Chances of Gold Confiscation
Written Oct. 8, 2008 when gold was $900.00 per ounce

   The manager of a gold hedge fund has said that governments in the past have banned owning gold and they could do it again.  Mark Mahaffey of Hinde Capital notes that interest in gold soared when the financial markets got the wobbles and he's worried banking interests will see that as a threat and pull the levers of government to re-create something  like Franklin Roosevelt's April 5th, 1933 decree calling in gold.  

   Americans complied for several reasons.  The country was on a gold standard and the people received gold-backed paper dollars for their coins at the going rate, $20.67 per troy ounce.  The Roosevelt administration made the call-in sound like it was a temporary act because of the financial emergency.  Not a word was said about devaluing the dollar after the call in.  Besides, silver coins remained in circulation.  By surrendering their gold the people thought they were supporting the nation's credit during very tough times. 

   Is it reasonable to think that if the government demanded that people turn in their private gold hoards that the going rate of more than $900.00 per ounce would be paid?  Very unlikely.  In 1933 gold was money - by definition.  Today it is not, although a U.S. gold eagle coin containing a troy ounce of pure gold is legal tender for $50.00.  No rational person would trade a gold coin worth more than $900.00 for an irredeemable paper fifty-dollar note, so a call-in of gold on the basis of its face value would fail.

   Then there is the matter of ownership.  When the United States Treasury Department mints a one-ounce gold coin and sells it to you for something above $900.00 that bit of precious metal belongs to YOU.  The government no longer owns it and has no more legal claim to it than it does the nickels and quarter-dollars that jingle in your pocket, unless it had a tax lien against you and nickels and quarters were all you had to your name.  

   The federal government  could not demand a return of your gold coin to the treasury without paying you full value.  The government is broke, so its chances of buying up all the private gold hoards in America at market values is extremely remote.  There is the further complication of setting a value on foreign gold coins, such as the Krugerrand and Canadian Maple Leaf.  

   The bottom line here is:  The Federal government has no more claim to your gold coin(s) than it does your wrist watch.  

   Some alarmists believe the government would not be denied should it demand to lay its hands on America's private gold.  It could decree that anyone caught with gold coins of any kind be thrown into prison and/or fined.  Armed forces and other police might be sent on house-to-house searches.  This would turn even tenuous rights to private property upside down, but only timid people who are comfortable being indentured to a governing class anyway would cave in to such ruthlessness.  

   What is more likely to happen is the current financial storm will eventually worsen and lead to a national conversation about returning to some level of gold backing for the U.S. dollar. Whereas the dollar was once worth 1/20th of an ounce of gold its new value might be established as 1/1000th of an ounce of pure gold.*  To be sure, there would be strong objections of tying the dollar to gold.  It would scuttle the grand plans of the political con artists who yearn to get rich by running the paper-money printing press overtime.  

   The United States got into serious trouble by completely abandoning the money system mandated by the U.S. Constitution.  It's time we admitted our folly and returned to honest money...a currency that is not only a reliable medium of exchange but also precise standard of measure and a store of value.  

October 8th, 2008

       *(NOTE:  By July, 2012, the paper dollar price of gold had risen to about $1,650.00 per troy ounce.  Therefore, to convert to a gold standard the dollar would be defined as approx. 1/1700th of an ounce of pure gold.  No actual gold one-dollar coins could be minted,  but anytime anyone wanted to convert his gold certificates he would take 1,700 of them into a bank and swap them for a one ounce gold coin.   170 paper certificates would fetch a 1/10th ounce gold coin, et cetera.  Banks would not be permitted to issue more paper certificates than the amount of actual gold they had in their vaults to back them up .)   

Click here for:

Look Out Below!
Voting for Maggie
Poobahs of Positivism
A Wistful Vista
An Unknown Road
Vern's Precipitation

Blood In the Streets
How To Buy Gold
Natalie's Predicament
America Descending
Just Plain Stealing?
A thing to fear
Unstuffing a Lifetime

Heavenly Sex
FDR & History
The Chicken Little Convention   Mr. Bolton's Predators
And Lead us not into temptation
My Obituary
The Legislature and Embryos
Ac-cent-tchu-ate the Positive
What Fools, We Mortals
Unvarnished Truth
End-of-everything Blues
My Immigrant Relative
The Eloquent Pogo
Nesta's Complaint
Unionize School Children
Hucksterism Gone Wild
Unmanageable Religious Violence