The 1933 Gold Seizure
In March 1933, America was sinking into the Great Depression. Citizens across the country worried that the government would simply print more paper money, causing rapid inflation that would make cash virtually worthless. In response, Americans rushed to exchange their cash for gold.
Until this point, paper money was still backed by gold, and everyone assumed that the government actually had enough gold to back its paper currency. The sudden demand, however, overwhelmed America’s banks and threatened the already-precarious American economy.
To prevent a total collapse, newly-elected President Franklin Delano Roosevelt issued an executive order, requiring that all citizens return their gold to the Federal Reserve Bank, in exchange for paper money. This executive order was closely followed with another, forbidding banks from paying out gold and preventing people from sending gold abroad.
The Source of the Myth
President Roosevelt exempted "gold coins having recognized special value to collectors of rare and unusual coins.” He did not offer further clarification on which coins were exempt. As a result, many coin dealers and precious metals firms now claim that certain coins would be exempt from another confiscation, should the United States be sunk into another national crisis.
Generally, these unscrupulous dealers use the myth of a potential gold recall to inflate prices on supposedly “exempt” coins.
- Pre-modern bullion: Dishonest dealers may claim that coins 100 years or older qualify as antiques, and are therefore not eligible for confiscation. Generally this tactic is used to inflate prices of St. Gaudens Double Eagles and other pre-1933 bullion. While, these coins have intrinsic value for their beauty, history, and precious metal content, coin dealers may justify higher premiums, since these coins make a “safer” investment.
- Coins with a 15% or higher premium: Some precious metals and coin firms will simply mark up all their coins at least 15%, under the guise that coins marked up this much automatically count as “collectibles.” This arbitrary number has no legal precedent, but does provide an easy profit margin for dealers who mislead ill-informed, novice collectors and investors. Honest coin dealers will only ask the market price, which is based on the coin’s quality and desirability.
- European coins: Dealers may argue that European coins would be exempt from future confiscation since they are not legal tender in the United States. They will use this rationale to substantially mark up coins like British Sovereigns, Swiss and Danish 20 Francs, Swedish and Danish Kroner, and Dutch 10 Guilders. Because these coins command a low premium over the price of their bullion value, they can be purchased cheaply and resold to unsuspecting collectors and investors at a fraudulently exaggerated mark-up.
It is important to note that these dealers are not selling coins that have absolutely no value. On the contrary, they are simply using false pretenses to scare people into paying too much money for gold bullion coins.
The Facts about Future Gold Confiscation
Roosevelt’s order would have no legal effect on any future gold confiscation. Furthermore, President Gerald Ford repealed the order in December 1974, right before he reinstated American citizens’ right to own gold. Congress went one step further in 1977, stripping the president’s authority to control gold transactions, except during war. These actions set a strong precedent for the government’s non-interference with citizens’ gold acquisition and possession, even in times of national emergency.
Gold bullion continues to be an outstanding investment option. In addition to bullion bars, coins such as the Krugerrand, Gold Eagle, and Maple Leaf, offer stable value that any investor can easily track.
This information is provided for general reference purposes and does not constitute professional advice. For detailed coin collecting or investing information, please consult with a professional expert.