How to Avoid a 'Windfall Profits' Tax on Gold

As inflation continues to climb, especially for essentials like food, people will start to realize that Fed policies are to blame,” says Dr. Paul Craig Roberts. 

Alix Steele reports on the 1933 declaration by U.S. President Franklin Delano Roosevelt to have American’s turn in their gold on Bloomberg TV’s “Lunch Money”. 

“80 years ago on April 5th, 1933, was the day that the federal government took all our gold and changed the precious metals as we know it,” said Alix Steel.

April 5th, 1933, FDR confiscated every gold coin, bar, or certificate and people had to turn in their gold to the Federal Government or else they would face a fine of $10,000 or 10 years in jail.  That is about $179,000 in today’s money.  You were able to keep a small amount or some rare coins and those that did give up their gold received about $20/oz. 

“Why would the government do that?” asks Ms. Steel.  They did this for the following reasons:

1. To prevent hoarding.

2. To devalue the dollar during the Great Depression.

3. The government set the gold price at $35/oz and pegged it to the dollar.

“But this could never happen again, right?” asks Ms. Steel. “Well tell that to Texas.”  

Steel reports, “The state of Texas is contemplating creating a bill to create the Texas Bullion Depository to protect its gold. It will abandon its New York depository and move their gold back stateside.  If the U.S. Federal Government tries to come for their gold the state says it is prepared to fight with the 10th amendment.  Arguing that state’s rights trump any order by the federal government.” 

Actually this event is more accurately termed a nationalization. Americans were forced under harsh penalties to sell their gold at an artificially low “official price.” If it were an outright confiscation, the government would have just taken the gold without giving anything in return. But no matter how you label it, the end result was the same: the theft of purchasing power.

Many have speculated that the US government could once again turn to gold confiscation/nationalization if it became desperate enough. These fears are not unfounded given the abysmal financial situation of the US government that only continues to get worse, coupled with a total lack of political will to cut spending.

But would the US government really turn to a 1933-style grab again?

I would argue that they wouldn’t, but that doesn’t mean the threat to your gold has diminished. Quite the opposite.

More Likely Than Outright Confiscation

Today only a tiny fraction of the overall US population owns gold. That wasn’t the case back in 1933 when the US was still on a variation of the gold standard.

Heck, I’d bet most Americans today have never even seen a gold coin, much less appreciate its value.

This is why I think it’s unlikely we’ll see a repeat of the 1933 ripoff. It’s simply not worth the effort. If the government is looking to confiscate wealth, they’ll likely go for the low-hanging fruit… like financial accounts, which can be plundered with a few mouse clicks. Or they’ll continue to ramp up the inflationary money printing, which is a way to confiscate from savers.

But that doesn’t mean gold owners are in the clear.

Instead there will be a new scam. And that scam is likely to be a windfall profits tax on gold.

A windfall profits tax on gold would be much easier for the government to administer than what they did in 1933. And thanks to the system of citizenship-based taxation, a windfall profits tax on gold could be levied on Americans no matter where in the world they live.

There’s precedence for this, too. In 1980 the Congress passed the Crude Oil Windfall Profit Tax Act, which taxed up to 70% of what they deemed to be “windfall profits” of domestic oil producers.

If gold were to explode to the upside (another way of saying the dollar crashes), we shouldn’t be surprised to see a bill like the Fair Share Gold Windfall Profit Tax Act get passed, which would levy a 80%, 90%, or higher tax on gold.

Fortunately, there are some practical steps you can take to protect yourself from a windfall profits tax on gold, which I believe is the most likely form of future confiscation.

Keep Your Hands Off of My Gold!

One way you can avoid a windfall profits tax on gold is to become a resident of Puerto Rico - read more on that here. You could also preemptively divorce the US government by renouncing your citizenship.

But these are drastic measures and out of reach of most people.”

The company does not report your purchases to any government or country, so it’s a “tax free zone”!

Click the image below to get information on buying gold from Karatbars International.