August 22, 2012
The chart below, which is a time series showing the total “Gold Held by the US Treasury and the Federal Reserve” (which for all intents and purposes are interchangeable), demonstrates vividly the moment when the US government enacted Executive Order 6102, aka the “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States” order which criminalized the possession of monetary gold “by any individual, partnership, association or corporation.” But not the government of course. Spot the moment after which gold confiscation by the US government (also known as USD devaluation) from its citizens was legalized.
The actual April 5, 1933 order, which in the coming years will make a repeat appearance with absolute certainty, is below.
What was the point of Executive Order 6102? It was two fold.
As for the process the government had in place to deal with those who refused to voluntarily hand over their gold quietly, curiously there was only one case of prosecution, which however should make it very clear that holding gold in “authorized” bank safes is about the dumbest thing one can do the next time the US government decides to devalue the dollar, and change the rules.
The circumstances of the case were that a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5,000 troy ounces (160 kg) of gold.When Campbell attempted to withdraw the gold Chase refused and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day (September 27, 1933) for failing to surrender his gold. Ultimately, the prosecution of Campbell failed, but the authority of the federal government to seize gold was upheld, and Campbell’s gold was confiscated.
The fact that the custodial bank of the 5000 ounces of gold is the bank that would subsequently become JPMorgan is not lost on us.
Finally, to those who have some gold ETF certificates in a brokerage account, which by law are the possession by DTCC’s Cede & Co. – a bank owned institution – we wish the best of luck to anyone hoping to preserve of even recover any of the invested wealth in such instruments.
And remember: when in doubt, recall Bernanke’s immortal words: “gold is not money.”
This article was posted: Wednesday, August 22, 2012 at 3:15 am