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Gold Confiscation: Could it Happen Again?
With the dollar growing weaker and the price of gold skyrocketing, could we see a repeat of the 1933 gold confiscation?
The eventual result of the Bailouts will be inflationary and will further weaken the dollar. The flip side to a weak dollar is a rising gold price. All other things being equal, gold will continue to climb higher as the dollar moves lower. Today, just as in 1973 when gold began its last, big bull market, gold and the dollar are competitors, riding opposite ends of an economic seesaw.
In the 1980s and 1990s, gold languished and was replaced by the dollar as the standard against which all things financial are measured. In the coming years, as the dollar suffers one of the great meltdowns in monetary history, gold will reclaim its place at the center of the global financial system. Gold's value, relative to most national currencies, will soar.
However, the monetary crisis that will make your gold extraordinarily valuable will also create the very situation in which the government could return to some version of the gold standard, which would require that central banks enlarge their stocks of gold, increasing the gold price.
The problem is that the very circumstances that would make your gold so valuable could also result in its being taken from you. In 1933, in order to stabilize the monetary system, President Franklin D. Roosevelt, under Executive Order No. 6102, confiscated all privately owned gold in the United States. Could it happen again? No two currency crises are exactly alike. However, it may be important to consider the reason why confiscation or expropriation is even relevant: the fact that, if it eventually became necessary for the U.S. to bolster a collapsing dollar with gold, we no longer have enough gold to do so in any meaningful way. As our debt and deficits have soared over the years, and as more and more dollars have been created, U.S. gold reserves have disappeared. In 1950, the United States Department of the Treasury owned 68.2 percent of the world's total gold reserves. Today, the Treasury owns less than 28 percent.
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What You Need to Know
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What Happened in 1933?
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