Today one of our readers asks, If gold will never go to zero, the question then is, will gold ever be confiscated? If ever there was a gold issue to speculate over, this may be the Grand Daddy of all.
Just to illustrate the profound nature of this question, at least in my opinion, let me list some questions that I believe fall in the same category of, Who The Heck Knows For Sure?
1. The U.S. is nearing a time when all of its tax revenue can't pay the interest on the national debt. Will that cause the U.S. to default on bonds and foreign debt obligations?
2. Can Countries like Greece really go bankrupt? What happens if they do?
3. At least 5 of our United States are said to be on the brink of bankruptcy - will it happen?
4. Will deflation precede inflation then cause the Dow/Gold ratio to approach 1:1?
5. Could world currencies move to a gold standard?
6. If World currencies did move to a gold standard would gold surge to $11,071 an ounce?
We could literally discuss these issues forever or until the events actually came to pass, whichever came first. So, with respect to our question of the day, let's focus on what we know for sure and not pretend we have a crystal ball.
On April 5, 1933, Franklin D. Roosevelt was said to have confiscated gold from all U.S. Citizens. Well, that's partially true. Let's get some things straight before we go any further. The order to turn in gold was actually an executive order referred to as an anti-hoarding measure that did not require all gold to be turned in. Any one person was allowed to keep the equivalent of $100 worth of gold coin or certificates. At that time, $100 in gold equaled 5 ounces. That means in a family of four people 20 ounces of gold could be kept.
Other gold was also excepted from the order. From the order itself we read of the $100 exception and then of one more.
(b) Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00 belonging to any one person; and gold coins having recognized special value to collectors of rare and unusual coins.
There were other exceptions, as well. You can read for yourself a copy of the order as it was issued in 1933.
Some may say, that was a long time ago and circumstances were extraordinary as the country desperately tried to emerge from the great depression. A long time ago yes, but a practice that was seen again in the late 90s as the Pacific Rim suffered its own crisis. At that time South Korea, whose currency was on the brink of collapse, asked citizens to turn in their gold. The gold was then used to secure loans from the IMF to help rescue their economy and their currency.
Could this now happen within a country whose currency is still known as the world's reserve currency? Sure it could!
Would the event go down the same way under the same circumstances as it did 77 years ago? While that process may serve as an example of how it was done successfully, I don't know of anyone that can say it will or will not occur again. Or, that if it does, the same terms, conditions and exceptions will apply.
Like I say, I don't have a crystal ball but you have to admit, it could be argued that we live in as desperate of times now as existed in 1933. With respect to our currency, it shows strength now against others as the whole world endures a debt crisis. But, when you consider our own debt crisis may be the most critical of all, it doesn't take much imagination to see roles reverse and the dollar weaken.
So what do we do in the meantime? . . . Like I always say, plan for the best and prepare for the worst.
Per the executive order, a good strategy may be to own some of all types of gold that were excepted from recall. Gold Coins, Gold Bars, Numismatic Coins - they all work. Even after the recall was complete, gold was revalued from about $20 an ounce to $35 an ounce. Those who kept some gold were rewarded with a 75% return on bullion and who knows how much on the rare and unusual coins they were legally allowed to keep. Own some silver too.
Of course you can choose not to own any gold at all. Then your only risk is that either inflation or deflation will confiscate your dollars and your savings and retirement accounts. To learn more or to find some of the lowest online prices for gold, visit LearCapital.com today.