Gold Confiscation: Learning from History
The history of gold confiscation is well documented, with literally tons of gold and silver ripped from the hands of ordinary Americans during the financially tumultuous years of the Great Depression. However, history books and academic research rarely shine light into the confiscation of silver and rather focus on gold, even though both were made illegal for a total of 40 years.
In this article, we'll examine the history of confiscation and shed light on the possible future confiscation of silver from investors.
Once Upon 1934
Franklin D. Roosevelt penned the first law to seize precious metal assets from Americans as a way to force savings in banks, rather than allowing Americans to hold their wealth in metals. Prior to the legislation, banks were riddled with liquidity problems, as trust in the American banking system waned and investors looked for the safest place to store their wealth. With both the banking system in question and the stock market still volatile after its peak in 1929, investors wanted hard assets, namely gold and silver.
FDR hoped gold confiscation would push investors towards the banking system, as well as raise cash for a growing Federal budget. Unfortunately, it did just that – all the while ripping wealth right out of the hands of the American people.
The Confiscation of Silver
In addition to the gold confiscation, silver bullion was also made illegal to own during the 40 year ban. However, this is often little discussed, as silver coins were still a large part of the money supply up until 1964. Almost all pre-1964 coinage was 90% silver, and the coins were not illegal to own during this time, as it was a mainstay of the monetary economy. Silver bars, on the other hand, were illegal, as they represented wealth outside the monetary system and were systematically “purchased” from their owners at a price well below market value.
The Future of Confiscation
Gold confiscation remains an important issue and is just as possible today as it was nearly 70 years ago. In a war-time act drafted during World War I known as the “Trading with the Enemy Act,” the US Treasury still has the power to seize all assets, including gold and silver, of anyone suspected of being in cahoots with a foreign government. Unfortunately, the wording is so incredibly loose that lawyers worry it could be construed to seize the assets of Americans involved in any foreign trade or investment.
The act is also empowered by the 1977 International Emergency Economic Powers Act, which extends the “Trading with the Enemy Act” to include all conflict, whether declared as a war or not.
More recently, in January 2010, the SEC approved a new regulation on money markets which would allow for the suspension of redemptions, practically freezing investor's assets for any duration the SEC sees fit.
Reflecting on Silver Ownership
It is important to remember that the greatest threats to bullion investing come during war time and serious economic turmoil. In these periods, the government has given itself the right to seize the assets of every American without due process and without any true legal opposition. Laws both old and new have increasingly opened the door for future confiscation and show how truly important it is to take ownership of bullion and store it securely.
The GATA perspective.
The CMI Gold and Silver perspective on the issue of gold confiscation...
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