jim4silver
Silver Member
- Apr 15, 2008
- 3,662
- 495
I was talking to someone yesterday about PMs and this person (somewhat of a PM bear) said he was not buying because he KNEW the Gov was going to confiscate PMs (gold specifically) again someday if/when they go way up in price. He couldn't give me any reason why other than because they did that before. I personally don't believe we will have another "confiscation", but if we do it won't be for the same reasons they did it in 1933.
Everyone on here is familiar with what Roosevelt did in 1933. Some may not know why they did it though. The reason was at the time the price of gold was fixed at $20.67. After the "confiscation" the Gov raised the artificially fixed price to $35. Back then before the announced "confiscation" the cash money was redeemable in gold, so in a sense our currency was "backed" by gold. Thus by raising the fixed price to $35 and outlawing most of the gold ownership re: bullion, the Gov was able to almost double the money supply, or rather the "value" of the US currency plus bring in lots and lots of bullion that the citizens relinquished.
Caveat: Although what Roosevelt did was bad for the citizens, the Gov did reimburse those whose gold they took with the then prevailing market rate of $20.67 and each citizen- man, woman and child- was able to own $100 face worth of gold coins (5 double eagles, 10 half eagles, or any mix therein). At today's gold value that would be worth close to $8500 melt per citizen for gold they could legally keep.
Fast forward to today. Our dollar is not backed by PMs (or anything other than a promise to pay by the Fed). If the Gov wants to inflate they can print or QE, etc., as much as they want. Gold is not tied to the dollar directly in any way. So the reasons for the confiscation back then do not exist anymore today. If the Gov showed any interest in obtaining more gold bullion it would hurt the dollar reputation-wise instantly and they don't want that to happen.
However, let's say many of the other large nations like China, Russia, etc, decide to increase their gold holdings thru the roof and perhaps one day decide to create a currency that is somehow tied to real assets like gold, etc. Let's further say that new currency becomes very popular because by then even the most mentally challenged folks could see how bad fiat currencies had become and wanted to put their money into something more strong and stable, etc. I could then see perhaps that our Gov, if things got really bad with the dollar, might decide to grab as much gold as it can so as to keep the US from not falling behind those other countries who had acquired so much gold over the years while the US and Euro countries kept talking about how the economy was going to improve, etc. If that were to happen, I believe the gold mines in the US and perhaps ETF storage facilities in the US could become nationalized. This would give the Gov a large chunk of gold compared to what they could get from us lowly citizens, most of which have no gold bullion.
And to carry that a step further, maybe they could "confiscate" all gold bullion held by citizens by making it illegal to own or setting price controls, etc. Again, I personally don't believe this will happen but I like to look at all possibilities.
Now the big question is that if the above happens, will ALL gold be "confiscated"? I don't think so. Imagine the outcry if the Gov not only "confiscated" gold bullion but also jewelry like wedding rings, etc, (gold jewelery was not outlawed back in 1933 when they "confiscated" the bullion).
My point is that if someone wanted to own gold and was scared of another confiscation, they could invest in scrap jewelry. Problems with this plan are that you would have to either buy it from directly citizens on your own or from a "we buy gold store" who wanted to unload their buys to a person instead of sending it to a refiner. Further, a person would have to know how to test the gold to make sure it wasn't fake, which I imagine is not as easy as inspecting a gold coin to determine its authenticity.
I know a couple of coin dealers who buy gold jewelry and have been offered the chance to buy anything they have before it goes to the refiner, for a price of about what the refiner was going to pay them. I never took any of them up on this offer, but if I ever believed another gold confiscation was coming, I might consider it. I would probably stick to 14KT rings instead of necklaces and bracelets. Maybe some knowledgeable gold folks can enlighten me on which type would be the best choice regarding the type least likely to be fake?
Many will say that they will never turn in their gold bullion if there is another "confiscation". I would like to say the same but I don't know for sure. Once any new law was in place outlawing gold bullion, it would be very hard to sell compared to now, and I don't see any bartering going on if/when gold is $5,000 or more per ounce and you decide to barter/trade since you cannot sell it legally to a coin store. However, if a person was allowed to keep their gold jewelry and a person had their gold stash mostly in jewelry, they would be way ahead of those who put their gold into bullion and would not become outlaws in the process.
I want to touch briefly on the argument put forth by some coin dealers who sell graded (slabbed) pre 1933 gold US coins and claim they are not subject to confiscation. I will only say that keep in mind there is NO law in effect now that would exempt such coins in a future confiscation. Back in the 1933 executive order the gov exempted rare coins with numismatic value or some phrase like that, but never specifically said what such exempt coins were. Keep in mind that the very coins confiscated back then are the same coins that some dealers today say would be exempt- old US gold coinage from pre 1933. From what I have seen there is still a lot of old US gold coinage in existence, so my opinion is that these coins would not be exempt from any bullion confiscation. If there were, I would imagine that counterfeiting of such coins would flourish, and if they were made well and with the exact proper amount of gold/copper, etc, they might be hard to distinguish from real ones.
PS I don't see any confiscations coming, but you never know what will happen if things get too messed up here financially. I really don't see silver being confiscated since the central banks and such are mostly focused on gold now to increase their reserves. But the same "plan" for buying sterling silver jewelry (and perhaps sterling spoons and forks, etc) would apply if a confiscation were to occur
Just my opinion.
Jim
Everyone on here is familiar with what Roosevelt did in 1933. Some may not know why they did it though. The reason was at the time the price of gold was fixed at $20.67. After the "confiscation" the Gov raised the artificially fixed price to $35. Back then before the announced "confiscation" the cash money was redeemable in gold, so in a sense our currency was "backed" by gold. Thus by raising the fixed price to $35 and outlawing most of the gold ownership re: bullion, the Gov was able to almost double the money supply, or rather the "value" of the US currency plus bring in lots and lots of bullion that the citizens relinquished.
Caveat: Although what Roosevelt did was bad for the citizens, the Gov did reimburse those whose gold they took with the then prevailing market rate of $20.67 and each citizen- man, woman and child- was able to own $100 face worth of gold coins (5 double eagles, 10 half eagles, or any mix therein). At today's gold value that would be worth close to $8500 melt per citizen for gold they could legally keep.
Fast forward to today. Our dollar is not backed by PMs (or anything other than a promise to pay by the Fed). If the Gov wants to inflate they can print or QE, etc., as much as they want. Gold is not tied to the dollar directly in any way. So the reasons for the confiscation back then do not exist anymore today. If the Gov showed any interest in obtaining more gold bullion it would hurt the dollar reputation-wise instantly and they don't want that to happen.
However, let's say many of the other large nations like China, Russia, etc, decide to increase their gold holdings thru the roof and perhaps one day decide to create a currency that is somehow tied to real assets like gold, etc. Let's further say that new currency becomes very popular because by then even the most mentally challenged folks could see how bad fiat currencies had become and wanted to put their money into something more strong and stable, etc. I could then see perhaps that our Gov, if things got really bad with the dollar, might decide to grab as much gold as it can so as to keep the US from not falling behind those other countries who had acquired so much gold over the years while the US and Euro countries kept talking about how the economy was going to improve, etc. If that were to happen, I believe the gold mines in the US and perhaps ETF storage facilities in the US could become nationalized. This would give the Gov a large chunk of gold compared to what they could get from us lowly citizens, most of which have no gold bullion.
And to carry that a step further, maybe they could "confiscate" all gold bullion held by citizens by making it illegal to own or setting price controls, etc. Again, I personally don't believe this will happen but I like to look at all possibilities.
Now the big question is that if the above happens, will ALL gold be "confiscated"? I don't think so. Imagine the outcry if the Gov not only "confiscated" gold bullion but also jewelry like wedding rings, etc, (gold jewelery was not outlawed back in 1933 when they "confiscated" the bullion).
My point is that if someone wanted to own gold and was scared of another confiscation, they could invest in scrap jewelry. Problems with this plan are that you would have to either buy it from directly citizens on your own or from a "we buy gold store" who wanted to unload their buys to a person instead of sending it to a refiner. Further, a person would have to know how to test the gold to make sure it wasn't fake, which I imagine is not as easy as inspecting a gold coin to determine its authenticity.
I know a couple of coin dealers who buy gold jewelry and have been offered the chance to buy anything they have before it goes to the refiner, for a price of about what the refiner was going to pay them. I never took any of them up on this offer, but if I ever believed another gold confiscation was coming, I might consider it. I would probably stick to 14KT rings instead of necklaces and bracelets. Maybe some knowledgeable gold folks can enlighten me on which type would be the best choice regarding the type least likely to be fake?
Many will say that they will never turn in their gold bullion if there is another "confiscation". I would like to say the same but I don't know for sure. Once any new law was in place outlawing gold bullion, it would be very hard to sell compared to now, and I don't see any bartering going on if/when gold is $5,000 or more per ounce and you decide to barter/trade since you cannot sell it legally to a coin store. However, if a person was allowed to keep their gold jewelry and a person had their gold stash mostly in jewelry, they would be way ahead of those who put their gold into bullion and would not become outlaws in the process.
I want to touch briefly on the argument put forth by some coin dealers who sell graded (slabbed) pre 1933 gold US coins and claim they are not subject to confiscation. I will only say that keep in mind there is NO law in effect now that would exempt such coins in a future confiscation. Back in the 1933 executive order the gov exempted rare coins with numismatic value or some phrase like that, but never specifically said what such exempt coins were. Keep in mind that the very coins confiscated back then are the same coins that some dealers today say would be exempt- old US gold coinage from pre 1933. From what I have seen there is still a lot of old US gold coinage in existence, so my opinion is that these coins would not be exempt from any bullion confiscation. If there were, I would imagine that counterfeiting of such coins would flourish, and if they were made well and with the exact proper amount of gold/copper, etc, they might be hard to distinguish from real ones.
PS I don't see any confiscations coming, but you never know what will happen if things get too messed up here financially. I really don't see silver being confiscated since the central banks and such are mostly focused on gold now to increase their reserves. But the same "plan" for buying sterling silver jewelry (and perhaps sterling spoons and forks, etc) would apply if a confiscation were to occur
Just my opinion.
Jim
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