Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Palladium Surges above $2,400. Is It Sustainable? - 27th Jan 20
THIS ONE THING Will Tell Us When the Bubble Economy Is Bursting… - 27th Jan 20
Stock Market, Gold Black Swan Event Begins - 27th Jan 20
This Will Signal A Massive Gold Stocks Rally - 27th Jan 20
US Presidential Cycle Stock Market Trend Forecast 2020 - 27th Jan 20
Stock Market Correction Review - 26th Jan 20
The Wuhan Wipeout – Could It Happen? - 26th Jan 20
JOHNSON & JOHNSON (JNJ) Big Pharama AI Mega-trend Investing 2020 - 25th Jan 20
Experts See Opportunity in Ratios of Gold to Silver and Platinum - 25th Jan 20
Gold/Silver Ratio, SPX, Yield Curve and a Story to Tell - 25th Jan 20
Germany Starts War on Gold  - 25th Jan 20
Gold Mining Stocks Valuations - 25th Jan 20
Three Upside and One Downside Risk for Gold - 25th Jan 20
A Lesson About Gold – How Bullish Can It Be? - 24th Jan 20
Stock Market January 2018 Repeats in 2020 – Yikes! - 24th Jan 20
Gold Report from the Two Besieged Cities - 24th Jan 20
Stock Market Elliott Waves Trend Forecast 2020 - Video - 24th Jan 20
AMD Multi-cores vs INTEL Turbo Cores - Best Gaming CPUs 2020 - 3900x, 3950x, 9900K, or 9900KS - 24th Jan 20
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Could the U.S. Government Seize Your Gold?

Commodities / Gold and Silver 2010 Oct 20, 2010 - 06:41 AM GMT

By: Money_Morning


Best Financial Markets Analysis ArticleDon Miller writes: Could the government seize your gold?

It's a question that's being asked with increasing frequency these days. The United States is struggling with a post-financial-crisis economy that can't seem to get healthy, which has led to a ballooning budget deficit and a staggering national debt.

And don't expect any structural improvements to the country's finances. Near-term stock-market bulls are awaiting an all-but-guaranteed round of "quantitative easing" (known as "QE2") - which will inject money into the U.S. financial system, though it will only add to shortfall even as it weakens the U.S. dollar.

The U.S. government hasn't seized individual investors' physical gold since U.S. President Franklin D. Roosevelt did so by a special "executive order" during the Great Depression. And there's nothing active afoot to make investors believe that such a seizure is imminent.

In fact, many experts say a repeat of that episode is highly unlikely.

"It would be very unpopular, so would only happen in an emergency," says Martin Hutchinson, an author and Money Morning columnist who is a former international merchant banker. "And [U.S. President Barack Obama] would need to carry Congress with him, which may not be possible after Nov. 2," when the upcoming midterm elections are scheduled.

Could the Government Seize Your Gold?
In spite of such reassurances, gold-seizure concerns are clearly escalating. These worries are very evident on the Internet, with questions, comments and articles on the topic appearing with increasing frequency.

There are several catalysts:

•The increasingly uncertain U.S. economic outlook.
•Stories of individual seizures of gold and other assets by government agents.
•And a reminder that the government maintains that it could seize gold - should the prevailing conditions so warrant it.
Let's take a look at each of the three potential problems facing holders of physical gold.

And we'll start with the widely expected new round of quantitative easing, or QE2.

A Dour Outlook
Although experts such as Money Morning's Hutchinson see this as a flawed strategy, U.S. central bank policymakers see QE2 as a positive. QE2 is part of the U.S bid to win the so-called "race to the bottom" - a competition between the world's biggest economies to see who can debase their national currency the most. The victor's objective: To offset a weak domestic economy.

As the old adage goes, however, in finance "there's no free lunch." In other words, any such near-term gains will have a long-term price tag. And that cost could be frightful, manifesting itself as an unhealthy dose of hyperinflation, and a completely destabilized monetary system.

Given such a dour outlook, it's no surprise that fears of a government gold seizure - akin to the one ordered back during the Great Depression by President Roosevelt ("FDR") - are escalating.

According to Hutchinson, "by seizing gold, the government can force people to deal in their own devalued money, which prevents the people from setting up any parallel payments system which the government doesn't control."

President Roosevelt issued Executive Order 6102 on April 5, 1933 "forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates" by U.S. citizens. It required all persons to deliver on or before May 1, 1933 all gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve.

As noted above, some of the circumstances of the time are eerily similar to modern-day conditions.

In March 1933, America was sinking into the Great Depression. Citizens across the country worried that the government would simply print more paper money, causing rapid inflation that would make cash virtually worthless.

Sound familiar?

At that time, paper money was still backed by gold, and Americans rushed to exchange their cash for gold. Everyone assumed that the government actually had enough gold to back its paper currency. The sudden demand, however, overwhelmed America's banks, threatened the already-precarious American economy and forced Roosevelt's hand.

While President Richard Nixon took the United States off the "gold standard," it was actually President Gerald Ford who repealed the limitations on gold ownership in December 1974, which reinstated American citizens' right to own gold. Congress went one step further in 1977, stripping the president's authority to control gold transactions, except during war.

Expanding Powers?
But some recent events have some investors worrying that with the increasing popularity of gold, the government may once again expand its powers to seize private property, including holdings of precious metals.

Gold bugs are buzzing over a Houston Chronicle report about federal agents seizing cash and gold from individual travelers at that city's George Bush Intercontinental Airport during May. According to the report, U.S. Customs and Border Protection officers and U.S. Immigration and Customs Enforcement (ICE) agents seized more than a quarter-million dollars in cash and nearly $160,000 worth of gold in 14 separate seizures that month.

Why all the angst?

Simple. George Bush Intercontinental is one of many airports that serve as entry and exit points for the continental United States. That means that it's possible the number and total value of these seizures could be multiplied many times over.

The newspaper report has gold bugs in a frenzy because the seizures were based on an arcane legal requirement that hadn't been used much by government agents - until recently.

U.S. citizens have the right to personally transport physical gold or other precious metals in or out of the U.S. by air or other means. But things could get sticky when you deal with a little-known requirement to report transfers if the total value of the precious metals you are carrying exceeds $2,500.

Officers at the Houston airport seized one bar of gold, two silver bullion bars and three bottles of gold nuggets - all because the travelers failed to file a government form known as a "Shipper's Export Declaration Form," or SED.

The consequences are severe for not having or stating correct information on an SED, an automated U.S. Census Bureau declaration-required document when transporting any commodity in or out of the country valued at $2,500 or more. The result of stating incorrect information can be seizure of the commodity, a fine up to $10,000 and/or imprisonment.

U.S. ICE agents have virtually unchecked power to seize any unreported currency under civil forfeiture laws, at which point their victim must begin a lengthy and costly legal battle to prove the confiscated property was legally theirs.

And although such actions are rare, seizures of gold are of particular concern to precious metal owners because of such previous U.S. acts as FDR's executive order.

The Long Arm of the Law?
Vigilant investors also are upset by the federal government's apparent attempts to force more disclosure by investors. The U.S. Treasury Department's Financial Crimes Enforcement Network proposed rules earlier this year that would require reporting of precious metals held offshore in custody on behalf of others. These rules are pending in draft form and do not take effect until 2011 or later.

Also this year, Congress adopted the so-called HIRE Act, a law requiring gold owners to report offshore holdings of precious metals. Rules to implement the law have not been issued yet.

This shouldn't be much of a surprise.

In terms of seizing investments such as physical gold, the U.S. Treasury Department has apparently been stating for years that it has the power to do so, should the need arise, says the Gold Anti-Trust Action Committee, which keeps correspondence between it and the U.S. Treasury on this very topic on its Website.

Moves to Make Now
Because the current economic climate resembles that of 1933, with a sinking currency and a ballooning national deficit, some investors think the politicians might find it easy to justify confiscating gold as a means to stabilize the country's monetary system

In this economic climate precious metal investors would be wise to take at least some precautions.

How to store your metals presents a dilemma. Every storage choice comes with pros and cons, and each individual probably weighs those pros and cons differently.

For example, burying some metal in the backyard or someplace else you consider to be safe may not be a bad idea, but it may not be for everyone. Also, that idea comes with some downside. Physical gold is not a very liquid asset, and is it really safe? Someone with a metal detector could easily locate a buried stash.

You have two basic solutions. You can either store it yourself or you can have someone else store it for you.

If you feel comfortable with it, go ahead and store some metal at home or work, or wherever you think it may be safe and if you think it is not at risk. But don't put all your eggs in one basket, and don't store all your metal in the country where you live.

Also, if you're about to move more than $2,500 worth of physical metals in or out of the country, you should take pains to have a properly completed SED form to accompany the gold or other precious metals you're transporting. It may also wise to obtain an appraised-value document certifying the value of your property.

Finally, make sure to carry documents that authenticate your ownership of any precious metals you want to transport.

[Editor's Note: If there's one thing top global investors understand, it's that you have to "follow the money" to reap the benefits of the best profit opportunities that are available at any one time. Money flows point out the next profit opportunities. Sometimes that means "following the money" from one sector to the next. Other times that means moving from one geographic market to another.

To make those moves successfully, investors need a compass or, better yet, a guide. And successful investors will tell you, one of the best guides out there is The Money Map Report.

This monthly advisory service - an affiliate of Money Morning - employs many of the same experts whose columns you read here each day. The difference is that The Money Map Report's straight investment analysis. Our writers use proprietary money-flow indicators to identify and isolate the most timely profit opportunities you'll find anywhere. For more information about The Money Map Report, please click here.]

Source :

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


20 Oct 10, 16:44
Hold Gold At Your Own Peril!

In the first place, the President does not need the consent of Congress to order the confiscation of gold. President Roosevelt did it merely through an executive order.

Secondly, confiscation is not limited solely to commodities; it can literally involve just about anything else including stocks, real estate, jewelry, etc.

Moreover, confiscation does not have to be restricted to just physical seizure. It can take many forms including the imposition of a heavy federal tax along with a host of other levies and demands.

Furthermore, one does not "own" gold; only the Rothschilds and other bastions of wealth reserve that right. All of the others are simply consigned the right to hold the metal. That is, of course, until at which time it is "called in", be it through an executive order or other avenue of physical confiscation.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules