Tuesday, August 30, 2011
A Twisted Tale of Gold Stolen Almost 80 Years Ago
The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. We have coined this term to describe the current monetary and fiscal policies of the U.S. government, which involve unprecedented money printing. This is the official blog of the New York Investing meetup.
Apparently the government can keep property stolen from you, but you can't keep property stolen from the government. A recent Bloomberg Businessweek article entitled "Gold Coins: The Mystery of the Double Eagle" details how the Secret Service has spent almost 80 years trying to track down 1933 Double Eagle $20 gold coins missing from the Philadelphia Mint. It is well-known however who stole millions of dollars of gold from the American public in the same year - and since it was the U.S. government, lot's of luck in getting compensation.
The 1933 Double Eagle never went into circulation. All coins were ordered to be melted down because U.S. citizens were banned from owning gold in the same year. Moreover, the Roosevelt Administration confiscated all gold and paid gold holders $20.67 per ounce. Those who failed to turn their gold in were subject to a 10 year jail sentence - more time than some violent criminals got - and a $10,000 fine. Once the government had the citizenry's gold, it raised the price to $35.00 an ounce or 41% higher. The price difference represents the value of personal property stolen by the government.
Sensibly, some people sued the federal government claiming the gold seizure was unconstitutional. After all, the U.S. Constitution clearly protects property rights of Americans - if it is enforced that is. Moreover, the Roosevelt Administration claimed it was given authority to seize everyone's gold through a World War I law that gave the government sweeping powers to seize personal property to protect the Republic during wartime. There was of course, no war in 1933.
Nevertheless, the Supreme Court, in one of its most absurd rulings of all time, ruled the gold seizure perfectly legal. Even today, the mainstream press continues to soft peddle this trashing of the U.S. Constitution. The Bloomberg Businessweek article states that Roosevelt's Executive Order 6102, "prohibited the hoarding of gold", rather than the owning of gold. While the gold was taken long ago, the same propaganda from the 1930s seems to still be with us.
Apparently also in 1933 at least one employee at the Philadelphia Mint smuggled out some Double Gold Eagles. The government was unaware of this however. Around 1937, a Philadelphia coin dealer offered some Double Gold Eagles for sale. One of them, after being purchased by another coin dealer, was sold to King Farouk of Egypt. Unbeknownst to the Secret Service, the Secretary of the Treasury's office issued an export license for this coin on Feb. 29, 1944.
This was only one of many things that took place at Treasury that the Secret Service knew nothing about. Not stated in the Bloomberg Businessweek article was that the Under-Secretary of the Treasury at the time, Harry Dexter White, was the most highly placed Soviet agent in the U.S. government. This inconvenient, but well-documented truth has been covered up or minimized by left-wing historians and reporters for decades. White began working for the Roosevelt Administration in 1934 and concentrated on the relationship of gold and silver to currency management. The U.S. federal government confiscated American's private silver holdings in 1934.
The Secret Service arranged an elaborate sting operation in 1996 to eventually get the Farouk gold coin back. Thank goodness they didn't waste their time investigating Bernie Madoff while he was in the process of ripping off the public in his record breaking $65 billion Ponzi scheme. Eventually, after being seized from a British subject who had bought it, this coin was sold at auction and the proceeds were split between him and the U.S. government. Recently more coins have surfaced in the United States and the government has simply confiscated them -- something it is very good at doing when it comes to gold.
That the U.S. government claims rights through perpetuity and across national borders for its property, but unconstitutionally denies them to its own citizens is the major issue in the Bloomberg Businessweek article (one they seem to have missed entirely), but not the only one. Other than the dangerous precedent of property rights for the average person being trashed, the article brings up the point that the federal government is unaware that gold is stolen from its storehouses and the government wastes its time on pursuing trivial matters on its behalf while ignoring major economic crimes involving billions or even trillions of dollars. Fort Knox hasn't been audited since 1954. How much of the gold is still there? What other major Ponzi schemes and frauds are taking place while government agents spend their time tracking down gold coins from 1933?
Disclosure: Do not own any 1933 gold coins.
Organizer, New York Investing meetup
This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.