In yesterday's blog entry, I described the legal precedent for the U.S. government to again confiscate privately held gold and silver, as it did in 1933.
What are the best ways to protect yourself against such an event?
One of the most important precautions is to not keep precious metals in a U.S. safety deposit box. President Roosevelt ordered all safety deposit boxes sealed when he issued his March 9, 1933 gold confiscation order. My grandparents couldn't retrieve their holdings from their safety deposit box until government thugs had rifled through it.
Also, beware of investing in U.S.-based exchange traded gold funds. In the event of a second gold confiscation, Treasury agents would clean out any U.S. vaults these services used almost before the ink was dry on the emergency order.
Some coin dealers claim that numismatic (collector) coins would be exempt from any future government confiscation of gold and silver. This claim is based on the terms of Roosevelt's 1933 emergency order, which specifically exempted "coins having recognized special value to collectors of rare and unusual coins."
Some firms say that premiums of at least 15% over the spot price of bullion magically turn coins "numismatic." This notion is based on a proposed federal regulation issued in 1984, but never adopted. Other dealers claim that coins 100 years or older are automatically converted to numismatic status.
It's beyond me why anyone takes these claims seriously. Why would a government that stole its citizens' property in 1933 be consistent when it does so again?
Nothing obliges the federal government to pay by the same set of "rules" it imposed 75 years go. Nothing obliges the federal government to honor the terms of a proposed regulation issued a quarter century ago. And naturally, those rules can change at any time.
However, should such an exemption again come into existence, U.S. law (which could naturally be swept away by legislative or executive fiat) does stipulate which specific coins are "numismatic." The 1985 legislation that authorized production of the coins now known as gold and silver Eagles stipulates that these coins are to be considered "numismatic items."
Therefore, if you believe that numismatic coins would be exempt from a future gold (or silver) confiscation, you should consider purchasing the only coins specifically defined in U.S. law as "numismatic."
In addition to gold and silver Eagles, keep some gold and silver bullion outside the United States, preferably in a safety deposit box or a private vault. That way, if a second confiscation occurs, your holdings won't be immediately affected—although I suspect you'd still be required to comply with the order.
Copyright © by Mark Nestmann
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