest rates (inflation), print money (exchange rate control), or both simultaneously in order to maintain control.
Gold jewellery can be easily authenticated by jewelers and pawnbrokers with just an acid test; its metal content can also be quickly verified. Furthermore, travelling with jewellery makes it much simpler than carrying stacks of coins or bars – providing an appealing solution for those living in oppressive nations where confiscation could pose a problem.
However, most jewellery is comprised of diluted metals rather than pure gold and is sold at huge markups over its precious metal content. Most telemarketingers’ jewelry offers 20% to 30% markups over their gold bullion content.
At times of extreme economic distress, governments have in the past confiscated gold savings of their citizens through Executive Order or other laws. But these confiscations tactics were typically limited to nations run by dictators; most developed nations’ governments are less likely to seize citizens’ gold savings unless it has compelling reasons to do so; instead they tend to devalue currency rates and impose new official rates instead of outright confiscations.