Understanding The Gold Confiscation Myth

Quite a bit has changed since 1933, including the fact that U.S

. currency is no longer even backed by gold, but somehow the gold confiscation myth remains.

Don't Buy into Myths about Investing in Precious Metals

In 1933, each dollar circulating in the U.S. economy accounted for a predetermined amount of gold. President Roosevelt was simply trying to prevent economic stagnation when he ordered citizens to return all but a specific quantity of gold to the Federal Reserve.

Those returning gold were compensated, and dentists, jewelers and other professionals whose work required gold were exempted from the order. Private citizens were also permitted to retain $100 worth of gold per person, and collectors were allowed to keep specific coins.

Despite all the uproar raised about the order at the time and the mythology that has surrounded it since, in fact only one person was even prosecuted under Order 6102, and no indictment resulted.

Yet when you begin to pursue investing in precious metals, you may still be warned that the government can confiscate your investment at any time. Dishonest dealers continue to perpetrate falsehoods, either about the rarity of gold coins or their exemption from confiscation. These myths are designed to encourage you to make specific purchases or pay more for gold investments, and dealers perpetrating them should not be trusted.

Why the Gold Confiscation Myth Does Not Affect Current and Future Investors

In 1974, Congress guaranteed the right of U.S. citizens to own gold bullion. As for the risk of the President confiscating gold in modern times, that authority only exists in times of war. Even then, the likelihood of confiscation is slim considering the U.S. economy has not relied on the gold standard since 1971, basing the value of currency instead on foreign exchange rates.

How, then, is the value of gold calculated today?

The answer to this question depends on the physical form of the metal. Coins, as collectible items, are valued by their rarity. Bars and bullion, provided they are minted following U.S. standards, hold a value equal to the amount of metal they contain.

Precious metals remain one of the most stable investments available. Your primary risk as an investor comes not from a government lying in wait to confiscate your holdings, but from dishonest dealers propagating myths with very little basis in modern reality. You can safeguard yourself from these risks by doing your research and investing with a respected firm experienced in coins, bullion and other forms of precious metal investment.

by: Max Nolan

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