Until gold investors truly understand the historical and current laws concerning gold, the idea of “gold confiscation” will always remain an alarmist myth; a conspiracy theory. To fully appreciate the potential for such a draconian event, you’ll have to understand what’s legal and what conditions can make such a scenario probable.
In the end, it all comes down to legality. If confiscation is legal under certain conditions, then those conditions, should they take place, will make the likelihood of confiscation highly probable. So, what are the laws surrounding confiscation? Most of them are listed below. Read them and formulate your own opinion on the matter.
The “Trading with the Enemy” Act of 1917
This act allows the President of the United states to prohibit, regulate, and investigate any form of financial transaction including gold and silver during a time of war or national emergency. Under this law, the president also has the power to seize assets and freeze financial accounts should the administration believe that such actions would be in the interest of national security or the nation’s economy.
International Emergency Economic Powers Act
In 1977, this act curtailed a number of emergency executive powers, restricting presidential power during times of war and national emergency. However, it did not curtail the president’s power to implement the “Trading with the Enemy Act.”
Executive Order 13603
In 2012, Executive Order 13603--the National Defense Resources Preparedness Act--was signed by President Barack Obama. This gave the president the authority to seize control of all resources on US soil. See “PART II – PRIORITIES AND ALLOCATIONS” for details. The key phrase here is “all resources.”
Later in his administration, Wall Street and the US Banking Industry expanded its powers into the precious metals sector, digitally tagging 93 typically traded precious metals products, deemed to be fungible, using standardized alphanumeric codes known as CUSIP Identifiers.
The Exchange Stabilization Fund (ESF)
A provision of the Gold Reserve Act of 1934, the ESF is an emergency reserve fund under the jurisdiction of the US Treasury Department whose chief purpose is to facilitate foreign exchange interventions.
According to a New York Fed document, “The Act authorized the Secretary of the Treasury, to deal in gold, foreign exchange, securities, and instruments of credit, under the exclusive control of the Secretary of the Treasury subject to the approval of the President.” Details of the ESF’s position on gold swaps can be accessed in this 1995 FOMC transcript.
The Gold Anti-Trust Action Committee (GATA) Correspondence
In 2005, there was a correspondence between GATA and the Treasury concerning fears of the government’s authority to seize precious metals. According to GATA, “the Treasury Department was surprisingly candid in that correspondence, asserting the U.S. Government's authority, in declared emergencies, to confiscate precious metals and to restrict ownership of mining shares -- and to confiscate and restrict every other financial asset as well. So perhaps precious metals investors shouldn't feel too paranoid.”
Executive Order 11037
In 1962, this definition of numismatic coins was expanded by President Kennedy to include gold coins of foreign origin.
Gold in Your IRA is Fine, but First Read IRS Form 590
If you’re planning on including gold in your IRA, you might want to read the IRS’s distinction between monetary and collectible gold. See Form 590. Perhaps this will help you make your decision as to which gold assets you might want to invest in for retirement.
Gold Act of 1934 Authorizes the Secret Service to Seize Gold Assets (2004)
You’ve probably never read an issue of Money and Finance: Treasury. It’s a publication circulated among certain governmental departments. This particular issue, published in 2004, references the Secret Services’ authority to seize gold, predicated on the Gold Reserve Act of 1934.
What’s the Federal Reserve’s Take On Gold Confiscation?
In this Federal Reserve speech, former Chairman Ben Bernanke speaks of gold as a means to fight deflation. His proposed solution is to devalue the dollar against gold, but this comes at a price: enforcing gold confiscation--a measure that helped usher the US out of the Great Depression (according to his interpretation of events).
The US Economy Hangs in a Three-Way Balance Between Recovery, Recession, and Depression Amid COVID-19
Think about the previous paragraph. Gold confiscation was one measure that helped the US recover from the Great Depression. What’s the likelihood that we might see a repeat of this draconian solution should the US fall into another depression?
There is a legal distinction between numismatic precious metals, semi-numismatic precious metals, and monetary bullion.
Understand the difference. And know which precious metals are registered and monitored by the American Bankers Association & US government (i.e. CUSIP-tracked coins). Most importantly, understand the legal conditions by which you can protect your private assets and wealth.
Why “Unusual” Non-CUSIP Coins Are Your Best Bet
Executive Order 6102 (1933) which forbade the "hoarding of gold coin, gold bullion, and gold certificates within the continental United States," included a clause exempting certain collectible numismatic coins considered “unusual” from confiscation.
What was that all about? What was the motivation behind this clause? The answer, though not well-known, is rather simple: the then-Treasury Secretary, William H. Woodin was an avid coin collector. He influenced the clause in a manner that protected his precious metals assets, or shall we say...“collectibles.”
The problem is, what constitutes “unusual”? According to the Treasury (see section 54.20), an unusual coin in a “gold coin of recognized special value to collectors of the rare and unusual coin may be acquired, held, and transported within the United States for numismatic purposes without the necessity of holding a license, therefore. Such coin may not be acquired for the purpose of acquiring the gold bullion contained therein.”
In short, one way of interpreting this description is that a “collectible” gold coin must have a “numismatic” value beyond its value in weight and purity. More importantly, the coin should not have a defined value on the book of the American Bankers Association via CUSIP ID, this would make it simple to set a value and seize under eminent domain.
Gold confiscation is NOT a myth.
It is written into our laws.
And it can be triggered in the event of a national emergency.