People Find Millions of Gold in Attic, Backyard
Posted onDo you know what’s in your attic or under your floorboards? If you live in an older house, it’s worth checking.
After the bank runs and failures during the Great Depression ended, many Americans maintained a deep distrust of banks. Instead of depositing their savings into a bank, they hid it at home.
Common hiding places for gold coins:
- Above false closet ceilings
- Beyond loose bricks around fireplaces
- Underneath carpet
- Inside chair and couch cushions
- Under floorboards
- Inside pianos
You never know when you are going to accidentally find a fortune.
3 True Stories
- In 2016, a man in France found $3.7 million worth of gold in a house he inherited from a deceased relative. The man – who had no idea he was about to become a millionaire – started moving furniture around and found a box of coins attached to one piece. He continued searching and found gold inside an old whisky box, in the bathroom and under piles of linen. In total, he found 5,000 gold pieces, two gold bars and 37 gold ingots, weighing more than 200 pounds.
- In 2015, a Florida family found 18th century Spanish and Portuguese coins in their Grandpa’s attic. It’s believed the coins belonged to infamous Tampa Bay pirate Jose Gaspar.
- In 2013, a California couple found 1,427 rare mint-condition gold coins buried in their backyard. Estimated value? 10 million dollars.
Death is perhaps one of the biggest reasons these hoards get lost. People forget where they hide them or fail to tell their heirs where to look. The excitement and instant wealth these lucky people stumbled upon shows the ever-lasting value of owning gold coins and rare numismatics. If you are looking to build your own personal wealth and didn’t find anything in your attic, start building or adding to your coin portfolio now.
Rare Coin Index Hits New All-Time High In 2018
Attention: Rare coin collectors! The price trend is up.
Rare coin values have been on a tear in recent months hitting a new all-time high in February 2018.
In fact, rare coin values increased for five consecutive months from November 2017 into March 2018. In April, the rare coin values retreated ever so slightly. That’s to be expected. Nothing goes straight up forever.
The US Coin Values Advisor’s Rare Coin Values Index “tracks the price movements of 87 key date United States rare coins, then combines their overall performance to arrive at a composite score, in an effort to gauge the direction and strength of the U.S. rare coin market. The Index uses January 2000 as its baseline (i.e. the Index score that first month was 100.00). Regular issue coins from the Half Cent to $20 Double Eagle are represented in the Index.”
As coin values retreated slightly in April – this represents a good time to make new purchases. No need to chase prices. Use the current pullback as a buying opportunity.
What is on your rare coin wish list? It’s time to go shopping.
The Strange Tale of The Borneo Gold Hoax
Posted onCan a man turn his gold wedding ring into a company with a $6 billion valuation? History tells us the answer is yes. This is the story of a Borneo gold mine and a man with a dream that became a nightmare. It’s the story of Michael de Guzman.
Canadian geologist John Felderho gained recognition after helping to discover a substantial gold and copper mine in Papua New Guinea. It was a once-in-a-career find. Then, suddenly, it seemed fate would put another buried treasure within reach. Filipino mining prospector Michael de Guzman brought some gold core samples to Felderho in 1994. The samples came from the Borneo jungle, and the traces of gold within became the basis of an estimate that 136,000 pounds of gold could be below the surface. Moreover, the land was for the taking, other, larger mining companies that previously explored the same area found nothing and decided to move on. Based on Felderho analysis of the samples Canadian penny-stock mining company Bre-X quickly bought the land. More good news followed.
The estimated gold deposit rose to 2 million pounds in 1995, then to 5 million pounds. Soon Bre-X investors started taking note. The stock, once valued at just 30 cents a share started to climb. Felderho conferred with analysts at J.P. Morgan all of whom were eager to get in on the historic find. By 1997 the stock ascended to $250 per share. Fortunes were made overnight. The company’s inflation adjusted valuation reached $6 billion. The problem, however, was that this “was one of the great frauds perpetrated in North America” according to a lawyer who later represented investors.
Michael de Guzman’s gold was “salted.” That is, he dressed up the samples to appear indicative of gold. In reality, the gold within was nothing more than shavings from his gold wedding band. As the scale of the deceit grew, he added more gold to the samples, this time from a small nearby panning operation.
The lies came to light when Indonesian President Suharto entered the picture. With the find occurring in his domain he became intensely interested in making his claim. He also insisted that another, more established, mining company join the operation. After all, with millions of pounds of gold below the dirt, they would need a few more shovels. It wasn’t long before the other mining company, Freeport-McMoRan Copper & Gold, insisted on reviewing and analyzing the Borneo gold samples for themselves. Soon after, they discovered de Guzman’s ruse.
In the following months, de Guzman’s disappeared in the jungle. Later, people discovered a molar in the dirt; it was de Guzman’s. Investigators believe he jumped to his death from a helicopter while en route to a meeting with Freeport. $6 billion in value vaporized almost immediately. Investors were left with nothing, not even dirt.
In 2014 an Ontario Superior Court justice decided to discontinue the languishing lawsuits against Bre-X. The decision was not an indication of innocents; it was instead an acknowledgment of insolvency; there was no money remaining to repay investors. Years earlier, in 2007, Felderho was acquitted of all charges. In the end, the only ones to make any money were the lawyers.
Attention Coin Collectors: Can You Answer These 4 Questions?
Posted on — 2 CommentsInvesting in rare coins is not only fulfilling financially, it’s fun too. Owning a rare coin is the opportunity to walk back in history. Learn more about the era in which the coin was circulated and the rich heritage of the coin itself. Here are four questions. Let us know if you already knew the answers.
1. Question: What is the most expensive coin sold?
Answer: The Flowing Hair Silver Dollar.
Minted in 1794, sold for a record price of $10,016,875 in January 2013.
A little history: These are the first dollar coins to be issued by the U.S. government and were were minted for only two years: 1794 and 1795. Only 1,758 of these dollar coins were produced in the first year, and those were intended for use as souvenirs rather than legal tender.
Although the first specimens produced were deemed at the time to be of poor quality, these dollar coins have become among the most highly prized collectibles with numismatists and investors.
2. Question: What is one of the most valuable coins you could find in your pocket change?
Answer: 1969-S Lincoln Cent with a Doubled Die Obverse
This extremely sought after and rare coin is easily identified by extremely strong doubling on the motto IN GOD WE TRUST as well as on the word LIBERTY and the date on the obverse (heads side).
After the collecting community noticed the aberration, early coins were reportedly seized by the Secret Service amid concerns of counterfeiting. However, once the coin was confirmed to be genuine, collectors began searching in earnest for this coin and the hunt continues today.
Last Year: A Michigan coin collector was searching through a 50-coin roll of pennies and stumbled upon an uncirculated 1969 – S Double Die Lincoln penny, a 2017 report noted. The coin was estimated to have value of at least $44,000 and perhaps as high as $100,000.
3. Question: What is the average lifespan of a dollar bill?
Answer: A $1 bill lasts about 22 months before it is so worn that is must be taken out of circulation and replaced, according to the Federal Reserve. A $5 bill lasts slightly longer at two years and a $10 bill lasts three years. A hundred? That lasts about nine years.
Nonetheless, “paper” money can’t hold a candle to gold and silver coins. Want to compare that to a lifespan of a gold coin? One of the world’s oldest gold coins – an Ionian “Striated” Stater, was sold to a private collector in 2016. The coin is estimated to be 2,650 years old.
4. Question: Why do some coins (like quarters and dimes) have ridges?
Answer: When common circulated coins were made of gold and silver, some enterprising thieves would shave off the edges of these coins and sell them.
The U.S. Mint fought back against this illegal practice by adding ridges or “reeds” on the sides of coins.
- The dime has 118 reeds
- A quarter has 119 reeds
- A half dollar has 150 reeds.
The penny and nickel don’t have reeds because they were never made of precious metals.
Share Your Stories
What’s your favorite fun fact that you’ve learned about coin collecting investing? Please join the conversation and add a comment below!
Want to read more? 4 Questions for Coin Collectors
Take Three: What Tariffs, Space and Fair Trade Mean for Gold
Posted onWant to make some gold? All you need are a few colliding neutron stars.
Tariffs
Call it the tariff tailspin. Trump has levied tariffs in an attempt to equalize the global trade playing field. The result: stocks plummeted. “Washington is going to dominate market action until Q1 earnings season kicks off in a few weeks,” remarked the co-founder of DataTrek Research. Meanwhile, the Volatility Index is rising as equity investors become fearful of what higher trade costs and muted growth will mean for stocks in the short-term and long-term. Their concern is well-founded; the moves could have implications for up to $60 billion of imports from China. The story for gold, however, has been different. Gold future increased 3% to $1,350 an ounce inching closer to its 52-week high of $1,362.40. “Further strength without additional dollar weakness would signal that bullion is becoming more sensitive to tariffs/trade war, and Trump’s recent cabinet replacements,” remarked an analyst with Institutional View. Additionally, silver picked up another 1.4% this week reaching $16.59 per ounce marking its highest price since March 9.
Space
Want to make some gold? All you need are a few colliding neutron stars. This was a recent scientific discovery coming from volumes of globally sourced data. In August of last year, researchers around the world made a united effort to observe a burst of gravitational waves in what one journalist calls “tiny ripples in the fabric of space.” They learned that when neutron stars crash into each other gold forms and is jettisoned into the universe. Scientist theorize that this natural phenomenon explains the origins of the precious metal on Earth. The immense force of these collisions is difficult to overstate. Each of the two colliding stars carries as much mass as the sun compressed into a sphere only slightly larger than six miles wide. “We estimate that the collision created about as much gold as the mass of the Earth,” remarked Professor Andrew Levan of Warwick University. That’s one serious pay day.
Fair Trade
Independent, non-profit organizations are leading the charge for more ethical standards in gold mining operations. They are offering certifications for companies that use both responsible working standards and pay fair wages. More jewelry manufacturers are taking note and converting their stock and production to fair trade gold only. This drive for sustainable gold has led some to delineate between traceable gold (that which can be proven to come from a certified source) and non-traceable gold. However, ensuring ethical practices carries a cost, in some cases certified gold costs an additional $4,000 per kilo. Today, fully certified mines can be found in Peru, Uganda and Kenya. As more retailers and consumers opt for fair trade the implications for all mines could be substantial given that approximately 78% of the world’s gold is turned into jewelry. For example, Swiss watch and jewelry maker Chopard has invested substantially in making their gold traceable. “The investment today will absolutely pay back in the long term,” remarked Caroline Scheufele, the co-president.
5 Surprising Facts about the Gold Standard
Posted onThe history surrounding gold is centuries old. Gold coins were first struck on the order of King Croesus of Lydia, an area that is part of Turkey today. Gold coins were used long before paper money was ever introduced as a medium of exchange.
By the late 19th century, many currencies around the globe were attached to gold, or fixed at a set price per ounce. That is known as the Gold Standard.
Let’s take a quick look at the fascinating history and future of the gold standard.
- In 1971, the U.S. went off the gold standard under President Nixon. What many gold investors don’t know is that the classic gold standard that the U.S. was using included a 40% cover ratio.
What does that mean? The 40% cover ratio meant the U.S. government would only print money if it has gold in its Treasury equal to 40% of the currency in circulation. For example, if the U.S. had $10 billion of money in circulation, the 40% cover ratio meant the government had $4 billion of gold in the Treasury.
- With the current U.S. debt totaling $21 trillion, even though the U.S. has the most gold in the world, we don’t have enough gold in Fort Knox to pay off our debts.
That means a return to the gold standard is unlikely, or it would mean the government would need to “revalue” the price of gold about 400-500% higher than the current $1,350 an ounce.
- Economists say a return to the gold standard would choke off economic growth.
Modern finance includes the concept of a “growing money supply.” The Federal Reserve can flip the switch and print more dollars, just like the “quantitative easing” efforts that were seen in the wake of the 2008 Global Financial Crisis. You can’t print more gold. Money supply couldn’t grow faster than the supply of gold, which could force lending and economic growth to slow down, some economists say.
- All other countries of the world would need to join in too.
Many financial experts say a return to the gold standard could only work if other advanced nations did it too. Given the difficulty agreeing on trade issues alone, a global monetary agreement to the gold standard appears unlikely at current times.
- Gold is expected to continue to play a key monetary role in the future.
While advanced industrial economies continue to degrade the value of their paper money by money printing and deficit spending, there has been discussion about an eventual “basket” of currencies that could someday become the new world reserve currency and replace the dollar. Gold would play a key part in that currency basket, financial experts say.
The Bottom Line
While a return to the gold standard appears unlikely in our modern financial era. That in no way takes away the inherent power and value of owning physical gold. To the contrary, it only enhances the intrinsic value of gold – as an asset that can’t be degraded by a government printing press.
Gold is a traditional currency that is recognized as a store of value around the world.
Why else would countries from the U.S. to Germany to Italy to China to Russia to Japan to India and dozens more hold hundreds of tons of gold in their central bank vaults?
Owning gold is an appropriate investor for all investors. A properly diversified portfolio can include anywhere from 10 to 25% of gold, depending on your financial goals. If you haven’t developed a financial investing plan, call Blanchard to get started with an individualized financial consultation. Blanchard has a long history of helping individual investors hedge their assets and grow their wealth. You can get started with investments as small as $380 for a 1/4 ounce American Eagle coin, all the way up to rare coins in the thousands. No matter your budget or your financial goals, we can help you too.
Y2K: When Americans Stockpiled Gold
Posted onThe latest Gold Rush wasn’t in the 1800s in California, but just a mere two decades ago.
In the months leading up to January 1, 2000, anxiety and fear was spreading among even the most educated and wealthy in the world.
Everyday Americans were stock piling canned goods, water bottles. Others were making escape plans, where would they go if their major urban city erupted into chaos and looting.
What was the culprit driving these fears?
Doom and gloom entered mainstream society in 1998 and 1999. Computer programmers were furiously working to fix the so-called “Millennium Bug,” also known as the Year 2000 or Y2K bug.
This all started decades ago when short-sighted computer programmers, were designing programs that control everything from your bank account to your 401k retirement funds to the electrical grid to municipal water management systems.
A programming short cut
Computer programmers adopted a universal short-cut date format that omitted the “19” as in 1980 or 1999.
Quite literally, it was feared that computer systems around the world would crash because programs would not be able to compute “20” for the year.
Can you imagine the feeling if you logged into your online bank account or retirement account to check your balance and all you saw was “00.00” or zero dollars. This was the fear, that no financial institution would really know who had how much money, as everything was digitized.
One senior executive at Barclays Bank, quoted anonymously said: “I’m going to plan for the absolute worst. I am talking about the need to start buying candles, tinned food and bottled water from mid-1999 onward.” He was one of many who saw gold as a safe investment in a time of uncertainty.
Flight to Gold: A Hard Asset
The banker also advised people stockpile their cash and buy gold in case the Y2K bug causes a global economic collapse, with currencies and stock exchanges tumbling into a computer-induced free fall.
The New York Times reported that “Another British banker, asked by the newspaper to comment on his rival’s seemingly daffy remarks, said investing in gold might not be a bad idea.”
Gold Sales Soared Ahead of Y2K
In mid-1999, an ounce of gold sold for a bargain basement price of $252 an ounce. Americans and Canadians stocked up aggressively on gold bars, coins and silver as protection of a meltdown of the global financial system. The Royal Canadian Mint reported a 20% increase in Maple Leaf gold coins, while the Mint also reported a $15 million sale of gold coins related to Y2K.
Others stocked up on silver coins in expectation that they could be used as barter units if the monetary system broke down.
Thankfully, the computer programmers fixed their short-sighted error. But, it was not known until just after the stroke of midnight on Dec. 31, 1999 what exactly would happen. Nonetheless, Americans and others around the world turned to hard assets – gold and silver, for protection against economic uncertainty.
Gold still plays an important part in portfolio diversification
Today, just as in yesteryear, gold is a universal currency, with recognized value around the world. Holding a portion of your assets in physical gold and silver makes sense for all Americans. While Y2K is not a looming threat, our financial system remains dependent on computer programming in the digital space. While most of your assets may be a number on a screen, having a portion in hard assets that you can hold in your hand brings a sense of security unmatched by a number on a screen.
Blanchard can help you get started or assist you in adding to your diversification strategy. Call Blanchard today at 1-800-880-4653.
[Editor’s note: This is one in an occasional series of posts on the history of gold. Read an earlier time in U.S. history when Americans were hoarding gold here: FDR to Americans: Stop Hoarding Gold.]
Fed Signals Three Rate Hikes In 2018
Posted onThe Federal Reserve hiked interest rates by a quarter percent as expected on Wednesday. That lifted the benchmark Federal funds rate to 1.50-1.75%. That move was widely telegraphed by Fed officials for months and markets were well prepared for the news.
What surprised investors was an additional rate hike penciled in for next year.
Key takeaways for gold investors –
- Three not four rate hikes in 2018 – The Fed’s famous “dot-plot” chart, which shows the Fed policy maker’s anonymous rate forecasts, indicates the Fed is on track to hike rates twice more in 2018. Some on Wall Street had expected the Fed to hike more this year that encouraged gold investors in the wake of the Fed’s announcement.
- Stock investors were jolted by the Fed’s signals of a faster pace of interest rate hikes in 2019. Now, the central bank expects to raise rates three times next year, rather than two just previously forecast.
How did markets react to the news?
- Spot gold hung onto solid gains scored earlier in the day Wednesday, trading around $1,327 an ounce. That’s up from Tuesday’s London pm gold fix at $1,311 an ounce.
- The Dow erased gains and turned lower during Fed Chair Powell’s press conference. Apple stock shares fell sharply.
- The yield on the 10-year Treasury note jumped to 2.91% on Wednesday, up from 2.88% on Tuesday.
Big picture
This is the sixth interest rate hike in the current monetary tightening cycle, as the central bank attempts to lift the economy toward a more normal interest rate environment.
Despite all the drama and intrigue over rate hikes, the new 1.50-1.75% remains abnormally and historically low – well below more the 3.5-4.0% range seen during typical economic expansions.
Is it too little too late from the Fed?
The U.S. economy is growing, aided by a big dose of fiscal stimulus from the recent tax cuts. But, for how long? Some investment firms, like Capital Economics, expect economic growth to slow in 2019, which will mean the Fed will have to start cutting interest rates as early as 2020.
Fed cycles come and go
While interest rates nudge higher and lower, it has little impact on the long-term value of investing in physical gold, silver and numismatics. The long-term trend for gold remains up.
- Gold represents a hard asset, an alternative monetary outlet that is not degraded by any government or deficit.
- Gold offers investors a proven portfolio diversification tool, against the inevitable decline in the stock market.
Gold prices are climbing and will likely be more expensive next month.
Current levels offer investors perhaps the best buying opportunity of 2018. Contact your Blanchard portfolio manager today for an update on how you can maximize today’s opportunity to grow your long-term wealth.
Thrills, Spills, and Chills
Posted onA Thrilling Ride…
On February 5th, the stock market fell out of bed and broke both legs.
The Dow Jones Industrial Average fell by 4.6%. While equity markets hit free fall, gold climbed. This dynamic illustrates once again the risk-mitigating characteristics of gold. “The stronger the market pullback, the stronger gold’s rally,” remarked The World Gold Council (WGC). Researchers have cited comparable events like Black Monday, the global financial crisis, and the European sovereign debt crisis. In fact, the hedging effect is even more pronounced during periods of prolonged corrections in stocks. Today’s equity markets, characterized by increased volatility, has illustrated, time and again, that gold can bolster overall portfolio performance during periods of uncertainty. Case in point: gold has been among the best performing asset classes year-to-date beating treasuries and corporate bonds.
Meanwhile, other investments, like cryptocurrencies, have not fared well. It’s worth noting that rising gold prices are not driven by short-term fears alone. For example, 90% of gold demand comes from outside the U.S. “As European currencies weakened against the US dollar during the week, gold’s price in those currencies strengthened. Gold rallied by 0.9% in euros and 1.8% in British pounds between Friday, February 2nd, and Monday, February 12th,” explains the WGC.
A Spilling Tide…
Ever wonder what 3 tons of gold scattered on a runway looks like? Wonder no more. A cargo plane loaded with 9.3 tons of gold took off down a Russian runway, but the door was not properly secured to withstand the weight of the shifting payload. 172 gold bars tumbled out the back and onto the ground over a 10-mile radius. Authorities shut down the runway and reportedly recovered 172 bars. The plane was headed for the Russian city of Krasnoyarsk. Other assets were scattered including various precious metals and diamonds.
The bars, known as dore, were semi-pure alloys of gold and silver. Such bars are often created at the site of a mine with the intention of further refinement at a plant. The value of the total payload was $398 million. After noticing the spill, the crew landed at another airport close to their original departure point. Authorities have started an internal investigation to understand why the accident occurred.
A Chilling Rise…
One of the coldest countries on the planet is going for the gold. Russia’s Central Bank Gold Reserves rose to 1,857 tons in January. This total surpasses that of the People’s Bank of China which holds 1,843 tons. The country added 18.66 tons in the month of January alone making them the fifth largest gold reserve in the world. These increases are just the latest in an ongoing trend characterized by fervent gold purchases. In fact, since June 2015, the Central Bank of Russia bolster their holdings with 576 tons. While the motivations for the purchases aren’t entirely clear, more gold would distance the country from the dollar at a time when U.S. sanctions are on the rise and tensions between the two countries rise.
Celtic Pride: Early Coinage as a Historical Record
Posted onToday we associate gold with investments and stores of wealth. However, a look at history reveals that gold had even more pragmatic uses. Some of the earliest Irish coinage served as payments from convicted criminals to victims or victims’ families. These early pieces of gold were rings, rather than coins. Coinage was a natural step in the evolution of economies. Celtic coinage was produced from the late second century B.C. to, approximately the mid-first century A.D.
Much of the early Irish and Celtic gold coin features were influenced by the Macedonian coinage of Philip II and Alexander the Great. The coins featured the head of Apollo from classic Greek and Roman religion. Apollo, with his youthful representation, is widely associated with music, truth, healing, and prophecy. The reverse often featured a horse-drawn chariot. Other coins show more gruesome images.
Some Celtic coins include representations of giants and severed heads on a rope. Other more dramatic images show soldiers on horses entering battle, gods, thunderbolts, or even skulls. Other coins showed symbols of good luck (gold stater of the Eburones). Such coins came from a tribe of Celtics called the Eburones. In fact, part of our understanding of the Eburones comes from the fact that concentrations of their coins have been found in et eastern part of the Dutch river area. The methods for minting these coins was surprisingly sophisticated given the limited technology of the time. Historians often make the distinction between coins that were “struck” versus those that were cast.
A struck coin starts as a blank and is stamped with an image using a die. Often, the die was formed with iron or bronze to withstand repeated use. A strong smithing operation, consisting of many professionals, could strike as many as 20,000 per day. In fact, at the height of production, ancient Romans could produce an astonishing 17 million in a year. The process was a trade including blacksmiths and apprentices. Like methods today, a struck coin required two dies, one for the front image, the other for the reverse. Eventually, modern technology gave way to innovations like roller mills which created metal sheets of uniform thickness. Mechanical minting operations would punch coins from this sheet. Moreover, these processes also gave rise to superior methods of generating precision alloys to ensure uniformity across coins. A cast, however, involves pouring the liquid metal into molds, so the coin image and shape are achieved in one step.
As the practice of minting became more commonplace, the designs on Celtic coins became more sophisticated. Horses became a regular image. Boar designs also became common as hunting was a regular practice. While many of these coins were gold or silver, Celtic coinage also included potin pieces consisting of tin and copper.
In time, the coins started to follow Roman imagery. This came as a result of Romans invading Gaul. Today, the coins that remain preserve an account of history that extends across a series of images that act as a record of victories and defeats.
FDR to Americans: Stop Hoarding Gold!
Posted onThe year was 1933. It was the height of the Great Depression. The average income of an American family had declined by 40 percent over the past four years. If you had a job you were one of the lucky ones.
Bread lines and soup kitchens were common. It is estimated that half of all American children did not have enough food, proper housing or medical care during the Great Depression.
After losing their jobs and unable to pay their mortgage or rent, hundreds of thousands of Americans lived in shanty towns made of cardboard and sheets nicknamed Hooverville’s. About 750,000 farming families lost their farms to bankruptcy. A full 20 percent of the population, or 15 million people at that time, were unemployed and could not find work.
It was the worst economic downturn to ever hit the industrialized world.
Paper Money Was Backed By Gold
In 1913 the Federal Reserve Act provided for the creation of Federal Reserve banks and a system overseen by the Federal Reserve Board. The U.S. was still on the gold standard at this time. The law required the Federal Reserve to hold gold equal to 40 percent of the value of the currency it issued. The Federal Reserve Notes were convertible into gold at the fixed price of $20.67 per ounce.
The Rush to Hard Money
During the Great Depression Americans were converting their paper money for gold, which sparked a massive outflow of gold from the Federal Reserve. Individuals revealed their preference to hold physical gold over paper money.
After several waves of banking crises, the U.S. government decided one of the solutions to the economic crisis would be to make it illegal for Americans to own a significant amount of gold. The government wanted to inflate the money supply, but was unable to do that if Americans were hoarding significant amounts of gold.
85 Years Ago
This April marks the 85th anniversary of when President Franklin Roosevelt proclaimed it was illegal for Americans to own a significant amount of gold.
In March 1933, the Federal Reserve Bank of New York could no longer honor its commitment to convert paper money to gold and President Franklin D. Roosevelt declared a banking holiday. FDR issued an Executive Order requiring all Americans to surrender all gold owned by them to a Federal Reserve bank and prohibited the private holdings of all gold coins and bullion.
The now infamous Executive Order 6102 was issued on April 5, 1933, states: “I, Franklin D. Roosevelt, President of the United States of America… hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates.” Prior to this executive order, gold certifications could be easily exchanged at banks for physical gold.
President Roosevelt ordered Americans to sell their gold back to the government, or face jail time and fines. Exemptions were made for coin collectors, dentists, artists, and jewelers, and average citizens could own up to $100 in gold coins.
In 1934, the Gold Reserve Act became law, which required all gold and gold certificates to be surrendered to the U.S. government.
Bretton Woods
Fast forward two more decades and another historic moment in the history of gold was seen in 1958. The Bretton Woods system became fully functional and included the stipulation that U.S. dollars were convertible to gold at a fixed exchange rate of $35 an ounce. The United States was required to keep the gold price fixed and adjust the supply of dollars in circulation to retain confidence in the gold convertibility system.
The Bretton Woods agreement had first been ratified by Congress in 1944 to establish a gold exchange standard and the IMF and the World Bank. The system was set up to rebuild the global economy towards the end of WWII.
Fast Forward to the 1970s
In 1971, the balance of payments deficits made it impossible for the U.S. to fulfill its obligation to convert dollars to gold at that price. President Nixon officially terminated the U.S. dollar’s link to gold established under the Bretton Woods agreement.
In 1973, the United States devalued the dollar and major currencies were allowed to float freely no longer pegged to gold.
All during these decades, Americans were not allowed to own gold other than jewelry.
The Legalize Gold Movement
One of our company’s founders – Jim Blanchard rose to prominence as a supporter of American’s right to own gold in the early 1970s.
Jim Blanchard gained national attention when he arranged for a biplane to tow a banner proclaiming “Legalize Gold” over President Richard Nixon’s inauguration in January 1973. His lobbying efforts were a success and after more than 40 years, Congress once again legalized private ownership of gold bullion effective Dec. 31, 1974.
Throughout ancient history, gold and silver were prized for their intrinsic value. They remain hard physical assets, which have become even more valuable in our modern society. It is the right and privilege of every American to own gold in order to have a safe haven to protect, preserve and grow their assets. Perhaps it is even more important today than ever for all Americans to invest a portion of their assets in gold.
