The issue of gold confiscation has long been the primary scare tactic behind the sale of overpriced collectible and numismatic coins. So pervasive has the fear become that even asset managers who control billions of dollars fear confiscation—according to mineweb.com’s top story for 2010.
The story, posted June 10, 2010 on Mineweb.com’s site became the site’s “top story,” which probably means the article received the most hits of all the articles posted on the site in 2010. The question remains:  Is the fear valid or has the story been told so many times that it has taken on a life of its own?
Unfortunately, there is precedent for government “confiscation.”  In 1933 President Franklin Roosevelt “called-in” all gold coins, gold certificates and gold bullion under Executive Order 6102. Further, Obama supposedly is a “student of Roosevelt’s policies,” which means he probably is aware of Roosevelt’s call-in.
When Roosevelt issued EO 6102, the prevalent gold coins were Double Eagles ($20 gold coins, both $20 Liberty Heads and St. Gaudens.) Under EO 6102, all Double Eagles were supposed to have been turned in.  This begs the question: If Double Eagles were supposed to have been turned in under Roosevelt’s 1933 call-in, would they be exempted from a future call-in?
Here’s the tenuous reasoning: Under EO 6102 “gold coins having recognized special value to collectors of rare and unusual coins” were exempted; therefore, $20 Liberty Heads and $20 St. Gaudens that have been graded MS62 or higher would be exempted from any future call-in. Would this necessarily be the case?
The coins exempted in 1933 were gold coins having “recognized special value to collectors of rare and unusual coins.” Since the mid-1980s when independent, third-party graded began, hundreds of thousands of common-date Double Eagles have been slabbed MS62, MS63 and MS64. So, would they be classified “rare and unusual” under another call-in? In my opinion, no. Further, consider this: How could an investor owning 20, 30 or even 100 MS62 Double Eagles assert that the coins are “rare and unusual?”
However, the a bigger issue is not whether the MS62, MS63 and MS64 Double Eagles would be exempted in any future call-in, but the prices at which telemarketers sell the coins.
Premiums on slabbed common-date Double Eagles fluctuate widely. At times, in the REAL market, they carry 30% – 40% premiums: other times premiums can be as low as 10%. In the 1990s, ungraded Double Eagles traded at bullion coin prices. Regardless, the prices at which the telemarketers sell the coins is the issue.
Some telemarketers add 20% – 30% to the REAL price; some tack on 50%; and, a few actually double the prices at which they sell common-dated slabbed MS62, MS63 and MS64 Double Eagles. We have seen instances where buyers bought years ago when gold was half the price it is today, but they still lost money on their purchases of “non-confiscatable” gold coins.
Investors need to be aware of what really drives the so-called “numismatic coin market.” The telemarketers drive it. As the price of gold moves higher, premiums on such coins will shrink, sometimes providing small profits, sometimes resulting in no profits. (See our page Telemarketers Under Attack.)
CMI Gold & Silver Inc. does not recommend “numismatic coins;” we recommend gold bullion coins. Still, we have access to the same coins promoted by telemarketers at much lower prices. Before buying from a dealer who constantly lays out the “non-confiscatable” story, check our prices. You will find big differences.
14 Responses
CMI recommends gold bullion coins as opposed to numismatic coins. Wouldn’t bullion be the most confiscatable of all since it is not numismatic?
The ONLY people who make money selling and buying Numismatics are THE COIN SALESMEN! I tell Gary North’s Subscribers this all the time. I’ve been into Gold and Silver Coins for over 25 years. The ONLY time I ever lost any money was when I bought $2500.00 of Numismatics [1982] that were “guaranteed to not lose value.” I sold at the TOP of the 1980’s Numismatic Craze — for $870.00! All my Numismatic friends have had the SAME experience–LOSING Money!
Buy ONLY Bullion Grade American Gold and/or Silver Eagles.
And don’t forget the Fractional Gold Eagles.
I would not worry too much about confiscation. There are just too many differences in the economy now and in FDR’s time. I think if you read history carefully, you will find less than 10% of the gold outstanding was actually turned-in. There are forces which would have you believe otherwise but if you are smart you will be long gold and silver.
What is CMI’s comment on the possibility of govt. confiscation [of gold] and about owning mining shares instead of the actual gold to avoid this?
I would honestly be more worried about a silver confiscation than a gold confiscation. Silver is needed in industry and military applications. If stockpiles got down to truly emergency levels, I could see the government “strategically” confiscating silver for “national security.”
A gold confiscation might cost them more than they would stand to gain, and think about the trillions of dollars they could easily steal from 401ks and pensions at the simple click of a mouse. Much easier than trying to pry gold and silver from my cold, dead hands.
If the U.S. government wanted to return to (some sort of) a gold “standard,” I assume it would require the government to acquire huge amounts of gold. Wouldn’t this likely precipitate the ‘confiscation’ of private sector gold?
The Gold Confiscation of 1933 is the single most draconian economic act in the history of the United States!
In 1933 the government “collected” gold from citizens, paying them the going rate per oz. Then, when it had collected “enough,” raised the price per oz which created instant, substantial profit/operating capital for the war while, at the same time, devalued the dollar which, effectively, swindled the American people.
Since 2008 I have lost $50,000.00 on the stock market. I was thinking of buying gold or silver but with gold or silver confiscation. I don’t know where to go. Do you have any ideas?
Thank you
Colin Williams
In 1933 confiscation of gold, the government required firms holding gold for customers or themselves to turn in gold, and for individuals to volunteer to turn in their privately held gold. The government did not identify gold owners by asking companies to turn over records of gold sales to individuals. Government agents did not enter homes to search for gold. Perhaps because too many households had guns