On April 5th, 1933, President Roosevelt signed executive order # 6102, which ordered, “Everyone holding gold coin, gold bullion or gold certificates, must turn them into the nearest Federal Reserve bank, branch, agency, or to any member bank of the Federal Reserve System.” That order, if violated, meant a year in the lockup or $1,000 fine. FDR said that people were ‘hoarding gold,’ and it was needed. Why? Because the Federal Reserve Act of 1913 required all paper dollars to be backed by 40% gold, they didn’t have enough gold to print all the money needed to supply the nation, so they wanted your gold. (It is extremely doubtful that Ft. Knox has even a single ounce of gold in it). If the buck were today backed by 40% gold, we wouldn’t be in business.
Unlike today, all they have to do is almost literally turn on the presses. ‘Almost,’ because they technically have to buy dollar bonds from the Fed, which creates them out of thin air, and pay interest on the bonds the Treasury buys, and then prints the un-backed dollars, which are then printed and inserted into circulation. Correction! The dollars are backed by “The Full Faith and Credit of the Federal Government,” which certainly should give you a full, no-nonsense sense of security, as a storage place for your surplus wealth, and especially since the current posted inflation rate is 7.9%, on its way to 10%, probably, if not more. Who pays the interest to the Fed for creating dollar bonds out of thin air and selling them to the Treasury? We do, but of course we don’t, as it is added to the U.S. debt clock, creating more debt, which makes gold go up.
#6102 has never been enforced, and today, as in 1933, it would be impossible to enforce, since there are no records of who has gold now or in 1933. In 1933, it was common for people to carry gold coins in their pockets, and in 1933, all silver was held in quarters, dimes, half dollars, and silver dollars. I wrote a column about confiscation in 2004, when gold was $850. (On the web site, there are over a thousand of my columns if you want to read). Imagine today, ordering 330 million people to turn in their gold. Sort of like telling everyone to stop drinking alcohol, smoking, or obeying the speed limits.
“The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Fourth Amendment, U.S. Constitution.
Are gold and silver a protection or insurance against inflation? Yes. Do gold and silver harm anyone? No. Are insurances against the law? No. Auto insurance is compulsory, as is homeowners if you have a mortgage. Even banks have the FDIC, which stands for “Federal Deposit Insurance Corporation,” and at last check, it had about a nickel in assets for every thousand dollars of ‘coverage.’ I know of no insurance which is illegal, and ‘insurance’ against inflation may take many forms, such as antiques of anything, or physical things such as real estate maybe. Gold and silver require little storage space, no property taxes or insurance, and no registration requirements of any kind, other than if you store them in a retirement account.
Suppose the government shut down their mints at West Point New York, and stopped making gold and silver Eagles? Private mints have always existed, and our silver Buffalos are in such demand, that while you can lock them in now, it may take many weeks for the private mint to catch up with demand. I love those ‘Buffys,” as we call them. All coins and bars must have a legitimate, acceptable “Hallmark” on them, which shows how much purity and weight they are. Do not buy any coin or bar with an unknown origin or weight. How about taxes? If you sell your gold or silver at a profit, should you pay capital gains or other taxes? It’s up to you, but if you sell at a profit, it may not be an actual profit, since their gain in dollars, only means that the dollar has decreased in purchasing power as much as the gold and silver have ‘gone up,’ so you may not have any actual ‘gain,’ but are merely collecting on your insurance. You decide. We report nothing, any more than a householder holding a yard sale, reports a ‘gain’ in junk sales, or anonymously selling anything to anyone at any time. We’ve been in business for 45 years and have yet to spend a dollar on advertising, so ‘word of mouth’ and reputation must be viable. Who do you think pays for all the TV and print ads for gold and silver?
Don Stott