Gold Ban of 1933
Also: Executive Order 6102, US gold confiscation, Gold recall 1933
A US legal order of 1933 that forced private individuals to hand over gold to the Federal Reserve and banned private gold ownership for around 40 years.
The gold ban of 1933 is regarded as one of the most far-reaching state interventions in private property rights in modern economic history. Its trigger was the Great Depression: mass hoarding of gold drained liquidity from the banking system and threatened the US gold standard. On 5 April 1933, President Franklin D. Roosevelt signed Executive Order 6102, which obliged all US citizens to hand over gold coins, gold bars and gold certificates worth more than 100 US dollars to the Federal Reserve by 1 May 1933.
Content of the order and compensation
The authorities paid the official fixed price of USD 20.67 per troy ounce as compensation. A few months later – with the Gold Reserve Act of January 1934 – the government raised the official gold price to USD 35.00 per troy ounce. As a result, those obliged to hand over gold instantly lost around 41 % of purchasing power, which passed directly to the state treasury. This devaluation of the dollar against gold was politically intended: it was meant to break deflation and make exported goods cheaper.
Exceptions applied to:
- Jewellery and dental gold up to certain quantities
- Gold objects with recognised collector value (numismatics)
- Industrially used gold
Repeal and aftermath
The ownership ban remained in force for almost four decades. Only on 31 December 1974 were US citizens again allowed to acquire and own physical gold without restriction – shortly after the Bretton Woods system collapsed under Nixon in 1971 (see Bretton Woods). The gold price then rose rapidly in the following years: from USD 35/oz (1971) to over USD 800/oz (January 1980).
| Event | Date | Gold price (USD/oz) |
|---|---|---|
| Executive Order 6102 | 05/04/1933 | 20.67 (official) |
| Gold Reserve Act | 30/01/1934 | 35.00 (newly fixed) |
| End of the ownership ban | 31/12/1974 | ~186 |
| Peak of the subsequent bull market | Jan 1980 | ~850 |
Lessons for investors
The gold ban demonstrates that states are capable of direct intervention in private ownership in extreme crisis situations. For today's investors, this historical episode is a recurring argument in the debate about physical gold versus paper gold and about the choice of storage location. Diversification across jurisdictions – for example via a bonded warehouse – is partly justified on these grounds. The historical price development shows how strongly the gold price reacted after private ownership was permitted again.
Not tax or investment advice: whether and how past state seizures should influence future investment decisions is an individual matter of judgement; please consult a financial or tax adviser if needed.
In brief
The US gold ban of 1933 forced private individuals to surrender gold far below the state price that was soon raised, and remained in force until 1974 – a defining example of state intervention in the precious metals market that still influences the discussion about physical gold ownership and storage-location diversification today.