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Last Updated on: 16th September 2021, 06:58 pm
Is it possible for the .U.S. government to confiscate your gold? If so, how do you expect to protect your stash in the event that happens? The answer to the first question is yes. The answer to the second question is that you have several options.
Most savvy investors who invest in gold and silver think that they can keep their wealth out of the hands of the government by doing so. They also believe that these commodities are more stable and likely to increase in value in the event of an economic recession or depression. Investing in gold is almost always the default, go to strategy for investors who worry about doomsday scenarios or Armageddon. It doesn’t matter if the scenario is a giant stock market crash, global warming, or another World War. Popular belief and the history of gold prices dictates that this is generally a sound strategy. However, having the Government confiscate gold is a real possibility. It’s been proven throughout history, particularly in the 1930s.
Table of Contents
- The Rise of Gold Confiscation in the 1930s
- Side Note: Why Governments Can Confiscate Gold at Anytime
- Gold Confiscation in Australia
- Gold Confiscation in Great Britain, 1956
- Italy in 1935
- Germans Take Gold from Czechoslovakia
- Other Dictators Stealing Gold
- How to Protect Gold from Confiscation
- Final Thoughts on Gold Confiscation
The Rise of Gold Confiscation in the 1930s
So why did gold become such a valuable commodity to the United States government in the 1930s? Well first of all, it wasn’t just a valuable commodity in the United States at the time. Gold was valuable all over the world. It was because of a global recession. That started in 1929, and by 1930, the deflation of commodities and currencies kicked in and led to a full on depression in 1931.
It wasn’t until two years later that Franklin Roosevelt became the President of the United States. In 1934 he and his political confidants instituted the Gold Reserve Act. Roosevelt had signed Executive Order 6102 the year before, which officially made it illegal for citizens to own anything other than jewelry and some coins with gold in them. This was a very common strategy instituted by countries all around the world who are struggling to pay off federal that’s and needed to support their respective reserve banks.
The Gold Reserve Act essentially forced people to go to the government and sell their gold back to the country for $20.63 an ounce. Just nine months later, the government decided that gold was now worth $35 an ounce, meaning that anyone buying back into gold as an investment was paying a 40% premium to get a commodity they could’ve had nine months earlier for much less. It wasn’t until 1975 that Americans were allowed to own more than $100 worth of gold again. That’s how governments around the world supplemented federal that’s during their respective economic crises.
All of the above is a common theme of the gold confiscation stories you’re about to read and given that many investing experts and economists believe another recession is on the horizon, there’s really nothing holding governments back from instituting similar laws going forward. It may seem unlikely but it’s happened many times before.
Side Note: Why Governments Can Confiscate Gold at Anytime
Governments can always change laws to adjust to the times. They did it during the Great Depression 90 years ago and they still do it today with alternative investments like digital currency for example. Governments cannot only nationalize the buying and selling of gold by creating new policies, they can also make it harder to export or import commodities with tariffs. That’s why learning how to protect gold from potential confiscation is important.
Remember, governments always make, change and enforce the rules.
Gold Confiscation in Australia
The Australian government was a little late to the party when it comes to nationalizing gold. They did it in 1959 via The Banking Act. As a result, every citizen in the country was required to hand over everything other than coins to the Bank of Australia within 30 days of taking possession of any gold. The Banking Act noted that Australians could only saw gold back to the reserve Bank and no one else. Citizens were also not allowed to move gold outside of the country without the government’s permission. Like many other nations, it wasn’t until the mid-1970s that citizens were allowed to own gold again.
Gold Confiscation in Great Britain, 1956
Great Britain abandoned the gold standard in 1931 and the value of the region’s currency began to fall dramatically. This lasted for decades and citizens started investing in gold to try to cope. So in 1966 the government banned people from owning more than four gold coins. They also prevented people from importing gold from other places through tariffs that made it a not so worthwhile proposition.
The only way to get around this was to become a licensed collector and if the Bank of England deemed that an investor was not a collector they would simply take the gold. This confiscation arrangement lasted until 1979.
Italy in 1935
Benito Mussolini was a noted dictator who played a huge role in supporting the Nazis during World War II. He also instituted what was known as the Gold for the Fatherland program in 1935. The program forced citizens to give their gold to the government as a way to account for federal that’s and prepare for war that would come years later. In exchange for that the only thing citizens got in return is a steel bracelet with the words “Gold for the Fatherland” engraved on them. Even Mussolini’s wife donated her jewelry to the cause. Nobody was exempt from it.
Germans Take Gold from Czechoslovakia
Adolph Hitler and his Nazi regime worked with insiders at the Bank of England to transfer nearly 6 million British pounds worth of gold to German banks. Germany then purposely understated the amount of gold the country had in its reserves publicly to get away with the scheme. Believe it or not, it worked.
Other Dictators Stealing Gold
Iraqi dictator Saddam Hussein and former leader of Cuba, Fidel Castro, were notorious for putting the rights of their citizens second in favour of increasing their own wealth and power. They were able to do so by successfully confiscating whatever they wanted from their people, including gold. The Russian government is also notorious for oppressing people. Back in the days of the Soviet Union, the powers that be used to throw citizens in jail just for owning a gold bar. Again, people were only allowed to own some basic jewelry and maybe a coin or two. Today, Russian central banks are some of the biggest buyers of gold all around the world. They do the same thing with diamonds.
How to Protect Gold from Confiscation
While most gold confiscation stories throughout history took place in the 1930s as a precursor to World War II and most of them ended by the 1970s, there is no a lot written in the world that cannot be changed. The fact that we may indeed be on the verge of another recession heading into 2020 means more and more investors will turn to gold as viable solutions for protecting their wealth. While investing in gold during times of crisis is a common theme, you can see looking at history that there is no such thing as a safe bet. However there are some solutions for protecting gold from confiscation. All it takes is a little bit of outside the box thinking.
Storing Gold in Other Countries
Storing gold in other countries is actually a protective measure used by many wealthy people investing in IRAs in America. It’s a sound strategy to reduce risk, but a hard-core libertarian worried about a government taking control of gold probably doesn’t want to register their investments with the government. As such, different types of accounts might be more suitable. Something not related to retirement or registered with the government. This brings us to our next solution.
Buying Gold Jewelry
Notice in many of the above stories of gold confiscation by governments, jewelry and a small number of coins were often exempt from government policies surrounding confiscation. Any investor’s travel to a developing country that is predominantly communist (IE Cuba and the like) may notice that many people flaunt their wealth using gold chains, particularly men. This isn’t by accident, and it’s not just to show off one’s riches. It’s a strategy for protecting wealth and keeping it out of the hands of the government. The more links your chain has and the more it weighs, the more value you have stored away for a rainy day.
You don’t have to be Cuban or living under the rule of a communist government to take advantage of this. Famed Hollywood actress Elizabeth Taylor was known to wear lots of jewelry when crossing borders, sometimes millions of dollars’ worth of gold and jewelry. She had stashes in several countries and transported items just by doing this. It wasn’t some elaborate scheme, but rather a very smart idea. Not that she was necessarily worried about having anything confiscated, but you get the point.
Invest in Bitcoin
Bitcoin is known as digital gold. Investing and it is as simple as converting cash and finding a website that will sell it to you. Yes, it’s true that you can also invest in a Bitcoin IRA. But again, if you’re trying to keep digital gold out of the hands of the government, it might be better to store some on a hardware wallet that isn’t connected to a retirement account. Whether or not you decide to do that depends on how much of a libertarian or conspiracy theorist you happen to be.
Bitcoin is a long-term investment just like anything else, and even though it’s more volatile than most other assets, it’s 11 year run of increasing in value over time seems to still be trending in a positive direction overall.
Final Thoughts on Gold Confiscation
The idea of governments confiscating gold is always a possibility. Now that you know the history of it and what you can do about it going forward, take the opportunity to insulate yourself from risk. The most successful investors in the world do just that. They don’t invest in anything trying to hit a home run. Rather they invest to avoid losing money and the prophet in the long term based on sound decision-making and outside the box thinking.
The gold you own should be yours and yours alone and with the gold investment options available today and that many exotic locations around the world that are willing to store it for you, there’s no reason to expose your hard-earned assets to the long arm of the law or the surveilling eyes of governments.