Most gold owners are familiar with worries of forced government gold confiscation – that one day black-ops shock teams will toss homes to find that stash of coins and bars.
The sole historical source for the modern fear of “confiscation” was President Franklin Roosevelt's 1933 Executive Order 6102 telling America to cough up its gold in the midst of The Great Depression.
But closely reading FDR's infamous order offers a sobering perspective, which doesn't fit the ever-evolving folklore. This reality might calm some confiscation fears...
- FDR's executive order was far from an outright grand theft “confiscation.” It was a paid-for expropriation. Surrendering a $20 double-eagle to the bank got you a $20 fiat paper note. While aiming to steal the economic power of gold, FDR left its nominal value in citizen's pockets. (Yes, he did devalue the dollar soon thereafter.)
- FDR did not outlaw the ownership of gold. He outlawed the “hoarding” of gold. The distinction is not minor. FDR intended to destroy gold as an everyday currency and took aim at larger concentrations of gold meant for everyday commerce. He had no intention, and no means, of putting millions of Americans in jail.
- FDR left a lot of gold on the table, allowing each citizen to personally keep $100 in gold coin. That meant anywhere from 100 individual one-dollar gold pieces to 5 twenty-dollar double-eagles. The population exceeded 120 million in 1933, meaning technically hundreds of millions of gold coins (more than existed) were exempted. Roosevelt wasn't worried. He knew depression-ravaged Americans needed every penny they could find, and gold was suddenly not spendable.
- He added exemptions for jeweler's gold stocks, gold marked for export, and rare, collectible coins, but without specifically defining which coins qualified as rare. (The collectible coin exemption has since been over-hyped by unscrupulous marketers to get investors to pay huge markups for supposedly "rare" coins.)
- Enforcement against “hoarding” was largely impossible and largely ignored. The late economist Milton Friedman found that one year after FDR's order, 78% of America's gold was still in private hands. The evidence for that is the abundance of “classic” pre-1933 gold coins surviving today. Those coins had been quickly shipped to Europe and South America for safekeeping – or were buried in tin cans on the family farm. It's apparent our great-grandparents knew more about history and economics than FDR and his socialist hand puppets. Our forefathers simply told FDR to shove it.
- Prosecution for hoarding gold was microscopically rare. The case cited most often was that of a New York attorney who publicly challenged FDR to take his gold. He was tried for the crime of hoarding gold – and acquitted!