Jonah Patel
In 1933, Franklin D. Roosevelt, President of the United States, issued an executive order that made it a criminal offence for US citizens to own or trade gold anywhere in the world. This executive order, known as Executive Order 6102, led to the extreme rarity of the 1933 Double Eagle gold coin, as it caused all gold coin production to cease and all 1933-minted coins to be destroyed. The order also permitted individuals to hold up to $100 in gold coins, which equates to about 5 troy ounces (160 g) of gold, valued at approximately $10,000 in 2020. However, it is important to note that the executive order exempted gold coins having a recognized special value to collectors of rare and unusual coins, which means that recognized gold coin collections were protected from legal seizure. This exemption was further amended in 1954 to include gold coin made prior to April 5th, 1933.
| Characteristics | Values |
|---|---|
| Date | Post-1933 gold coins are extremely rare due to Executive Order 6102, which ceased gold coin production and ordered the destruction of all 1933-minted coins. |
| Rarity | Rare and collectible coins are generally exempt from confiscation. |
| Value | Gold coins with a "recognised special value" to collectors of rare and unusual coins are exempt from confiscation. |
| Amount | Individuals are permitted to hold up to $100 in gold coins, equivalent to 5 troy ounces (160 g) of gold, valued at approximately $10,000 in 2020. |
| Location | The UK's Exchange Control Act of 1947 made it illegal for UK residents to hold more than four gold coins dated after 1817 without a collector's license from the Bank of England. |
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What You'll Learn
- Roosevelt's Executive Order in 1933 exempted collector coins
- The UK's Exchange Control Act 1947 banned gold trade in 1966
- US Gold Reserve Act, 1934: surrendered gold to the US Treasury
- Gold Confiscation: Rare or collectible coins are not exempt
- Gold coins: Telemarketers promote European coins as 'non-confiscatable'
Roosevelt's Executive Order in 1933 exempted collector coins
On April 5, 1933, US President Franklin D. Roosevelt signed Executive Order 6102, which forbade the hoarding of gold coins, gold bullion, and gold certificates within the continental United States. The order required all individuals to deliver all gold coins, bullion, and certificates to the Federal Reserve, receiving $20.67 per troy ounce in exchange. Non-compliance was punishable by a $10,000 fine, up to ten years in prison, or both.
However, Roosevelt's Executive Order specifically exempted "gold coins having recognized special value to collectors of rare and unusual coins". This provision protected recognized gold coin collections from legal seizure, allowing collectors to retain their rare and valuable coins. The order also permitted individuals to hold a small amount of gold for personal use, up to $100 in gold coins, equivalent to 5 troy ounces.
The Executive Order was enacted to address the economic challenges of the Great Depression. By removing the constraint on the Federal Reserve, the order aimed to increase the money supply and stimulate economic growth. The subsequent Gold Reserve Act of 1934 further addressed these issues, banning gold exports, restricting ownership, and halting the convertibility of paper money into gold.
The impact of Roosevelt's Executive Order on numismatics was significant, particularly with the extreme rarity of the 1933 Double Eagle gold coin. The order halted gold coin production and led to the destruction of all 1933-minted coins, with a few stolen coins becoming highly valuable. Additionally, the mass melting of gold coins created rarities out of certain $20 Saint-Gaudens coins from 1927, 1930, and 1932.
While collector coins were exempted from confiscation, the overall impact of Roosevelt's Executive Order and the Gold Reserve Act had lasting consequences on the financial infrastructure of the United States. The exemption for collector coins in 1933 may not be guaranteed in any future confiscations, as the government's primary focus was on obtaining monetary control of gold bullion.
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The UK's Exchange Control Act 1947 banned gold trade in 1966
In 1966, the UK government amended the 1947 Exchange Control Act to include the importation of gold coins, banning gold trade in the UK. This amendment imposed restrictions on the possession of gold bullion and limited the ownership of gold coins. UK residents could only legally possess up to four gold coins dated after 1837 without a special licence from the Bank of England. This restriction aimed to prevent people from hoarding gold during a period of rising living costs and inflation.
The 1966 amendment caused some controversy, as it was seen as potentially destructive to the open market and difficult to enforce. While some individuals declared their gold holdings, many others may have chosen to keep them concealed. It is important to note that gold possession was never explicitly banned in the UK, and there were no confiscations as occurred in the United States during a similar period. The section of the Exchange Control Act concerning gold was eventually dropped in 1971, and the act was fully repealed in 1979, restoring British citizens' freedom to trade and possess gold bullion.
The UK's experience with gold trade restrictions under the Exchange Control Act differs from the United States' more drastic gold confiscation in the 1930s. In 1933, US President Franklin D. Roosevelt signed Executive Order 6102, which forbade the hoarding of gold coins, bullion, and certificates within the country. This order required US citizens to surrender their gold holdings to the Federal Reserve in exchange for $20.67 per troy ounce, which devalued the dollar and allowed the Federal Reserve to print more paper money. While there were exemptions for specific industries and rare coin collections, the order caused all gold coin production to cease, and violations were punishable by hefty fines and prison sentences.
The UK's Exchange Control Act and the subsequent amendment in 1966 focused on restricting gold imports and limiting gold coin ownership to prevent hoarding during economic instability. In contrast, the US government's actions under Executive Order 6102 led to more extreme measures, including the cessation of gold coin production and the confiscation of gold holdings, with less emphasis on exemptions for collectors and specific industries.
While the UK's Exchange Control Act did impose restrictions on gold trade, it did not result in the same level of gold confiscation as seen in the United States under Executive Order 6102. The UK's approach focused on controlling imports and limiting ownership to a small number of gold coins, while the US government's actions were more direct and involved the forced surrender of gold holdings from citizens and even foreign entities.
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US Gold Reserve Act, 1934: surrendered gold to the US Treasury
The US Gold Reserve Act of 1934 was signed into law by President Franklin D. Roosevelt on January 30, 1934. The Act was the culmination of Roosevelt's controversial gold program, which began in 1933 with restrictions on the private use of gold. The program required businesses to apply to the Fed for gold bars.
The Gold Reserve Act mandated that all gold and gold certificates held by private individuals, institutions, and the Federal Reserve be surrendered to the US Treasury. This included all coins and bullion. In return, individuals and institutions received currency at a rate of $35 per ounce of gold, a significant increase from the previous rate of $20.67 per ounce. This change in price incentivized global gold miners and foreigners exporting gold to the US to expand production, while also devaluing US currency.
The Act also prohibited the Treasury and financial institutions from exchanging US dollars for gold, effectively converting gold from a currency to a commodity. This allowed the Treasury to buy gold internationally, further devaluing the dollar in foreign exchange markets. The Exchange Stabilization Fund was established under the control of the Treasury to control the dollar's value without the assistance of the Federal Reserve.
The Gold Reserve Act was passed at the height of the Great Depression, with the intended effect of increasing the money supply and stabilizing deflation. The law also gave the government more control over the domestic money supply. The Federal Reserve System had become troubled during this period, and the Act served to transfer its powers to the Treasury.
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Gold Confiscation: Rare or collectible coins are not exempt
Gold confiscation is not a new concept. In 1933, President Roosevelt's Executive Order 6102 required all US citizens to deliver all gold coins, bullion, and certificates to the Federal Reserve in exchange for $20.67 per ounce. This order was amended in 1934 by the Gold Reserve Act, which raised the price of gold to $35 per ounce. While this may seem like a positive move for gold owners, it actually devalued the US dollar, allowing the Federal Reserve to print more paper money.
The Executive Order of 1933 specifically exempted gold coins with a "recognised special value to collectors of rare and unusual coins". This led to the belief that certain gold coins are "non-confiscatable". However, this is a myth. The order did not define "special value", "collectors", or "collectibles", and there is no guarantee that such an exemption would be made again in the future. Telemarketers often perpetuate this myth to sell high-priced coins, but investors should be aware that there is no such thing as "non-confiscatable" gold.
In addition to the 1933 Executive Order, there have been other instances of gold confiscation by the US government. The Trading with the Enemy Act of 1917, as amended in 1933, allowed for fines and imprisonment for violations of the order. Executive Orders 6260 and 6261, issued under the signature of the Secretary of the Treasury, provided for the seizure of gold and the prosecution of gold hoarders. Numerous individuals and companies were prosecuted, and foreigners also had their gold confiscated, receiving paper money in return.
While gold confiscation may seem like a distant memory, it is important to remember that it could happen again. The bottom line is that confiscation did happen, it was repealed, but future confiscations are possible. Laws can and do change. Investors should be cautious when purchasing expensive old or collectible coins in the hopes of avoiding confiscation, as they may end up paying unnecessarily high prices. Instead, it is recommended to buy gold coins and bullion from trusted precious metal refiners at fair prices.
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Gold coins: Telemarketers promote European coins as 'non-confiscatable'
Gold coins have long been an attractive investment option, especially during periods of economic uncertainty. However, the idea of "non-confiscatable" gold coins is a myth. In 1933, amidst the Great Depression, President Franklin D. Roosevelt issued Executive Order 6102, making it illegal for Americans to own gold bullion or gold bullion coins. This order, which stood until December 31, 1974, led to the confiscation of gold and the issuance of paper currency in exchange. While certain rare and collectible coins were exempted from confiscation, there is no guarantee that such exemptions will apply in the future.
Telemarketers often promote European coins as "non-confiscatable," using fear-inducing tactics to scare potential investors. They dismiss standard gold bullion coins, such as American Gold Eagles and Krugerrands, as "confiscatable," encouraging people to buy gold coins at grossly inflated prices. Unfortunately, many investors have suffered significant financial losses due to these deceptive practices.
The telemarketers' claims of "non-confiscatability" are unfounded, and there is no legal basis for their assertions. While it is true that the 1933 Executive Order exempted certain coins with a "recognized special value to collectors of rare and unusual coins," this does not guarantee that future confiscations will follow the same rules. The bottom line is that confiscation did happen once and could happen again.
Investors interested in purchasing gold should be cautious and informed. Instead of buying gold coins at highly inflated prices, investors are usually better off with basic bullion products like American Gold Eagles, Krugerrands, or gold bullion bars, which can be purchased at a small premium over their gold content value. Additionally, it is essential to deal only with reputable dealers and avoid making impulsive decisions based on fear or emotional triggers.
In conclusion, while gold coins can be a valuable investment, it is crucial to understand that no gold coins are inherently "non-confiscatable." Investors should be wary of telemarketers promoting European coins as such and instead focus on dealing with reputable dealers and making informed, logical decisions. By staying informed and cautious, investors can protect themselves from potential financial losses and make sound investments that align with their financial goals.
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Frequently asked questions
Gold Confiscation refers to the US government's seizure of gold from its citizens. This was done through Executive Order 6102, which made it illegal for US citizens to own or trade gold, and Executive Order 6260, which regulated the hoarding, export, and earmarking of gold coins.
The dates that constitute gold collector's coins from confiscation are not entirely clear. However, it seems that coins with dates prior to April 5, 1933, may be exempt, as the Treasury Department amended the Gold Regulations in 1954 to include this date. Additionally, in 1966, the UK introduced a law that made it illegal for UK residents to hold more than four gold coins dated after 1817 without a collector's license.
Yes, rarity and value are also considered. Executive Order 6102 exempted "gold coins having a recognized special value to collectors of rare and unusual coins." However, the terms "special value," "rare," and "unusual" were not defined, and it is unclear how these exemptions are determined.
