A Dark Day in Economic History; Could It Happen Again?

The comments below are an edited and abridged synopsis of an article by SchiffGold

On April 5, 1933, President Roosevelt issued EO-6102; it was the beginning of the end for the gold standard.

A Dark Day in Economic History; Could It Happen Again? - BullionBuzz - Nick's Top Six
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Many people refer to EO-6102 as a gold confiscation order. But confiscation is probably not the best word for what happened in practice.

In effect, the executive order criminalized owning gold. People caught with more than small amounts of gold could face a fine of $10,000 or 10 years in prison for hoarding the yellow metal. The order required private citizens, partnerships, associations and corporations to turn in all but small amounts of gold to the Fed at an exchange rate of $20.67 per ounce.

In effect, EO 6102 nationalized gold, but it didn’t really lead to gold confiscation. Americans turned in gold to the government, but they did so voluntarily and the government gave people dollars in return. The feds never made any concerted effort to confiscate gold by force. They never went door to door looking for gold, and few were prosecuted.

Today, people warn against owning gold because the government can confiscate it again. Some coin dealers and precious metals pundits cling to this argument to instill fear and bolster the sale of what they claim are confiscation-free products.

Of course, it is theoretically possible for the government to confiscate gold. It’s also theoretically possible for the government to confiscate cell phones. That doesn’t mean it will.

Even if you view the Roosevelt executive order as a warning sign, it’s important to understand that the political and economic dynamics are much different today than they were in 1933. The world was on a gold standard and the economy was in a deep recession. The nationalization of gold was all about controlling the monetary system, and it worked.

Today, the Fed has complete authority to expand the money supply and control interest rates. This is done with or without gold reserves. In other words, the government doesn’t need your gold.

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