By Patrick Heller
Liberty's Outlook

       Over the past 20 years, a marketing scare tactic often used by less-than-scrupulous coin dealers has been to raise the fear of "U.S. gold confiscation."
       This tactic was used to persuade customers away from low profit margin bullion coins into higher profit (for the dealer) rare gold coins.
       I have explained in the past that President Roosevelt's gold surrender in 1933 called for full compensation to those who turned in their gold. It turned out not to be full compensation when the government then raised the price of gold from $20.67 to $35.00 per ounce. The value of the price hike was enough to cover 1-1/2 years of federal government operations at the time.
       Because it was largely illegal for Americans to own gold from 1933 to 1974, gold ownership in the U.S., on a per capita basis, is actually quite low today. In past analyses, I have estimated that US government would bring in about $80 billion of gold - equal to about one month of federal operations - if it called in gold again! If the government was really desperate to seize assets I think a juicier target would be IRAs and retirement accounts that hold trillions of dollars of assets.
       Still, we periodically hear from customers who state that one of their aims in buying a particular form of gold is protection against possible government confiscation.
       A December 17, 2004 letter by U.S. Treasury Department Assistant General Counsel (Banking and Finance) Roberta K. McInerney addressed to the press secretary of Congressman John B. Larson (D-CT) hopefully can put this bugaboo to rest.
       Rep. Larson's office had written the Treasury about concerns from constituents about the legal security of their gold, specifically because of the 1933 presidential decree to redeem gold.
       The text of Ms. McInerney's letter reads:
       "I am writing in response to your e-mail of November 29, 2004, which forwarded a question from a constituent of Congressman Larson's as to whether the Treasury Department could force the redemption of U.S. gold bullion coins at face value, or the surrender of foreign bullion coins."
       "In Public Law 97-258 (Sept 13, 1982), Congress eliminated a statute (12 USC 248 n) which had allowed the secretary of the Treasury to require individuals and others to deliver to the Treasury gold coins, bullion, and certificates. As a result, this statutory authority no longer exists."
       "I hope this information is helpful. Please let us know if you have further questions or need additional information."
       Now, I suppose that just because a law does not exist now doesn't mean that none could ever be enacted. There might also be some presidential order that could circumvent this lack of authority. However, the possibility of any redemption or confiscation is so remote that it should have no bearing on your decision about which form of gold to hold.
       Incidentally, if a coin dealer mentions "gold confiscation" as part of a sales spiel, you may want to avoid that dealer.
       Editor's Note: Patrick Heller is editor of Liberty's Outlook. Liberty's Outlook is published monthly by Liberty Coin Service, 300 Frandor Ave., Lansing, MI 48912, 1 year, $79.