Thread: Gold could this happen again

The United States Gold Reserve Act of January 31, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury.

After America went off the gold standard there was not a huge need for hoarding gold. The Gold Reserve Act outlawed private possession of gold and allowed fort Knox to take in all gold in the US so no one would be able to sell their gold, unless it was jewlery.

Following the Executive Order 6102 the year before, it had already become a criminal offense for U.S. citizens to own or trade gold anywhere in the world, with an exception of some jewelry and collector's coins. Gold certificates were again allowed for private investors on April 24, 1964, although the obligation to pay the certificate holder on demand in gold specie would not be honored. By 1975 Americans could again freely own and trade gold. The Act also changed the nominal price of gold from $20.67 per troy ounce to $35 per ounce.

The Gold Reserve Act authorized the Exchange Stabilization Fund to use such assets as were not needed for exchange market stabilization to deal in government securities. It had no statutory authority, however, to engage in other activities that it began to undertake.

The Gold Reserve Act had economic ramifications far beyond national finance. At that time many contracts stipulated that their monetary terms could be demanded in gold. Such "gold clauses" were intended to protect against the United States devaluing the dollar. When the Emergency Banking Act of 1934 and the Gold Reserve Act of 1934 outlawed the use of gold such contracts became sources of controversy. In Norman v. Baltimore & Ohio Railroad Co., 294 U.S. 240 (1935), the U.S. Supreme court ruled that gold clauses were invalid.