Did You Know?: The Story of the Gold Standard

When the United States was on the gold standard, United States gold and silver coins were produced with their actual metal content being the same as their face value. In other words, a $20 gold coin had $20 worth of gold in it and a silver $ had $1 in silver content.

In the midst of the depression, the federal government and President Roosevelt came to the conclusion that people were hoarding gold coins and deducted that this was causing a stall in economic growth and was contributing to the depression.

So, on April 5, 1933 Roosevelt signed an executive order forbidding the hoarding of gold coins, gold bullion and gold certificates (currency backed by gold) in the continental United States.

The order required all citizens to turn in all of their gold except for a stated small amount to the Federal Reserve in exchange for $20.67 per troy ounce, which was the set gold standard price.

Of course, in this situation some people followed the law and many did not and it in turn created an atmosphere of people wanting to hoard it even more. At the onset of this executive order many wealthy people took as many of their $20 gold coins as they could and shipped them to Swiss banks. Many Swiss banks also bought up as many $20 gold coins as they could as this was the highest denomination available.

The executive order was repealed by President Gerald Ford on December 31, 1974. Since the price of gold and silver was no longer controlled by the government, the precious metals prices began to climb over the years. The Swiss banks began to sell off their gold coin holdings in small quantities over time to certain coin and precious metals dealers that had an “in” with the banks.

I know of several dealers in the 1980’s that would make frequent trips to Switzerland and purchase $20 gold pieces and bring them back to the states to re-sell them.

Consequently, despite an executive order to nearly eliminate the gold coins on the market, today there seems to be a readily available supply except for extremely high grade and scarce coins.

I hope you are having a great summer and wish to see you soon.

Stay tuned next month for more “Did You Know?” stories.

Kind regards,
Chris Seuntjens
Christopher’s Fine Jewelry and Rare Coins