Did You Know: Gold Ownership Was Once ILLEGAL in the United States?

Did you know owning gold was once illegal in the United States? This is a very interesting event in United States history that is not taught in school or discussed in mainstream media. It also has big ramifications on the economy and our lives today.

As the time of this post, the U.S. is over $27 trillion dollars in debt. The debt has been steadily increasing over the years:

How big is one trillion? If you made one million dollars everyday, it would take nearly 3,000 years to make ONE trillion. Remember: we are over 27 trillion in debt. This debt is how much the country owes to its creditors.

There are many reasons for this tremendous increase in debt in the U.S. The most recent reason is the stimulus checks and increased government spending due to the coronavirus pandemic.

Another reason for this massive debt is the ability for the country to literally “print” as much money as they want. This is where the history of gold comes into play.

The History of Gold

Gold has been used as currency for centuries, with its first known use in Lydia (present day Turkey) in 643 B.C. In 3000 B.C. the ancient Egyptians recognized gold’s importance and built temples and artifacts made of solid gold.

As time went on, gold became universally accepted as currency, and in 1792, the Mint and Coinage Act was passed by Congress. The price of gold would then be listed in U.S. dollars. In addition to gold, silver was officially recognized as legal tender in the United States.

1800 Gold Eagle Coin

In the 1900’s, the “gold standard” was created. This linked the value of paper dollars printed to an ounce of gold. This helped to stabilize the value of the currency. This all changed in in 1933, thanks to the Emergency Banking Act: American citizens were ordered to turn in their gold and exchange them for U.S. dollars.

Later that year, President Roosevelt signed Executive Order 6102, which made holding gold a crime. Anyone caught with gold would face either 10 years in prison or a $10,000 fine, or both.

The gold was exchanged for $20.67 in dollars. A few days later, the price of gold was raised to $35/ounce by the Gold Reserve Act. Today, gold trades at $1900/ounce.

It would remain illegal to own gold in the United States until 1971.

The Beginning of Fiat Currency

In 1944, the U.S. dollar was officially pegged to the price of gold thanks to the Bretton Woods Agreement. The conference, held in held in Bretton Woods, New Hampshire, consisted of over 700 delegates from 44 countries. Their mission was to prevent the devaluation of currencies and promote economic growth for all nations.

However, in 1971, President Richard Nixon removed the U.S. from the gold standard, and the fiat system was created. Instead of being backed by gold, the U.S. dollar was now called “notes,” and these notes were backed by the US government and printed by the US Treasury. Other countries quickly followed suit, removing their money off the gold standard as well. The phrase “This note is legal tender for all debts public and private” appears on each dollar bill as seen below:

See the source image

Since the dollar is not backed by gold and just the faith of the U.S. government, they are free to print as much currency as they want. This is a major reason for the trillion dollar deficits we see today.

Problems With Fiat Currency

As more money is printed, the value of the dollars in circulation is decreased. In other words, the purchasing power of that dollar begins to fall, making things more expensive. This is a key component of inflation:

This excessive printing of money has alarmed many people, causing them to seek another safe haven, or, in other words, a way to protect themselves from the dollar’s decreasing value. This is why we see so many people purchasing other assets such as gold and silver These assets are outside the current monetary system, and are believed to retain their value. Cryptocurrencies such as bitcoin are increasing in popularity for the same reasons. Many believe all 3 will increase in value as more dollars are printed.

This cartoon depicts China buying gold with U.S. dollars:

See the source image

The logic is simple: exchange as much “fake money” as you can for “real money.” Why? Because one day gold may be too expensive to purchase with fiat currency, so get it while you can.

In terms of history, fiat currency has not been around long. The world has used gold as currency for centuries, while fiat currency for less that 100 years. Many believe gold will be used to back the dollar again, while others believe it will be a cryptocurrency such as bitcoin. No one knows what will happen. It’s pure speculation at this point.

Whatever the case, it’s critical to understand the history of gold and the current monetary system. Once a person understands, they are better equipped to move forward.

This is a summary of what’s going on currently. I encourage you to do your own research and prepare accordingly. Personally, I like to accumulate gold and silver, while others are buying bitcoin and other cryptocurrencies.

Please note: I am NOT giving financial advice. Do your own research as to what investments work for you and your financial situation.

Will the dollar crash? Will the gold standard be reenacted? Will bitcoin become the new reserve currency? Time will tell.

Gold is an asset. It’s critical we learn as much as we can about gold, silver, and other items that retain their value and items that can generate revenue for us. This important information is not taught in school or discussed in mainstream media. Get more great tips in my book Invest For Success: Winning Wealth Strategies Not Taught in School. Available on Amazon.

One Reply to “Did You Know: Gold Ownership Was Once ILLEGAL in the United States?”

Leave a Reply