History, Myths, And Real Solutions by Jeff Clark and
Mike Maloney | February 8, 2017
of retail precious metals investors is the possibility of
a gold confiscation.
Imagine having the forethought to buy gold
to shield your finances from an economic or monetary crisis—only
to have it taken away from you by your government. You’d
lose not just the protective buffer you put in place but
potentially a chunk of your net worth.
Gold confiscation may sound preposterous
to investors used to securities or real estate. But it’s
happened in the past enough times to make it a reasonable
concern for those uneasy about unsolvable debt levels, runaway
government spending, and continual central bank money creation.
Watch this video for the complete history of gold confiscation
and what you can do to protect yourself or read on below:
When a grab is made for people’s savings,
governments don’t bother to confiscate instruments like
stocks and bonds and savings accounts—those can be wiped
out by simply devaluing the currency. But when times are
really tough, governments have “requested” citizens turn
over their gold—the one asset they’ve historically been
unable to control, since it’s not someone else’s liability.
When a gold confiscation happens, there
unfortunately aren’t a lot of viable solutions. If your
government declares it illegal to own a meaningful amount
of bullion, you’d have little choice but to comply. Either
that or play the role of a fugitive—with the prospects of
financial penalties, forcible confiscation of your metal,
and even jail time waiting for you.
Many investors believe gold won’t be confiscated
today because it’s not part of the monetary system like
it was during the U.S. nationalization in 1933, under Roosevelt.
While it’s true we’re not on a gold standard today, if the
crisis gets bad enough any and all viable solutions could
be on the table. Debt in all developed countries is unpayable,
for example, especially when you add in unfunded liabilities…
where could the government get funds to service it all?
One source could definitely be gold.
The sober reality is, while lower than in
the past, the risk of a gold confiscation is not zero. The
world today can be an uncertain place, and what were once
“local” issues can rapidly escalate and have global consequences.
This does not mean, however, that we are suggesting a gold
confiscation is imminent or even probable; simply that it
could happen if one or a series of events having significant
worldwide implications occurs. Without official gold-backing
on most major currencies today, the specific motivation
to “confiscate” gold that existed during many previous confiscations
barely exists today. But as you’ll see, even that hasn’t
stopped modern government’s without a gold standard from
doing the same, ostensibly as a form of currency controls
to slow down market-driven devaluation.
The “Solutions” to Confiscation
There’s lots of speculation floating around
the Web about what one might do if gold was confiscated
again. Unfortunately, the majority of the most common solutions
don’t hold up to much scrutiny.
Some investors assume silver would be exempt.
That’s usually because past confiscations mainly focused
on gold, since silver wasn’t part of the monetary system.
However, what many investors don’t know is that a year after
the 1933 confiscation order, President Roosevelt signed
Executive Order 6814 that “required the delivery of all
silver to the United States for coinage.”
Many dealers claim numismatic coins would
be excluded, since there was an exception made for rare
coin collectors in 1933. But as history will show, during
past confiscations the onus was on the investor to prove
they were a coin collector and not a bullion buyer. Unless
you owned a substantial amount of rare coins, you were automatically
deemed a bullion owner, not a collector.
The uncomfortable truth is, no one knows
exactly what form a confiscation could take, or how new
laws might be enforced. And that’s part of the problem.
As Mike Maloney said well in his best-selling book, Guide
to Investing in Gold and Silver:
“Confiscation all comes down to this:
the government makes the rules, changes the rules, and
enforces the rules. Though it lacks the moral right, it
can create legal authority. Though it lacks the constitutional
empowerment, it can turn a blind eye to the Constitution…
The Constitution did not stop the government from taking
people’s gold in 1933.”
Political leaders can and will do whatever
they deem necessary at the time. In any way they see fit.
For as long as they think it’s needed.
When the gold investor considers the number
of ways a confiscation could take place, how long it could
last, how easily the government could change the rules and
how deeply it could reach—all against the backdrop of an
economic or monetary crisis—it underscores the need to put
a viable strategy in place.
What’s really viable is a lesson best learned
by the mistakes and successes of the past…
Gold Confiscation: A Surprisingly
Since 1933, there have been a few notable
gold confiscations around the world.
The specific circumstances varied, but there
was one common thread to all of them: they all arose out
of a financial crisis. As government coffers dwindled and
reached emergency levels, politicians didn’t hesitate to
grab the net worth of private citizens. And in many cases
it was portrayed as patriotic; your country is threatened—help
save your nation!
Here are some gold confiscations that have
occurred within the past 80 years…
United States Gold Confiscation—1933
Labeled Executive Order 6102, President
Franklin Roosevelt signed on a law on April 5, 1933 “forbidding
the hoarding of gold coin, gold bullion, and gold certificates
within the continental United States.”
It basically meant that private owners were
required to take their coins, bars or gold certificates
to a bank, and exchange them for US dollars at the prevailing
rate of $20.67 per ounce.
Why did he do this? The US was on a gold
standard at the time, so hoarding gold (i.e., money) was
seen as a threat to the stability of the country’s financial
system. Remember how bad things got… banks were shut, unemployment
soared, bread lines formed, civil unrest grew, and the government
couldn’t make its debt payments. Roosevelt desperately needed
to remove the constraint on the Federal Reserve that prevented
it from increasing the money supply the Great Depression
was already four years old and wasn’t showing any sign of
Within nine months after making gold illegal
to own, the president raised the official price to $35 per
ounce. The dollars those ex-gold owners received in exchange
had just been devalued by 40%, overnight.
It’s actually a misconception that
FDR “confiscated” gold in 1933. More accurately, he nationalized
it. Citizens were compensated for what they turned over…
in a true confiscation, your assets are essentially seized,
with no compensation. In a severe national crisis, it’s
certainly possible the government wouldn’t be able to afford
to pay investors the full value of their bullion.
And the US government was serious about
you not hoarding gold. As Wikipedia reports…
“Under the Trading With the Enemy Act
of 1917, as later amended by the Emergency Banking Act
of March 9, 1933, violation of the order was punishable
by fine up to $10,000, up to ten years in prison, or both.
Numerous individuals and companies were prosecuted.”
Worse, the ban on private ownership of gold
in America—the home of the free—lasted over four decades.
Not until January 1, 1975 could US citizens own more than
$100 in gold again.
Australia Gold Confiscation—1959
The Australian government similarly nationalized
The law, part of the Banking Act in 1959,
allowed gold seizures of private citizens if the Governor
determined it was “expedient so to do, for the protection
of the currency or of the public credit of the Commonwealth.”
In other words, they made it legal to seize gold from private
citizens and exchange it for paper currency.
The country’s Treasurer stated in a press
release that followed, “All gold (other than wrought gold
and coins to a limited extent) had to be delivered to the
Reserve Bank of Australia within one month of its coming
into a person’s possession.”
The law also said you weren’t allowed to
sell gold, except to the Reserve Bank of Australia (their
central bank). Nor could you export any gold (send it outside
the country) without the bank’s permission.
While it is unclear whether or not the country
moved ahead with active seizures, or just how many citizens
complied, the law still destroyed the local private gold
Like the US ban, this rule wasn’t short
lived either. Reports indicate it stayed on the books until
1976, a full 17 years, before being “suspended.”
Great Britain’s Gold Ban—1966
Ever since Great Britain went off the gold
standard in 1931, their currency had been falling. As the
decline stretched from years into decades, many investors
began to store gold overseas, worried their country might
never recover. Who could blame them? Their standard of living
To stem the decline in the Pound Sterling,
in 1966 the government banned private citizens from owning
more than four precious metals coins. It also blocked imports
of gold coins (a common move to keep currency from being
exported, similar to modern day tariffs on gold imports
in places like India).
The only exemption to owning more than four
coins was to prove you were a collector. You were required
to apply for a license, and then an officer from the Bank
of England would determine if you were a true collector
or not. If not, we’ll take your bullion, thank you very
The important distinction about this gold
ban is that it occurred when Great Britain was not on a
gold standard. In other words, we have historical precedence
that gold was confiscated without it being part of the monetary
system. Gold is not part of the monetary system today, either.
Like most confiscations, this law lasted
a long time—until 1979, a full 13 years.
See Any Patterns Here?
These three gold confiscations have some
things in common. They all…
1. Were imposed by Western
governments. These were advanced societies, among the richest
countries on the planet. And yet they all confiscated gold.
2. Arose out of economic crisis. Each government had
abused its finances so badly that it eventually nationalized
privately held gold from citizens.
3. Lasted for a LONG time. Of these confiscations from
advanced economies, the shortest was 13 years.
4. Completely forbid any type of hoarding of bullion.
Only true collectors were exempt, and only those pieces
that were truly classified as rare. And you had to prove
it. Interestingly, gold jewelry was not part of any of
Unfortunately, there are some nastier gold
confiscations from history. These involve…
The Brutes, Bullies, and Dictators
It won’t surprise you that in nations ruled
by an oppressive regime, gold was a natural target to grab
funds for the government…
Italy’s Gold “Donation”
Benito Mussolini—Italy’s prime minister
turned dictator—tried to fight a nasty recession by introducing
the “Gold for the Fatherland” initiative in 1935. He “encouraged”
the public to “voluntarily donate” their gold rings, necklaces,
and other forms of gold to the government. In exchange,
citizens received a steel wristband that bore the proud
words, translated, “Gold for the Fatherland.” It’s said
that even his wife Rachele donated her own wedding ring
in a show of solidarity.
The gold was melted down and made into bars,
then distributed to the country’s banks. The government
netted 35 tonnes (1.23 million ounces) from citizen “donations.”
Germany’s Confiscation of Czech
Hitler’s Nazi party pulled a tricky scheme
in 1939… after the invasion of Czechoslovakia the year before,
the Bank of International Settlements, chaired by Bank of
England director Otto Niemeyer—a German no less—instructed
the Bank of England to transfer £5.6 million of gold from
the Czech national bank to the Reichsbank.
Even though the gold belonged to Czechoslovakian
government, and even though English authorities had been
warned of the possible transfer, it went through without
a hitch. To mask the theft, Germany’s central bank understated
its official reserves later that year.
Saddam and Fidel
The madman of Iraq and the communist oppressor
of Cuba both confiscated gold, art, jewelry, etc. These
brutal dictators took whatever they wanted, at the point
of a sword or gun.
As you might surmise, citizens were not
compensated when their holdings were seized—unless you count
remaining alive as compensation.
Based on interviews I’ve conducted with
two large gold bullion dealers in Russia, the old Soviet
Union has historically viewed gold and silver as a matter
of national security. Therefore, private ownership in any
form—except jewelry and numismatic coins—was strictly forbidden.
People went to jail for owning a gold bar.
And in spite of the Russian central bank
being one of the biggest buyers of gold since 2008, those
old laws are still on the books. It is illegal to buy or
sell bullion bars except at a bank that has a precious metals
license (and very few have them)… it is a criminal offense
to buy or sell a gold bar from a friend or relative… transporting
bars has strict rules and can send you to prison if you
break them… it is illegal to take bullion bars out of the
country… buying and selling foreign-made bars is also illegal.
These laws are not as strictly enforced
today, but they remain on the books and thus could be easily
activated again. You can buy gold coins, but they’re not
abundant and are in poor quality.
What About India’s Government Schemes?
The Indian government has tried to crackdown on gold jewelry
demand numerous times and in numerous ways. They currently
have a 10% tariff on all gold imports in an attempt to curtail
demand, a program they seem to try every few years. They
introduced a monetization scheme last year that would pay
interest on the gold you “lent” them, also something they’ve
tried several times. In fact, these attempts have been tried
for decades, on both gold and silver. Check out this excerpt
from the New York Times on August 27, 1976:
“India announced it was resuming its ban
on the export of silver. India is believed to have the
largest silver hoard and the government there freed exports
earlier this year as a means of earning taxes levied on
overseas sales. However, most silver dealers minimized
the significance of India’s move yesterday. As one dealer
explained, ‘Smuggling silver out of India is so ingrained
there that the ban will have no effect on the flow. It
never has. Indian silver will continue to ebb and flow
into the world market according to price.’”
The reason these schemes haven’t worked
is because gold jewelry in India is viewed as an investment,
not an adornment. Although they have coins and bars, the
vast majority of gold in India is in jewelry form. It is
thus more accurate to view “jewelry” demand in India as
• The difference in gold confiscations
between the plunderers vs. those from advanced economies
is that the plunderers were more oppressive about the
confiscation, typically took more than just gold, and
of course were more brutal in carrying it out.
There’s another crucial distinction. Except
during times of active persecution, there is no historical
precedence of goldjewelry being confiscated. If a nation
operated under the rule of law, seizing jewelry wasn’t part
of the government’s strategy.
The reality is that in a crisis,
we could potentially face a lethal combination: a desperate
government, with your assets ready for the taking.
The point to all this isn’t to predict that
there will be a gold confiscation. The idea is be aware
of the risks and to have a viable plan in place to combat
one if it occurs.
But is there really such a strategy?
On the surface it would seem that short
of renouncing your citizenship and moving out of the country,
there are precious few options to protect against such a
But there are a couple strategies that have
historically been effective in combating a gold confiscation…
Out of Jurisdiction
Storing gold and silver where a government
is less likely to be able to reach it quickly and easily
is smart buffer to put in place.
First, as many have noted before, keeping
it outside the banking system is a good step. Many references
cite how banks have been known to hypothecate gold, i.e.
lend it out to someone other than its rightful owner, putting
it at systemic risk. Just as importantly, during the modern
“bail-ins” we’ve seen in debt-stricken countries, banks
were often working hand in hand with governments to seize
assets long before citizens found out what was happening.
The threat of being cut-off from central bank liquidity
is an existential threat to banks, and thus they are not
known for going to bat for consumers in court to block overreach
like an independent vault provider hopefully would.
Another step further removed is storing
overseas—also in a vault outside the banking system. It
puts your assets one step further out of reach. Less low
hanging fruit, as they say. Without the ability to take
quick possession, you have more time and distance to fight
such an order.
But even this is not bulletproof. A desperate
government could just as well declare all personal gold
holdings be repatriated, regardless of where they’re stored.
It’d be a spinoff of the old tax joke, “How much gold do
you own?… Give it to us.”
If the company holding your metal is a domestic
entity, they might be forced to comply anyway, at least
in reporting your holdings so they can be taxed in lieu
Some suggest you should instead do business
with a foreign company. But that adds a different risk,
and one that comes with a dubious level of added protection.
First, you give up access to the local rule of law. If a
vault in Singapore swears your gold is there, what will
you do if it ends up not being the case? When dealing with
a domestic company, at least you can turn to the court system.
Second, a foreign company can be compelled
to cooperate with a big enough foreign government, like
the US. As investors using private banking services in Switzerland
discovered in recent years, the threat of being cut off
from banking with the US will quickly convince a company,
or its host government, to comply with a confiscation order
at least by reporting holdings.
Even if it does not relent to pressure from
abroad, the foreign entity would almost certainly refuse
to deliver, buy, or sell precious metals in a jurisdiction
where authorities have issued a confiscation order, leaving
you only with the option to relocate elsewhere—hardly better,
and often much worse than using a domestic provider you
have real recourse against.
Bottom line, while not risk free, private
foreign vault holdings, whose affordability surprises many
precious metals investors, stewarded by a company based
in a nation with a historically strong rule of law, can
be one of your best lines of defense if confiscation is
The Elizabeth Taylor Solution
You probably know that the queen of the
silver screen loved jewelry. Her collection fetched over
$156 million after her death. She even wrote a book about
her jewelry. Indeed, it’s hard to find a picture of her
without gold, diamonds, or pearls draped over her neck or
You may also know that Elizabeth Taylor
traveled a lot. At various points in her life she had homes
in Beverly Hills, London, and Switzerland, among other places.
She even traveled to Iran a few years before the Iran Hostage
And here’s an interesting fact about her
travels: she always took some jewelry with her—and walked
right through customs with it. No messing with customs forms,
no requirement to declare a financial asset.
This circumstance remains true today. You
likely know that when crossing borders, travelers are often
required to complete customs paperwork and declare large
amounts money they are carrying, anything over $10,000 for
travel to/from the US for example. The new rules specifically
mention gold, and also that the price of the gold determines
if you are at the reporting limit (not the face value on
a coin). That means 7 ounces of gold would be the maximum
you could carry at $1,300 gold. You’d be at risk with 5
coins when gold reaches $2,000/ounce.
Since gold jewelry is not considered a financial
asset under US law, it does not require reporting. Nor have
we discovered any country where it’s handled differently,
though always be sure to check the laws along your itinerary.
You and your loved ones can employ your
very own Elizabeth Taylor solution.
Consider the advantages you’d possess if
you wanted to transport some gold outside the country… it
would be a lot easier to hop on a plane wearing a few necklaces
or bracelets than carrying a stack of gold coins or bars.
Consider the hassle you could avoid passing through customs,
as well as the threat of your bullion coins being questioned
But what about confiscation? As history
has shown, in the developed world, gold confiscations have
targeted monetary metals, like coins and bars. Jewelry was
spared. Only in oppressive nations, ruled by dictators,
was it a target. In other words, the resident of a developed
nation that owns gold jewelry has an asset that is far off
the radar of appealing assets to grab.
Which is why we believe that bullion-grade
jewelry is one of the most unique and important asset classes
to own if confiscation is a concern…
Gold Without Borders: GoldSilver’s
Investment Grade Gold Bullion Jewelry
The problem with most “gold” jewelry sold
in the West is dilution. It’s often made with cheaper alloys
that contain only a fraction of gold, and is very expensive
relative to the actual precious metals content. Mark-ups
are easily two and three times the gold value, and it’s
not hard to find it four or even five times higher.
That takes gold jewelry far from its roots,
when it was a form a wearable wealth, meant to keep assets
close at hand. Traditionally in Europe and Asia, gold jewelry
was a more portable alternative to art, heirloom furniture,
and land as outside-the-bank assets that held their value
and were easily passed between generations. Today in India,
China, Thailand and elsewhere the tradition remains—the
Thai currency, Baht, for example, is even named for a common
jewelry style that pre-dates it.
And that’s exactly what we’ve recreated
with our exclusive Gold Without Borders jewelry line.
These investment grade 22-carat (91.6% gold,
same as an American Eagle coin) and 24-carat (99.99% pure
gold) pieces are an affordable alternative to the mostly
costume jewelry you find in today’s stores. Classic designs
that provide much more bullion for your money.
And of course, they’re beautiful.
Bullion jewelry is a real asset that is
both portable and practical—you can wear it, transport it,
and a confiscation order is likely to bypass it. Discreet,