The Great Confiscation: Gold ownership was illegal in the USA from 1933 to 1975

Roosevelt 1933


Have you heard of Roosevelt’s Emergency Banking Act on April 5th 1933? This was the date on which the American president declared that it was illegal for US citizens to own gold and ordered them to return their coins, ingots and gold certificates to the federal reserve banks before May 1st 1933 at a price of 20.67 USD per ounce. Immediately devaluing the dollar by 40 percent; and setting the price of gold at $35.00 per ounce. At a single stroke, Roosevelt increased the government’s gold assets, stabilized the monetary system and increased wholesale prices by more than 33 percent. However, he also inflicted losses of 40 percent on gold owners and stripped them of the gold that they saved to insure their financial futures.

1933 was the year when the great depression had led to a severe shortage of gold. Anxious Americans, demanding gold, had reduced the Federal Reserve’s gold supply almost to the legal minimum, creating additional fears of an impending monetary crisis. The 1933 Emergency Banking Relief Act was approved to ‘provide relief from the national emergency for the banking sector and for other purposes’. On March 6 of 1933, the President set in motion a chain of events that ended the international gold standard once and for all. First, he closed the nation’s banks and prohibited them from paying out or exporting gold coins and bullion, using emergency powers granted by the Trading with the Enemy Act that had been enacted during World War I.

From 1933 forward, private possession and ownership of gold was illegal for U.S. citizens. Any refusal to return one’s gold was punishable by a fine of 10,000 $ and 10 years in prison.  These exceptional measures were aimed at preventing the general public from storing gold. The solution was simple: make it illegal to directly own gold.

In 1934, Roosevelt proclaimed the confiscation of the gold held by the banks (Gold Reserve Act: in exchange for gold certificates that could not be exchanged for gold!)

This law remained active in the USA until 1975, a few years after the dollar’s value had stopped being linked to that of gold.

All of this failed to prevent Americans buying and selling gold on the black market especially gold in the form of nuggets which the law had forgotten. Of course there were also all those Americans who knew all about gold and stored it in vaults in Switzerland: the reserves of wealth are immobile but the value that this wealth represents (currency) circulates.

Although private ownership of gold in the United States was legalized on August 15, 1974, the power to confiscate gold remains in the hands of the President. The President still retains the right, under the Emergency Banking Relief Act, to “investigate, regulate or prohibit… the importing, exporting, hoarding, melting or earmarking of gold” in times of a declared national emergency.

The time to act is before, not after, a crisis occurs. If you wait until gold confiscation, currency exchange controls or any other emergency measures are taken it will be too late.

As an investor, what should you do? Put some of your savings in the ultimate crisis hedge – numismatic coins. In the event of a crisis it would be better to own numismatic gold than bullion

Maurice Hall

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