Gold Coin Rationing: Where There's Smoke, There's Fire

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If the physical supply constraint persists, we might indeed see that behind all this smoke, there's fire (i.e., the US government has run out of gold with which it's willing to part). Time (months, not years) will tell, quite soon.

The U.S. Mint announced Monday that it would resume taking orders of American Eagle coins on a limited basis after last week's sales suspension. At this very moment in time, orders on gold coins are taking weeks or even months to fill...

A quick trip down memory lane is in order. Back in 1933, President Roosevelt signed Executive Order 6102 and made it illegal for anyone to own more than $100 worth of gold (5 ounces by 1933 prices). Citizens had to turn in all excess gold to the Federal Reserve in exchange for paper money. The gold coins were melted down into bars by the U.S. Treasury department. This was done to keep the U.S. dollar afloat and avoid panic in the overseas market. The tactic worked. Gold prices hovered around the fixed price of $35/oz until 1971 when President Nixon closed the gold window; when President Gerald Ford lifted the ownership ban in 1974, open-market gold was trading at nearly four times the fixed price...

If the physical supply constraint persists, we might indeed see that behind all this smoke, there's fire (i.e., the US government has run out of gold with which it's willing to part). Time (months, not years) will tell, quite soon.

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