• Steve H. Hanke
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    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: Gold Confiscation - Straws in the Wind

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Tue, 09/14/2010 - 15:37 | 581468 traderjoe
traderjoe's picture

From my cold, dead hands Bitchez!

Tue, 09/14/2010 - 16:26 | 581617 Oracle of Kypseli
Oracle of Kypseli's picture

This legislation is being repealed as we speak. Check the news on the IRS 1099 reporting.

Tue, 09/14/2010 - 17:38 | 581769 Dantzler
Dantzler's picture

Not so fast, mate.

"Neither amendment achieved the 60 votes necessary to proceed to a final vote for possible inclusion in the “Small Business Jobs and Credit Act of 2010,” which is still under consideration in the Senate."

http://www.modernhealthcare.com/article/20100914/NEWS/309149984

Tue, 09/14/2010 - 21:59 | 582246 jeff montanye
jeff montanye's picture

another reason to own gold and silver stocks.

Tue, 09/14/2010 - 15:49 | 581494 UGrev
UGrev's picture

I swear to god; I said the same thing (in my head) that you posted. Only I had a clear picture of Heston in a Turkey bubble above mine :)

I don't think people will obey this time around. Anyone have any good info on how much resistance there was during the Gold Confiscation Act's employment? 

Tue, 09/14/2010 - 15:56 | 581520 Hansel
Hansel's picture

I agree there will be too much resistance this time.  For them to initially confiscate gold, then make it legal for people to own again, then confiscate it once again is too much.

Tue, 09/14/2010 - 16:06 | 581555 1100-TACTICAL-12
1100-TACTICAL-12's picture

Gold nor Guns will be confiscated,talk about revolution.

Tue, 09/14/2010 - 22:09 | 582265 jeff montanye
jeff montanye's picture

there was no violent resistance.  probably much passive resistance/movement of assets beyond borders.  or refusal to turn the stuff in.  little was really "seized".  prosecutions were mostly the result of bank transactions.  they were few and all were guilty at trial, eventually (even if new legislation had to be passed).  hear tell it was all melted into ingots, still in knox or ny, but lower purity than will trade.  it may be most of what's left (or not).

Tue, 09/14/2010 - 16:34 | 581635 e_goldstein
e_goldstein's picture

It wasn't really a confiscation, people were compelled to turn their gold in for FEDREZ notes.  It's estimated they got about half of the gold that was in circulation.

Tue, 09/14/2010 - 18:00 | 581807 DosZap
DosZap's picture

They got less that 20 Tons total.

Where do you think the near UNLIMITED supply of Eagles and Libs came from in this country now?.

From Europeans, after the ban was lifted.They hoarded the crap out of them.

There are more availbale than anyone one person has FRN's.......anybody.

As for Gline, they love to push austrian corona  shit, and soverigns,(as valuable Non confiscatible collectibles, LOL.

Like other pm sellers, use scare tactics to sell the highest premium crap JUST like them.

The dude on T.V. in the interview, is a loon.

If he was that broke he should have bought silver.

I am sure he goes to a car dealer, and pays sticker or above, for his cars,without a flinch.

Call the Whine Line.

Pussy.

 

Tue, 09/14/2010 - 15:55 | 581513 Azannoth
Azannoth's picture

Be careful you might just get what you wish for

Wed, 09/15/2010 - 08:20 | 581516 Translational Lift
Translational Lift's picture

The Gubment can arrange that...........Luckily....We outnumber them.............

Tue, 09/14/2010 - 16:01 | 581539 Rahm
Rahm's picture

Barter Bitzhez!

Tue, 09/14/2010 - 16:02 | 581545 unwashedmass
unwashedmass's picture

 

there will be a black market. count on it. no one is going to be trading a gold coin for tissue dollars.....or blithely paying a VAT....

 

 

Tue, 09/14/2010 - 20:44 | 582128 thefatasswilly
thefatasswilly's picture

Yes, that's the plan. From your cold, dead hands.

Please, all of you, hoard as much gold as possible. It will do you much good against commando squads sponsored by the pentagon (and yours truly).

Wed, 09/15/2010 - 01:41 | 582641 Bendromeda Strain
Bendromeda Strain's picture

I fart in your general direction, shmuck. Molon Labe, keyboard commando.

Tue, 09/14/2010 - 15:38 | 581470 NOTW777
NOTW777's picture

clear path to physical violence (not recommending - just saying)

Tue, 09/14/2010 - 15:45 | 581484 LoneStarHog
LoneStarHog's picture

Relatively speaking there are damn few physical gold owners.  Those who do have gold also are the people well-armed with plenty of ammo.  Let's take a low figure and say one million, all in different locations. Now Waco, Ruby Ridge, et al. were easy pickings for government thugs. Waco also showed what can happen to thugs who get too damn confident.

So one must ask, what would be the benefit to the government to go after these relatively few people, most having gold, but in small stashes.  The real gold in quantity already being held by TPTB, even if Fort Knox is empty.

It would be in the best interest of the government to just let these gold owners become the new Middle Class in the aftermath.

Tue, 09/14/2010 - 16:08 | 581558 traderjoe
Tue, 09/14/2010 - 16:25 | 581613 bronzie
bronzie's picture

there are a number of big stashes - they are called ETFs

Tue, 09/14/2010 - 16:36 | 581643 LoneStarHog
LoneStarHog's picture

We are discussing physical gold IN YOU POSSESSION.  It is doubtful that ETFs have anywhere near the physical gold claimed.  I have always said that ETFs serve two purposes:  1) To take demand away from the physical market and into paper

2) To have physical, in whatever quantities, in one place for easy confiscation.

Attempting to confiscate small stashes in MILLIONS of well-armed locations would be pure stupidity.  Just let those become the new Middle Class.

Tue, 09/14/2010 - 16:46 | 581661 RockyRacoon
RockyRacoon's picture

You are right that there are few gold owners -- anywhere.  I've seen fence-sitters waiting for a "reasonable entry point" for the last 10 years.  Losers.

I hesitate to post the entire article, but David Ganz has a nice treatment of the last gold confiscation, and the possibilities of another one.   Ganz is an attorney and is well known by any coin collector and has been in the business all his life.  I am a coin dealer as well so I have to stay on top of this topic.  Below are a few excerpts from his article which appeared in Numismatic News on Sept 9th, as well as a link to the original.

A Florida reader has asked about whether possible gold  seizure actions by the U.S. government, which some say is in the offing, make out a case for investing in gold coins of foreign countries, and asks as an ancillary question whether or not those who strongly believe in gold ought to consider holding some (or all) of their gold outside the United States.

...no one who is contemplating this has shown me the text of the proposed Presidential Finding and Declaration that would be most likely to be necessary in order to force the surrender of bullion, hallmarked items and coins. But I can guess what it will have to say (“national emergency”) and several other key lines of verbiage based on past action.

Just how successful the program of turning in gold was has not been fully explored. I took my collection of Mint reports that go back to 1867 and put a spreadsheet together. See the chart below.

Here’s what these statistics mean: the government’s “voluntary” gold coin retirement program actually took in and melted 125 million gold coins of 351 million gold coins ever produced by the United States from 1795-1933. That constitutes melting 39 percent of all the double eagles struck, 47 percent of all the $10 coins manufactured, and about a third of the $5 gold coins that were produced by the U.S. Mints. Most of this took place 1933-1939 under the “voluntary” recall.

Quite besides the $1 to $20 gold pieces melted, foreign gold coin was also turned in. According to the 1934 Mint report, between 1870 and 1934, the U.S. was a net exporter of gold coin to the extent of about $1,651 million ($1.6 billion, valued at $35 an ounce (or about 45.7 million troy ounces of gold.

However, saved from the melting pot were collector coins. During the 1933 gold recall, citizens were permitted to retain “rare and unusual coin,” as much because the constitution prohibits a taking without just compensation, as because even in 1934, coin collectors and the general public understood that coins had a value that exceed face value or metal content.

The coins that were ultimately declared “collectible” were all U.S. gold coins made prior to 1933; later, all foreign gold coins minted before 1960 were in the equation. Specifically, the law and regulations allowed up to five of each date and mintmark to be held.

That is, for a $20 gold piece, $100 face value in gold coin for each date and mintmark. There are over 190 double eagles and that would allow a collector to acquire 950 gold double eagles at a minimum), which amounts to about 919 ounces of gold worth at current gold price (about $1.1 million). The $10 gold coin set has over 336 eagles in it or about 1,680 coins.

In context, the value at melt is about 806 troy ounces or another $967,000. What the heck: the $5 gold piece collection has over 225 dates and mintmarks from 1839 to 1908, alone (1,125 coins) (another 288 ounces, or about $345,000).

Completely forgetting numismatic value, the gold content of that collection alone would be around $2.5 million (and we haven’t gotten to quarter eagles yet). That should be enough to shield most people from seizure of their gold assets.

There follows a chart showing the makeup of a nice, safe gold holding.  In many cases the collector premiums are very small -- and besides, collecting coins is fun!

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=13775

 

Tue, 09/14/2010 - 18:06 | 581822 boiow
boiow's picture

good article.   i'm sure i speak for a lot of people here in valueing your ZH contributions.

Tue, 09/14/2010 - 18:18 | 581845 RockyRacoon
RockyRacoon's picture

Thank you.  I guess I get frustrated over the number of instant experts on every subject, stirring a pot of some sort all the time and displaying ignorance.  I try to reserve my comments to 2 areas.  1. Topics upon which I have real world or career experience.  2. Totally irritating snark.  Otherwise, I keep my trap shut.

Tue, 09/14/2010 - 18:43 | 581914 ColonelCooper
ColonelCooper's picture

LOL.  I always enjoy your posts, Rocky.  I didn't think that last one was snarky at all... ;)

Tue, 09/14/2010 - 18:46 | 581917 Cognitive Dissonance
Cognitive Dissonance's picture

Even RR's snark is usually filled with some wisdom and insight.

Then again, you'd expect someone who's 96 years old to have a few nuggets of Gold to pass around. :>)

Tue, 09/14/2010 - 19:29 | 581999 Hulk
Hulk's picture

Thats one old Coon. I hope I am alive when I am 96!

Wed, 09/15/2010 - 13:26 | 583504 RockyRacoon
RockyRacoon's picture

Rummaging in garbage cans has its advantages.

And messing with the family dog:

http://www.dark-logic.com/images/raccoon.jpg

Tue, 09/14/2010 - 18:47 | 581918 amusedobserver
amusedobserver's picture

Most people don't realize:

1.  The "national emergency" that FDR deemed to exist 1934, in justification for his gold confiscation, was World War I in 1917.  (Go ahead, google his executive order and read it, it's not that long.)

 

2.  The price of gold from the founding of the Republic thru the time of the confiscation was set at $20.67 the ounce.  Nine months after the confiscation, FDR devalued the dollar 40% to $35 the ounce.  That is, if you wanted to buy an imported item from a country still on the gold standard it would cost 69% more dollars.  So he not only took in everyone's gold, he then creamed their wealth for good measure.

 

3.  Anyone who thinks FDR is a great man and one of our best presidents is an ignorant jackass.  He was nothing more than a premeditated thief.

Tue, 09/14/2010 - 22:30 | 582304 jeff montanye
jeff montanye's picture

i don't know about premeditated; he seems to have been making up most of it as he went along.  still, four elections.  excellent point about ww1; it gets neglected in this.  another reason to avoid wars: they generate such bad legislation (fdr's other world class crime: the japanese internment in ww2).

Tue, 09/14/2010 - 20:57 | 582160 thefatasswilly
thefatasswilly's picture

Government will be much more aggressive this time around; this depression is far more severe.

Tue, 09/14/2010 - 20:47 | 582139 thefatasswilly
thefatasswilly's picture

You have assault rifles. Government has small, specially trained squads with nightvision, grenades, and most importantly, superior numbers/teamwork. Pentagon is probably collecting information on you as I type this, because you have revealed yourself to be a gold hoarder. Thank Confucius for the internet.

Thus, in response to your comment, LOL. LOLOLOLOOLSJAFOADL

Wed, 09/15/2010 - 01:44 | 582645 Bendromeda Strain
Bendromeda Strain's picture

You really are a douche. Come get me first, sarge. The only rifle you've held was white with a Nintendo logo.

Wed, 09/15/2010 - 10:19 | 583070 thefatasswilly
thefatasswilly's picture

Rather be a douche than be a dimwit who is incapable of reading comprehension.

I'm not the pentagon, you fucking idiot. Don't post, ever again.

Wed, 09/15/2010 - 16:53 | 584080 The Rogue Economist
The Rogue Economist's picture

 

"It would be in the best interest of the government to just let these gold owners become the new Middle Class in the aftermath." I think that this mostly sums it up. What most people don't realize is that the government doesn' have to come into your house to confiscate your physically held gold. All they have to do is to set an incredibly high tax rate on the profits of any sale with an assumed 100% profit without documentation. This wouldn't affect the highly wealthy that much, as they would be able to use their larger stores of gold as collateral in loans, which would then be used to scoop up assets at pennies on the dollar in a crisis. I always find it interesting how some coin vendors tout collectables as a way to avoid confiscation, all the while missing or avoiding two key points: 1). Any president who even mentioned the words "wedding ring" in a confiscation order, no matter how bad the crisis, would be committing political suicide. 2). A look into countries with a black market in gold, but no nearby natural source (gold mine) reveals that if you want to trade your gold for a bag of rice, they're going to give you the going rate for 10k jewelry, even if you have pure 24k bullion. In a hyperinflation situation, not only is it dangerous to flash a full gold coin in front of others, they probably won't have enough goods to give you full value. This means that you'll have to shave coins, which renders their pedigree and gold purity stamping useless. If the government is smart when TSHTF, they'll make special dispensations through government approved vendors while sympathizing with the people having to snip up their wedding rings to eat. That way they'll get midt of the gold, and it will be turned in gratefully. Bullion and coins are good, but use 10k gold to survive, then use the bullion to secure loans once the banks restabalize. Collectables are for collectors, not survivalists. (my apologies for any typos. I'm replying on a cell phone keyboard.)

Tue, 09/14/2010 - 15:51 | 581490 Azannoth
Azannoth's picture

The people of America where in a 100x better position 80 years ago to defend their gold and they didnt, I kind sorta think that today the government would get away with this sorta thing even more easily, most people like 60% think that only 'fat cats' own gold and would very likely support a confiscation

Tue, 09/14/2010 - 15:51 | 581499 LoneStarHog
LoneStarHog's picture

They were given gold-backed dollars back then. Get a clue!

Tue, 09/14/2010 - 16:49 | 581678 alien-IQ
alien-IQ's picture

actually, I don't think so.

1934: The obligation is changed. The bill is no longer redeemable in gold, but rather in "lawful currency". This is due to the U.S. being taken off of the gold standard. "Lawful currency" in this case means silver.

The Gold confiscation act was April 5, 1933.

So in a sense they took your gold and gave you paper. Oh yeah...nice trade.

Tue, 09/14/2010 - 17:25 | 581745 MarketTruth
MarketTruth's picture

More USA gold confiscations talk... and China is asking their citizens to buy gold, which is VERY WIDELY available as was there a few months back and you could easily buy gold bars in malls, jewelry stores, at many banks, etc.

So ask yourself why China is asking their citizens to buy gold and it is wodely available yet within the USA you must seek it out and virtually all banks do not sell gold. What is the USA afraid of?

 

Tue, 09/14/2010 - 20:54 | 582152 thefatasswilly
thefatasswilly's picture

Prob responding to a rhetorical question, but: loss of status as world reserve currency, and thus subsequent collapse (from such a loss and many other factors).

U.S. is trying to stall economically until it can enter WWIII, at which time it will use its only source of remaining power.

Many countries will side against the United States (whose capitol is located in the middle east nowadays), for two reasons: its currency reserve status and subsequent ludicrious economic behavior.

This war will be spectacular. "Win" or "lose," zhong guo will profit most.

Tue, 09/14/2010 - 16:03 | 581546 Slartebartfast
Slartebartfast's picture

Everything I have read states that only a very tiny percentage of ordinary folks surrendered their gold.  There was also a black market for some time.  There was also selling it outside the country.  Anything but obeying like a good slave.  Then or now.

Tue, 09/14/2010 - 16:11 | 581568 traderjoe
traderjoe's picture

I read that they gave people a lot of notice, and most people with substantial holdings moved their gold to Europe...

Tue, 09/14/2010 - 16:47 | 581670 RockyRacoon
Tue, 09/14/2010 - 16:54 | 581684 alien-IQ
alien-IQ's picture

No the "average person" was not given much advance notice at all.

The executive order was issued on April 5, 1933 and all Gold had to be delivered by May 1, 1933. A little less than a month. Not much time at all.

Wed, 09/15/2010 - 01:47 | 582646 Bendromeda Strain
Bendromeda Strain's picture

And everyone was entitled to keep 5 ozt personal stash. So, aren't you also holding for your "extended" family?

Tue, 09/14/2010 - 16:14 | 581580 Azannoth
Azannoth's picture

America has 1 weekness all of you people who think themselves patriots(to America not its governmnet) well there are just as many if not more people who think of themselves as Patiots serving the Government or on government dole, its like during the Civil War the south and north both thought of themselves as the 'good guys' the biggest carnage in the history of your country happened because you fought a 'Patriotic War' people can be made to do the stiupidest and evil things in the name of Patriotism and Religion and no doubt the next war will be a 'Patriotic war' or 'Religious war' (aren't they all btw?)

Tue, 09/14/2010 - 16:26 | 581615 cossack55
cossack55's picture

Patriotism is the last refuge of a scoundrel.

 

                              Dr. Samuel Johnson

Tue, 09/14/2010 - 16:22 | 581605 bronzie
bronzie's picture

those people 80 years ago were far more compliant than people are today

those people of yorn also trusted their government and believed that the govt had their best interests at heart

anyone today who believes the govt has their best interests at heart is delusional

~

I read a lot about the precious metals but I have never seen any numbers for how much gold was actually turned in in 1934 - I inherited some of the gold that DIDN'T get turned in which makes me wonder if compliance was really all that high even 80 years ago

 

Tue, 09/14/2010 - 16:51 | 581675 RockyRacoon
RockyRacoon's picture

Numbers on that here:

http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=13775

Here is a small part of the article:

...the government’s “voluntary” gold coin retirement program actually took in and melted 125 million gold coins of 351 million gold coins ever produced by the United States from 1795-1933. That constitutes melting 39 percent of all the double eagles struck, 47 percent of all the $10 coins manufactured, and about a third of the $5 gold coins that were produced by the U.S. Mints. Most of this took place 1933-1939 under the “voluntary” recall.

Quite besides the $1 to $20 gold pieces melted, foreign gold coin was also turned in. According to the 1934 Mint report, between 1870 and 1934, the U.S. was a net exporter of gold coin to the extent of about $1,651 million ($1.6 billion, valued at $35 an ounce (or about 45.7 million troy ounces of gold.

However, saved from the melting pot were collector coins. During the 1933 gold recall, citizens were permitted to retain “rare and unusual coin,” as much because the constitution prohibits a taking without just compensation, as because even in 1934, coin collectors and the general public understood that coins had a value that exceed face value or metal content.

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