Gold Confiscation - What Are The Odds?

It seems like more articles are popping up concerning gold confiscation - what the U.S. Government will do, may do, won't do, can't do, etc. This all stems from the original confiscation of most gold holdings from U.S. citizens in 1933. I say most because within the Executive Order it stated "Gold coin and gold certificates in an amount not exceeding in the aggregate $100 belonging to any one person; and gold coins having a recognized special value to collectors of rare and unusual coins." were exceptions. So an individual could legally own just under five ounces of gold (the price of gold was $20.67 at the time) and a number of rare and unusual coins (as a collector). You can see the entire document at Executive Order April 5, 1933 .

How updates to the gold confiscation language progressed from 1933 until the present day is the topic of the first article I would like to call your attention to. Written by David L Ganz J.D., it is titled "Gold Confiscation: Here's how it could happen - and what you can do about it". After reading his credentials, I can't imagine too many people more qualified to write on the subject than Mr Ganz. It is a long article and you might want to skim the upper part until you get to the commentary on the applicability of current U.S. law to gold ownership. There is an impressive picture of gold coins (well worth seeing) at the end. You can read the article here.

The second article related to gold confiscation appeared on the GATA (Gold Anti-Trust Action Committee) web site. It details correspondence that GATA had with the U.S. Treasury Department in 2005 (possibly the most recent "official" statement from the U.S. Government as to its powers, or perceived powers, concerning gold and silver confiscation). The article provides the actual list of questions GATA has asked the government to respond to as well as the detailed response provided by Chief Counsel of the responsible area of the U.S. Treasury. You can see it here.

Some investors take great comfort in the fact that rare and unusual (numismatic?) coins were exceptions to the law and, therefore, would surely be exempt again if gold confiscation became a repeat event. This feeling is helped along by some dealers telling their customers that a coin with a 15% or more premium over the spot value of gold won't be confiscated.

I don't believe there is such a thing as a confiscation-proof coin. The current language would seem to favor coins that are rare and unusual but that language could be changed in a heartbeat by a desperate government. As far as the 15% exemption law, I don't think it exists. A regulation was proposed in the Federal Register, Vol 49, No.3, 1/5/1984 but it was never adopted. If you have proof that there is such a law, I would be most interested in being notified of it.

I don't believe that gold confiscation is in our near future as there are much more attractive targets to home in on (can you say 401k?). But information is power and hopefully these two articles will help you make informed decisions on your future gold investments.

Thanks for reading.