From Nick Giambruno, senior editor, International Man: On April 5, 1933, under the pretext of a national emergency, President Franklin D. Roosevelt issued Executive Order 6102, making it illegal for U.S. citizens to own gold.
The decree forced Americans to sell their gold at an artificially low “official price.” If they refused, the government could hit them with stiff penalties: a $10,000 fine (equivalent to $180,000 today) and/or up to 10 years in prison.
The government blatantly stole wealth from the American people.
Many worry the U.S. government might confiscate gold again if it becomes desperate enough. I don’t think those fears are unfounded. The U.S. government’s abysmal financial situation is only getting worse.
But would it really do a 1933-style grab again?
I don’t think it will. However, there is another growing threat to your gold.
More Likely Than Outright Confiscation
Today, only a tiny fraction of the U.S. population owns gold. Heck, I’d bet most Americans have never even seen a gold coin, much less appreciate its value.
This wasn’t the case in 1933, when the U.S. was still on a variation of the gold standard.
That’s why the government probably won’t repeat the 1933 rip-off. It’s simply not worth the effort.
If the government wants to confiscate wealth, it’s far more likely to go for the easy option… steadily debasing the currency by printing money. It’s a stealthy way to confiscate from savers.
That doesn’t mean gold owners are in the clear.
I think the government will try a new scam: taxing windfall profits on gold. This would make it much easier for the government to accomplish something similar to its 1933 heist.
There’s precedence for it, too. In 1980, Congress passed the Crude Oil Windfall Profit Tax Act, which taxed up to 70% of “windfall profits” of domestic oil producers.
What the heck is a windfall profit anyway?
As far as I can tell, it’s whatever politicians decide it is. It’s completely arbitrary. There are no objective measures to define it.
In short, a windfall profit is simply a profit politicians don’t like. The whole concept is a scam—a word trick to camouflage and sanitize legalized theft.
If the price of gold explodes, I wouldn’t be surprised if Congress passes a Fair Share Gold Windfall Profit Tax Act levying a tax of 80%, 90%, or more on gold profits.
Fortunately, there are some practical steps you can take to protect yourself from this form of politically motivated expropriation.
What to Do
One way you can avoid a windfall-profits tax on gold is to renounce your U.S. citizenship. But that’s a drastic step. It’s just not realistic for most people.
Thankfully, there’s a far more practical option. You can do it from your living room. And you don’t have to turn in your passport.
The solution is to own gold stocks in a Roth IRA.
A Roth IRA is a tax-free zone. You fund it with after-tax savings, and any future capital gains or income derived from investments in your Roth IRA are not taxable.
While you can never be 100% sure what the U.S. government will do, it’s far less likely a future tax increase, even a windfall-profits tax, would affect investments in a Roth IRA.
A Roth IRA is the most practical way to protect yourself from the most likely form of future gold confiscation—a windfall-profits tax. It makes you a hard target.
Reeve’s Note: Speaking of gold, longtime PBRG friend and Casey Research founder Doug Casey recently put $1 million of his money in gold stocks using the “Casey Method”… a proven way of selecting gold stocks with 5 to 10 times upside, or more.
All the details are in Doug’s latest video, which you can watch by clicking here.