Gold’s Rally to $2,195: A Sign of What’s to Come

Gold’s journey has hit a new milestone, soaring to an all-time high of $2,195 this week.

However, gold’s past isn’t without its shadows. There have been periods, even in the U.S., where owning gold was more than just frowned upon — it was outlawed.
In this week’s Nuggets, we’ll dive into these historical moments when gold was banned. Ready for a quick journey through gold’s storied past?

Let’s explore.

Gold Reached Record Highs Again

Last Friday, gold made history again when it jumped up as high as $2,195/oz. Analysts are scrambling to update their forecasts, signaling a bullish outlook for 2024.

Billionaires Mark Zuckerburg and Sam Altman Allegedly Buy Gold

Jonathan Rose, CEO of Genesis Gold Group, notes a trend: he says the wealthy, including Mark Zuckerberg and Sam Altman, are increasingly investing in gold for emergency preparedness. Situated in Beverly Hills, Rose says tech moguls to pro athletes are purchasing gold to secure their future.

The Big Number: $3.3 Trillion

That big number is the amount of gold held by investors, according to strategist Nikolaos Panigirtzoglou from JP Morgan. While that number may sound impressive, it only represents about 1.4% of the value of all global investments.

Bitcoin Hits Record Above $73,500

Bitcoin hit a record high on Wednesday above $73,500.According to LSEG data, flows of capital into the 10 largest U.S. spot bitcoin exchange-traded funds slowed to a two-week low in the week ending March 8, but still reached almost $2 billion.

Is Gold Doing Its Job?

A Look at Gold vs Inflation since 2020

We’ve all felt the pinch of rising prices in recent years. Yet, for those who have turned to gold as a safeguard, there’s a silver lining…

This chart, crafted by GoldSilver analyst Alan Hibbard, showcases a compelling idea you might not be hearing on most mainstream news channels. Since 2020, the price of gold has not just kept up with inflation — it has surpassed it.

Alan indexed the CPI to the price of gold at the beginning of the chart (1/1/2020 which is $1,523.10/oz). The CPI has risen 20% in this time, which is pretty substantial. But during that same span gold has risen 43%.

Despite the Consumer Price Index (CPI) signaling sharp inflationary trends, gold investors have witnessed an increase in their purchasing power.

This chart helps show a powerful message: combating inflation isn’t a hopeless task. By investing in gold, you’re taking a concrete step towards safeguarding your financial future against the erosive effects of inflation.

The Hidden History of Gold Confiscation: A Warning from the Past

Gold confiscation may seem far-fetched to investors used to stocks, bonds, or real estate. However, during moments of economic distress, governments have reached into the private “vaults” of their citizens, marking gold reserves for seizure.

As unlikely as it may be, it’s wise to be educated about the past just in case. Here’s a quick overview of notable gold confiscations over the last 80 years:

United States Gold Confiscation—1933

On April 5, 1933, during the Great Depression, President Franklin D. Roosevelt enacted Executive Order 6102, “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.”

People were required to take their coins, bars or gold certificates to a bank, and exchange them for US dollars at the rate of $20.67 per ounce. Less than a year later, the president raised the official price to $35 per ounce, instantly devaluing the dollars those ex-gold owners received by 40%.

Australia’s 1959 Gold Seizure

In Australia, the Banking Act in 1959 allowed gold seizures of private citizens if the Governor determined it was “expedient so to do, for the protection of the currency or of the public credit of the Commonwealth,” making it legal to seize gold from private citizens in exchange for paper currency.

Great Britain’s 1966 Gold Ban: The Fear of Decline

After leaving the gold standard in 1931, the British pound steadily weakened, prompting investors to move their gold abroad. In response, the 1966 government enacted restrictions limiting private citizens to owning no more than four precious metals coins and prohibited the importation of gold coins.

You’ll notice that these first three confiscations had some striking similarities: All three:

• were imposed by western governments.
• arose out of economic crisis.
• had a long duration, with the shortest lasting 13 years.

As bad as these unfortunately were, there are some nastier gold confiscations from history. When you look at oppressive regimes, gold was a natural target to grab funds for the government…

Italy’s “Voluntary Gold Donation” in 1935

Under Mussolini’s “Gold for the Fatherland” initiative, citizens were encouraged to donate gold, boosting Italy’s reserves by 35 tons.

Germany’s Confiscation of Czech Gold

In 1939 the Nazis transferred £5.6 million of Czech gold to the Reichsbank, despite its clear ownership by the Czech government, and got away with it scot-free.

Saddam and Fidel Seizure by Force

Saddam Hussein of Iraq and Fidel Castro of Cuba forcefully confiscated assets such as gold, art, and jewelry from their citizens. Citizens weren’t compensated for their gold — unless you count remaining alive as compensation.

Safeguarding Your Gold In Today’s Landscape

In an era where currency is no longer gold-backed, the likelihood of government asset seizures leans more towards securities or bank-held cash than gold itself.

However, keeping your gold outside the banking system is still a wise move. There is no federal law governing safe deposit boxes. No rules require banks to compensate customers if their property is stolen or destroyed. Not even if the bank accidentally misplaces a box… or loses its contents.

Taking your gold out of the bank also shields your investments from potential risks like rehypothecation — a scenario where banks use assets in their custody as collateral for their own borrowing. Should a bank fail, this could legally entangle your gold with creditors you’ve never dealt with.

The truth is that the risk of another gold confiscation is low, but it’s not zero. This does not mean, however, that we are suggesting a gold confiscation is imminent or even probable; simply that it could happen if one or a series of events having significant worldwide implications occurs.