Wednesday, November 5, 2008

Palladium & Gold Confiscation

Confiscation Act of 1933

From what I got from my reading online, during the gold confiscation of 1933, having it was punishable by 10 years in prison and or a fine up to $10,000 (which would be like $100,000 or more today). You were apparently required to take all the metal you had and turn it in for the price of those days--$20/oz. But, from the Net info I've read, it says safety deposit boxes were not searched. I guess it was kind of a honor system of whether you turned it in or not and if you got caught you were legally screwed. There's a lot of Net info out there but I prefer reading hard copies and can't stare at the screen too long. I don't know how silver or platinum was effected at the time. I don't think platinum trading was very popular back then, and I'm sure palladium wasn't. I know they had bullion though

The ABC's of Gold Investing by Michael Kosares

I read Michael Kosares's The ABC's of Gold Investing. It's basically for beginners but I enjoyed it. It's the only book I've ever bought on palladium or precious metals (and learned the rest through a friend...or the hard way!). Chapter 16 is devoted to confiscation and after reading it I'm convinced that confiscation is truly possible, even today. It happened in Korea and Thailand as late as 1997. However, in the years following Executive Order 6102 of 1933 (the Confiscation Law) up until 1975, pre-1933 coins were allowed to be held by investors due to their numismatic value. This held true for US $20 pieces, German 20 mark, Swiss 20 franc, French angel, Dutch guilder, amongst others (pg 123).

Now let's look at a quote from the late palladium expert Franz Pick, as quoted by Kosares:
I am afraid that one day the government will indeed call (precious metals) in (bullion) will be subject to confiscation. This is one big advantage to numismatic (coins), such as the double eagles. It is an idiosyncrasy of governments that although they may prohibit ownerships of (metals) in any form, they are reluctant to touch collections of numismatic...coins. Today, there are some 49 countries that forbid ownership of (it) by their citizens, but do allow holding...coins for numismatic purposes. Even Soviet Union and easter European countries legally tolerated]the acquisition of numismatic...coins. So, these are the only...holdings that could be kept in your safe deposit box without any fear of confiscation (p 128).
1927 St. Gaudens (click to enlarge)

That's what I got from Kosares anyway. He has another "book" which came about before ABCs which I think might be free to read on the Internet. It's called How You Can Survive a Potential Gold Confiscation with Michael Cooper. I don't know how to find it. Someone said it's free with this packet but I haven't signed up yet. I can't find it anywhere for free or to buy. Anyone know where to find it?

* * *

What's strange to me that Roosevelt passed the order in 1933, then quickly made it legal to keep all coins pre-1933. So, at that time, ALL coins were legal to hold! But, the government still got the bars. Since was illegal, the last minted coins were 1933, and they didn't mint again until, as uncovered my quick search, 1992. And, as a side note, Kosares says this, "All safety deposit boxes were sealed and could not be opened except in the presence of an IRS agent" (pg 122). Hmm...

Possible Palladium Confiscation Summary

Well, if you came here looking for definite answers, I can't give you any. In fact, no one can answer confiscation questions. Here are a few facts to help you though:
  • Metal was confiscated in 1933 and it was illegal to hold until 1975. There is nothing saying that palladium won't be confiscated again
  • The past can predict the future. In the past pre-1933 coins were not confiscated. They are less likely to be confiscated this time. In fact, there are 49 countries that prohibit ownership, but they all allow ownership of numismatic (collectible) coins
  • If palladium and other metals areconfiscated, you will be paid a set price for it. The government will determine this price. It will likely be low
  • If you own palladium that cannot be tracked to you and you keep it hidden, it cannot be confiscated
  • You can make your own guesses by reading about the past. The executive order of 1933 is posted at the bottom of this page
  • The US government has very little palladium and other metals now. The metals it used to have went not to US citizens, but overseas. Confiscation of palladium by the US government wouldn't do much good for any purpose
And that's all I have! Let's just hope this will never happen!

Click this link to read the 1933 confiscation executive order by Franklin Roosevelt: http://www.goldline.com/images/content/precious-metals/articles/conf-order.pdf

1 comment:

  1. "Metal was confiscated in 1933 and it was illegal to hold until 1975. There is nothing saying that palladium won't be confiscated again."

    Again? When was it confiscated the first time?

    ReplyDelete

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