Over and over you’ll hear gold dealers claim that you need to buy rare or numismatic coins to avoid government confiscation. What they are really saying, is “buy our more expensive coins so we can make more money.”
I can flat out say that a gold dealer who sells rare coins is in the business of making a larger profit off of fear tactics like confiscation, than a gold dealer who sells just bullion coins.
In fact, you won’t hear a gold dealer who sells just bullion gold and silver coins and bars ever advertise on Glenn Beck’s radio or television show, or any other show for that matter. Why? Because it’s just too expensive. There is not a high enough mark-up on bullion gold and silver to allow any profits generated the funds necessary to use towards advertising on these programs.
The following is an excerpt from my book; “Buy Gold and Silver Safely,” that goes into gold dealer confiscation tactics and other means gold dealers use to get you to buy highly marked up coins.
“Gold dealers will make certain statements that play on the ignorance of those who call in after hearing an ad on the radio or TV. Gold salespeople will say things like, “Are you aware that in 1933, the government took gold coins away?” Most people don’t realize this is true, which will be explained in a moment.
The gold salesperson will then ask “What kind of gold do you want, the gold that can be confiscated, or the gold that can’t?” Or word the question this way: “Do you want government gold or private gold?” “Government gold” would be the bullion gold like American Eagle gold bullion coins and “private gold” would be the coins like the European coins or others with a high markup over the spot price of gold.
Some companies will even mention confiscation in their literature. The literature might say; “No confiscation…. yet another advantage over gold bullion coins: rare coins are not subject to gold confiscation laws, due to their historical status as a collector piece.” Or they’ll say; “Investment metals offer different premiums and benefits, such as government reporting and protection from confiscation.”
Many gold salesmen will try and convince you that if you buy gold bullion coins, the government will confiscate them like they did in 1933 with an executive order. They’ll say that pre-1933 coins didn’t get confiscated and if you buy these pre-1933 coins, the government won’t confiscate them from you today. This is pure speculation on behalf of the gold salesperson.
Yes, gold was confiscated in 1933. However, those laws and executive orders are no longer valid. They have all been rescinded. Don’t let gold dealers convince you otherwise.
The Truth About Gold Confiscation
The following explains the facts of the gold confiscation. The only people who will probably read this in detail are gold salespeople, who won’t be too happy about their hand being exposed. My guess is quite a bit of their profit comes from this one tactic alone.
Executive Order 6102 was signed by President Roosevelt on April 5, 1933, “forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates.”
Executive Order 6260, August 28, 1933 amended 6102 by saying:
“…no returns (of gold to the government) are required to be filed with
respect to Gold coin having a recognized special value to collectors of rare
and unusual coin;”
Gold salespeople will say there was an amendment to this executive order on December 28, 1933 “Exempting Pre-1933 Gold Coins from Confiscation.” No such executive order amendment from that date exists, although there were other amendments to Executive Order 6260.
Finally, Executive Order No. 11825, written December 31st, 1974, revoked Executive Orders 6102 and 6260.
So what does this mean? It means no executive order exists today to confiscate anyone’s gold.
Many gold dealers will say the following is of significance regarding which coins are considered “collectible” and thus would be exempt from confiscation:
Title 31 of Code of Federal Regulations Sec. 54.20 Rare Coin:
(b) Gold coin made prior to April 5, 1933, is considered to be of recognized
special value to collectors of rare and unusual coin.
While it is true that these coins may be collectors’ coins, it is irrelevant because again, all executive orders pertaining to confiscation of gold have been rescinded.
These collectible gold coins should not be bought to be utilized for
purchasing goods and services at some point in the future, period. This
includes all European bullion coins because they will be difficult to use as a medium of exchange, as they are not highly recognizable in the United States.
There’s even one gold dealer out there, Goldworth Financial, that
outright lies about what the U.S. code says about confiscation and puts
it right on their website:
“Today the Federal Government still maintains the power to confiscate
gold and Silver through: Title 12, Chapter 2, Subchapter IV, Section 95a,
which provides in part: “During the time of war, the president may through
any agency that he may designate, licenses, or otherwise—(A) investigate,
regulate, or prohibit, any transactions in foreign exchange transfers of
credit or payments between, by, through, or to any banking institution,
and the importing, exporting, hoarding, melting, or earning of gold or silver
coin or bullion, currency or securities.”
Well, guess what? Title 12, Chapter 2, Subchapter IV, 95a exists, but it says none of what this gold dealer would have you believe it does.
In reality, the government could confiscate anything they wanted
to in times of “economic emergency.” Whether it is gold, stocks or
your home, the laws and regulations are in place for them to do so… in the country’s best interest, of course.
Making an investment decision on a “what if” scenario makes no sense whatsoever, especially at a cost of 30% to 50% of the initial investment.
Making an investment decision on known facts of what our Congress, Treasury, Federal Reserve are doing in destroying the economy and monetary system makes perfect sense.”
I just did a Google search for gold confiscation today and one of the companies under investigation by the Energy and Commerce committee, Goldline International, is still using this scare tactic to get people to buy a certain type of marked up gold.
Sooner or later the American public will wake up to this gold confiscation nonsense.
Disclosure: My company only sells bullion gold and silver, no numismatic or rare coins.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.