Can the Government Take My Gold?
People frequently inquire whether the government can seize their gold. A notable instance occurred in 1933 when President Roosevelt issued Executive Order 6102 making hoarding of gold bullion and coins illegal; citizens were however compensated for their holdings.
Given that governments no longer rely on gold standards and use fiat currencies as money substitutes, confiscations is unlikely. Yet many investors remain worried.
Reasons for Confiscating Gold
Investors in bullion often worry about government confiscation of their precious metals. While this fear is justified in part, much of it stems from misconceptions. Our team at First National Bullion and Coin is here to dispel some myths surrounding gold confiscation.
Remember, however, that only extreme circumstances would prompt the government to attempt confiscating your gold. The last time a government tried this tactic was during World War II when Roosevelt signed an Executive Order forcing Americans to turn in their bullion and coins.
As noted above, having your gold stored abroad – such as Switzerland–is less likely to be confiscated by US authorities. That’s because companies that store foreign customers’ gold can be forced into complying with confiscation orders at risk of losing business in the US or being cut off from banking altogether.
Legal Issues
Governments don’t tend to approve of gold prices, which is why citizens need to take steps to safeguard their assets against confiscation. One effective method of doing this is through diversifying ownership of your bullion holdings: such as placing some into trusts or holding some in corporations that provide legal protection and privacy; another approach might be keeping your gold safe by keeping it outside the banking system in a vault that offers extra protection from confiscation.
Many telemarketers promote European coins that are harder to sell, claiming these can’t be confiscated because they don’t fall under the same reporting requirements as bullion gold. Unfortunately, this claim is incorrect: only transactions involving cash payments of $10,000 or greater require reporting; this regulation was put into place to avoid confiscations such as that implemented by President Roosevelt via Executive Order 6102.
Tax Issues
Purchase of old or collectible gold coins to avoid confiscation can lead to exorbitant prices from dealers who inflate them due to fear of confiscation.
As long as it’s being held by an institution that tracks it, it would be virtually impossible for the government to accurately ascertain your gold bullion holdings. Even then, they may struggle to determine how much is sold or swapped, as well as purchases made using cash.
Another consideration when investing in gold is inheritance tax (IHT). Planning ahead can help minimize IHT bills which currently comprise 40% of estate assets for married couples. The Royal Mint offers several products suitable for IHT planning such as gold bullion, Sovereigns and Britannia coins which are all VAT free and therefore suitable as IHT planning tools for non-VAT registered private individuals.
Storage Issues
Many people fear the government will seize gold again, leading some numismatic coin dealers and precious metals pundits to use this fear-mongering strategy as a scare tactic that’s often unsubstantiated.
Today there is no justification for Roosevelt-style gold confiscation. Our economy has changed considerably from 1933 and governments can control money supply, set interest rates and implement other policies without taking all your gold bullion from you.
Even if there were, it would be nearly impossible for governments to confiscate gold stored at homes across the nation. Storing your gold in coffee cans beneath beds, closets and loose floorboards is inviting disaster and theft; keeping it safely stored can make all the difference in protecting it against being lost in natural disasters or stolen by criminals.
Storing gold in a bank vault or private depository is the safest solution, protecting both you and your assets from changes to monetary policy.
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