A US coin with a face value of $20 just sold for $18.9 million.
That’s quite a nice little bit of appreciation right there. Or one heck of a premium, depending on how you look at it.
It shouldn’t shock you to know it was a gold coin.
In fact, it was an extremely rare 1933 “Double Eagle.” This was the last gold coin ever minted in the US for circulation. But it never got circulated. President Franking D. Roosevelt saw to that.
On April 5, 1933, Roosevelt signed Executive Order 6102. It was touted as a measure to stop gold hoarding. In reality, it was a scheme to confiscate gold from the public. The order required private citizens, partnerships, associations and corporations to turn in all but small amounts of gold to the Federal Reserve in exchange for $20.67 per ounce.
With the dollar tied to gold, the Federal Reserve found it difficult to increase the money supply during the Great Depression. It couldn’t simply fire up the printing press as it can today. The Federal Reserve Act required all notes have 40% gold backing. But the Fed was low on gold and up against the limit. By stealing gold from the public, the Fed was able to boost its gold holdings.
Actually, gold confiscation is a misnomer. The government never sent goons to people’s homes to take their gold. Most Americans just turned their gold willingly. I mean, hey, if you gave the feds a gold coin with a $20 face value, you’d get a 67 cent premium! Weeee!
What this really tells you is the general public isn’t very bright. It’s like those gun buyback programs where you get a Target gift card in exchange for your AR-15. No thanks – I’ll keep my guns. Well, I would have kept them had it not been for that unfortunate boating accident.
Anyway, those 1933 Double Eagles never made it into circulation. Most of them were returned to the government and melted down. A few did make it into public hands. In 1944, a Secret Service investigation declared that any 1933 Double Eagles found in collectors’ hands would be considered stolen – this according to Sotheby’s, the auction house that sold the coin this week. But somehow, this particular escaped its fate to become the most expensive coin ever sold at auction.
According to CNN, the coin that sold this week is the only 1933 Double Eagle that can be legally possessed by a private individual. It won legitimacy in a legal battle between the US Treasury Department and a former owner. So, if you happen to have one of these lying around, I wouldn’t recommend you going public. (And I wouldn’t be surprised if there are others out there. After, a lot of people just ignored the demand to turn in their gold.)
I’ve heard some people complaining about high premiums on gold coins. Well, this one takes the cake. At 1 ounce, the melt value of the gold today is just below $1,900. That means we’re looking at a 994636.842% premium!
That makes those retail premiums on modern American Gold Eagles look a little more palatable, eh?
Granted, the gold coin you buy today probably won’t ever be worth $18.9 million. But you know, the way the Fed is printing money – maybe it will!
Fun on Friday is a weekly SchiffGold feature. I dig up some of the off-the-wall and off-beat stories relating to precious metals and share them with you – with tongue firmly planted in cheek. The opinions expressed are my own. They are 100% correct – but not necessarily shared by anybody else here – including Peter Schiff. Click here to read other posts in this series.
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!