Interesting and Amusing
Americans Required to Hand Over All Gold Certificates and Gold Coin
Imagine waiting in a bank line for hours--to turn in all of your
money. This was the scene in many American cities in March 1933 when United
States residents were required to exchange gold certificates and gold coin for
Federal Reserve notes. Americans who refused to hand over all gold currency and
coin could be fined up to $10,000 or imprisoned for up to 10 years. An exception
was made for gold jewelry and rare coins. As part of the Emergency Banking Act,
the exchange of gold for Federal Reserve notes took place to stop the public's
hoarding of gold bullion. The Great Depression had caused an international shortage
of gold, resulting in a worldwide abandonment of the gold standard. The United
States remained on a modified gold standard until President Nixon suspended the
dollar's link to gold in 1971. In 1974, President Ford restored Americans' right
to hold gold bullion.
Many investors predicted a substantial increase in the demand for gold as soon
as the restrictions were eased. In 1974, dealers began stocking up on gold coins
in anticipation of consumer buying sprees. Surprisingly, consumers did not purchase
anything close to the predicted quantity of gold, even when dealers offered
discounts as high as 10 percent. Many consumers
who had grown accustomed to stable gold prices from 1933 to 1970 were not willing
to pay the new higher prices of gold. From 1933 to 1970, the price of gold
hovered at about $35 an ounce. The price of gold had remained constant for
almost 40 years, while inflation had increased over three times during the
same period. In 1974, the average price of gold had increased to over $150
per ounce. During most of the 1980s the price of gold continued to increase
and reached an all-time high of $850 per ounce on January 21, 1980. Since
then, the price of gold has largely remained in the $300 to $400 range.
Most central banks store gold bars that weigh 400 onces each and are valued
in excess of one hundred thousand dollars. |
