The all powerful (but totally bankrupt) government of the United States on Wednesday won the first round of a legal battle over the ownership of ten rare U.S. gold coins originally minted just around the time of the first inauguration of President Franklin D. Roosevelt in 1933.
The coins are now worth an estimated $75 million. The $20 gold pieces are called “Double Eagles” because at that time a $10 gold coin was called an “Eagle,” both names based on the beautiful coin design. The coin depicts an eagle with spreading wings on one side; the other has the image of a woman portraying Liberty designed by the noted American sculptor, Augustus Saint-Gaudens that had been in use since 1907.
A single 1933 Double Eagle believed once owned by the late King Farouk of Egypt sold at auction in 2002 for $7.59 million. The U.S. government minted fewer than 500,000 of the $20 coins in 1933, and all were ordered to be turned in and melted by the U.S. Mint.
Only thirteen of the Double Eagles are known to exist, according to Robert W. Hoge, a curator of at the American Numismatic Society. Besides the ten coins on trial in Philadelphia, the Smithsonian has two and the King Farouk coin is currently on display at the New York Federal Reserve Bank.
Jury OKs Confiscation
Last Wednesday a U.S. District Court jury decided, after five hours of deliberation, that it was proper for U.S. Treasury agents to confiscate the double eagle coins, which were taken from a Philadelphia family after the daughter of a jeweler found the coins in a family safe-deposit box in 2003.
The last of these coins were issued to the public in 1933, the year President Roosevelt issued a highly questionable executive order that made it illegal for U.S. citizens to own gold. (In the early 1970s, President Richard M. Nixon cut the last links to the “gold standard” that had made the U.S. dollar a respected currency because dollars were backed by and redeemable for real gold.)
FDR’s Major Government Default
The New Deal president also stiffed thousands of domestic U.S. investors when he refused to repay 1917 “Liberty Bonds” that were redeemable in gold and used to finance the American World War I efforts.
By coincidence only last week, I wrote about this major U.S. government default, comparing it to the current impasse in Washington over increasing the national debt. FDR’s gold bond default, while the largest, was but one of many U.S. government failures to honor its debts.
Others at the Sovereign Society have always shared my respect for gold as an investment and as a hedge against inflation and profligate government spending.
Ownership Still Undecided
The next step is for the judge who presided over the trial, Legrome Davis, to decide who actually owns the coins. No date has been set for that ruling. (The opinion in Langbord v. U.S. Dept. of Treasury (Case 06-cv-5315, USDC, ED Pa. can be seen here).
In July 2009 the same judge had ruled that the government improperly confiscated the coins but Treasury officials refused to return them. The Langbord family negotiated with the U.S. Mint in 2004 to have the coins authenticated. Several months after turning the coins over to the Mint, they were notified that the coins were authentic but would not be returned on the grounds that they were government property.
Joan Langbord’s lawsuit to reclaim her father’s gold is stirring passion among the numismatic community at a time when gold has reached a near record price. (Gold closed at $1630 today, July 18th.) Just as in 1933 Roosevelt confiscated all Americans’ privately own gold and gold coins, many fear that the desperately deficit President Obama may try the same wealth grab.
Real Fear of Confiscation
“The government is broke and, eventually, they will dig into everyone’s pockets,” said Tobina Kahn, the vice president of House of Kahn Estate Jewelers in Chicago. “Anyone who puts money into gold coins has no confidence in the government or fiat currencies.”
A typical “we-are-the-government” bureaucratic response was voiced by Asst. U.S. Attorney Jacqueline Romero, who tried the case: “I think the lesson is you cannot steal from the U.S. government, hide it for almost 80 years, and then try and profit off of government property. It is our duty to go after government property,” she said.
Ms. Langbord believes the coins belonged to her father, Israel Switt, according to the court filings. The government admitted that in 1944 the Secret Service investigated “Switt’s involvement in the apparent theft of 1933 Double Eagles from the Mint.” The government declined to prosecute Switt, citing the statute of limitations.
Could Be Legal Eagles
Evidence was presented that there was a period of three weeks in 1933, between when the coins were first struck and President Roosevelt’s executive order took effect, when the coins could have been exchanged legally for other gold coins at the Philadelphia Mint. Judge Davis’ original 2009 ruling stated the seizure of the coins denied the family the “clearly delineated paths to justice” established by the U.S. Constitution.
A good many other formerly “clearly delineated paths to justice” established by the U.S. Constitution have disappeared during the Bush and Obama administration.
My advice is to keep your mouth shut in the presence of federal agents if you have gold tooth fillings – and better yet, quickly diversify your wealth by moving at least some of it offshore beyond the immediate reach of the gold confiscators at the U.S. Treasury.
Sign up for my new Offshore Confidential today. I can tell you how you (and your gold) can “go offshore” legally.
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