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Protection against Government Gold Confiscation
Another Executive Order issued eight months after exempted “gold coins having a recognized special value to collectors of rare ad unusual coins” from the confiscation. That classification as collectors’ items was reinforced in Treasury regulations issued in 1954 mentioning that all pre-1933 gold coins would be classified as collectors’ items, and again in 1962 permitting the importation of all pre-1933 gold coins as collectors’ items.
In his site, Investing In Gold Coins (1970), author Donald Hoppe gives an excellent layman’s legal history of pre-1933 gold coins:
- In 1954, the Treasury Department recognized at last that the time had come to legitimize the numismatic gold market. Consequently, an amendment was made to the Gold regulations, to the effect that all gold coins minted prior to 1933 would subsequently be presumed to be rare and of recognized special value to collectors, without the necessity of further determinations by the Treasury.
The fractional (a fraction of an ounce) European gold coins such as the Dutch guilder, French angel, Swiss 20 franc, German 20 mark, and the British sovereign, to name a few were among the legalized coins. All of these coins are still available today at favorable premiums over their gold content. The popular U.S. 20 dollar gold pieces were also exempted. Very few individuals are aware that, although gold was illegal in the United States, these items traded freely during the period the confiscation was implemented in 1933, and up until te re-legalization of gold in 1975.
Whether or not pre-1933 gold coins would escape any potential future gold confiscation or capital controls cannot be predicted. This is the best available option for those with these preoccupation’s given the weight of legal precedent. Ultimately, you, as the gold owner, will have to weigh the potential for a gold confiscation and whether or not pre-1933 gold coins should be part of, or the totality of your gold holdings. This part was written with the intention to be an introduction to a complex and controversial subject, and not a definitive study. For that, we can refer to a memorandum written by George R. Cooper, gold advocate and attorney at law, titled “How You Can Survive a Potential Gold Confiscation.” The most important point Cooper makes is that this additional layer of protection can be added to your portfolio at a manageable premium over gold bullion coins, and at the price similar to what you would pay for similarly sized contemporary bullion coins.
I am afraid that one day the government will indeed call gold in. Gold bullion will be subject to confiscation. This is one big advantage to numismatic gold, such as the double eagles. It is an idiosyncracy of governments that although they may prohibit ownership of gold in any form, they are reluctant to touch collections of numismatic gold coins. Today there are some 49 countries that forbid ownership of gold by their citizens, but do allow holding gold coins for numismatic purposes. Even the Soviet Union and Eastern European countries legally tolerated the acquisition of numismatic gold coins. So these are the only gold holdings that could be kept in your safe deposit box without any fear of confiscation.
Throughout history, collector gold coins have been treated differently under U.S. law than bullion, and that treatment has generally been favorable. Since a confiscation could very possibly come without warning, buying pre-1933 European and U.S. gold coins is something to be approached at the outset, and not left on the back burner until the unthinkable happens.
