Previously we talked about the Great Depression and what its effects were on coins minted during that era. However, the largest coin disaster of the 1930s was Franklin Delano Roosevelt’s infamous gold confiscation. His Executive Order 6102 of 1933 strikes fear, or at least anxiety, in the hearts of some coin collectors (and gold bugs) even now. Many coin collectors view the U.S. government’s confiscation of gold with anger and loathing as well as feelings of foreboding for the future. When a government has the right to or enforces a perceived right to confiscate gold bullion and gold coins from its own population, what does that mean for coin collectors today? Well, it’s not as ominous as you might think.
While what happened is a tragedy for historic gold coins and collectors, it’s unlikely to reoccur today because FDR’s confiscation of gold was done to bail out the Federal Reserve which in years prior to the Depression had issued millions more in gold-clause notes than it had gold to back them with. Today the Federal Reserve no longer has to pay back its liabilities in gold. It hasn’t since 1971 when President Richard Nixon closed the international dollar-gold exchange window.
Executive Order 6102 prohibited the hoarding of gold with the premise that Americans withholding that money from circulating were preventing an economic recovery. The order required that holders of gold bars and bullion sell them to the government at $20.67 per ounce, the exception being “gold coins having a recognized special value to collectors of rare and unusual coins.” The penalty for not complying with the order was a fine of $10,000 and up to 10 years in prison.
Within a year of this confiscation, the U.S. government raised the price for gold to $35 per ounce. The American public was then forced to accept fiat currency over specie, an arrangement that was very convenient for Roosevelt’s government which could easily print currency but not gold coins. The government in one stroke of the pen hugely inflated the value of its assets, giving it more money to spend on the New Deal.
Since all of the United States’ debts have been calculated in paper dollars since that time, it’s unlikely that the same sort of confiscation would occur today. Some people have invested savings in gold bullion and gold coins, and this is a fine strategy as part of a diversified portfolio of investments, but almost no one saves all their money in gold coins anymore. It would be a pointless exercise for the government to try to hunt them down and unnecessarily complicated. Considering most people save their money in electronic accounts, it would be much easier and quicker for any government to electronically confiscate assets – as the government of Cyprus did in 2013.
It may not give peace of mind to hear stories of government confiscation of assets either historically or today, but coin lovers shouldn’t be overly troubled about their collections. Proper care and safekeeping of the coins, as well as decent insurance coverage should be all that is necessary to protect them.