When Gold Became Illegal (And The Gold Boom)

1933. The year that would change the way gold was seen and how it was traded. Prior to 1933 paper money was backed by physical gold – the gold standard. The gold standard was the norm – world governments would give you physical gold in exchange for cash if you demanded it.

But it all changed in 1933. The U.S. government had got itself into a sticky mess – debt and deflation were widespread in the economy. The government took a drastic step – ordering all citizens to trade all their gold coins in exchange for paper cash, while increasing the value of gold immediately thereafter.

Owning gold coins became ILLEGAL. Many gold coins (even those that were nothing short of a work of art) were melted down. No individual was allowed to own gold coins and this carried on for decades. Then, in the mid 1970’s gold coin ownership was legalized again…with some startling effects.

This “false inflation” strategy certainly worked in the mid-30’s for the U.S. government – shortly after the long standing gold standard was destroyed, the value of the US dollar nose-dived while the price of gold soared. Even so, the American economy made a staggering recovery – and there are those who believe that the current U.S. government are emulating the very same strategy that Franklin Delano Roosevelt employed in the mid 30’s.

You should be very excited, because the conditions are startlingly similar now as they were when the gold standard was executed. The U.S. economy (as then) is struggling with deflation, debt and a faltering economy. The amount of paper money being produced today is increasing. The value of the dollar is decreasing.

And guess what? The price of gold at the time of writing is steaming forward …and it seems we could be heading towards another major boom which could mean huge gains for those who harbor gold holdings in their portfolios.

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