Can Government Consolidate Gold Bars?
gold confiscations has long been used by governments as an economic crisis approach to contain capital flight and bank runs while providing them with room to print money to combat inflation or deflation.
Many untrustworthy precious metals dealers and firms misinform customers that the only effective hedge against confiscation are rare numismatic coins that command premiums above their gold content. Unfortunately, this statement is simply false.
The Global Monetary System Has Changed
An emerging global monetary system no longer depends on the classic gold standard; rather, it relies on close cooperation among governments and central banks in order to maintain currency stability and international financial architectures.
President Roosevelt outlawed private gold ownership in 1933 in order to increase money circulation and offset his administration’s massive war and New Deal program debt accumulation. Today, politicians and central bankers enjoy greater leeway to spend, lend, and inflate with ease.
That is why the prospect of gold confiscation remains very real, yet it’s essential to note that “confiscation” may also refer to expropriation – that is, taking private property without proper compensation or legal authority (Merriam Webster). Although expropriation looms over global investors in precious metals, investors shouldn’t abandon investing altogether if there’s fear of expropriation looming over them.
The Global Political Landscape Has Changed
Many bullion dealers and ordinary collectors fear the government seizing their precious metals during an economic or monetary crisis, which is an understandable fear given how often political leaders take whatever steps are necessary at such times.
Modern societies and central banks no longer rely on gold to hold government and central bank power; Janet Yellen can print as many dollars she wishes with just the click of a button; this gives her and her colleagues tremendous power not available during Franklin Delano Roosevelt’s seizure of citizens’ gold in 1933.
As such, there is little motivation for governments to confiscate gold today compared with prior years. While confiscation could still occur at some point in time, its likelihood is far less likely now. Storing your precious metals away from banks is one way of keeping them safe from theft threats.
The Threat of Gold Confiscation Still Exists
Though confiscation of gold bars by governments is unlikely, investors still face this potential risk. Should their country make ownership illegal and those not complying face steep fines and/or jail time.
Franklin Roosevelt issued Executive Order 6102 during the Great Depression to nationalize private American gold holdings and force people to give it up in exchange for paper money, on grounds that people were hoarding too much gold and endangering its economic stability.
Unfortunately, this ban lasted 13 years before it was finally lifted. Since then, buying and selling gold bullion has become relatively easier, yet there may still be ways for the government to restrict ownership. That is why we advise keeping your gold stored away from home in places difficult for authorities to quickly access – this way if a crisis does hit, your savings may still remain secure with an extra protective cushion in place.
Protect Your Gold Investments
Gold can provide protection during times of economic instability. Should we experience a recession, government authorities could come after your precious metals; thankfully there are ways to avoid this scenario.
One way to avoid confiscation is to purchase rare coins with high numismatic value; however, most claims of their high numismatic value can often be discounted as high-pressure sales tactics employed by telemarketers selling old American coins.
Historically, confiscations efforts only targeted monetary metals like bars and coins; gold jewelry was usually spared unless in oppressive nations under dictatorships.
An alternative way of avoiding confiscation is storing your gold in an independent vault. This would ensure it remains unaccessible during any crisis and would make it more difficult for authorities to forcefully seize it if stored away from banking systems.