Loading ...The legal ability for U.S. citizens to own gold was established when President Gerald Ford signed a law in 1974, which became effective on December 31, 1974. This act ended a four-decade ban on private gold ownership that had been put in place by President Franklin D. Roosevelt.
The Gold Bullion Coin Act of 1985
The origins of the Gold Bullion Coin Act are both political and economic. In part, the Act was a response to the rising popularity of foreign national coins, like the South African Gold Krugerrand and the Canadian Gold Maple Leaf.
In 1984, “more than $600 million worth of Krugerrands were marketed in the United States,” however, sales plummeted in mid- to late 1985 as a reaction to “growing racial strife in South Africa and a mounting worldwide protest against apartheid,” reported the Los Angeles Times in October 1985. Per the L.A. Times, South Africa derived half of its foreign exchange earnings from Krugerrand sales, and the U.S. was its biggest market.
Perceiving the Krugerrand as a symbol of apartheid, President Reagan banned imports of the coin effective October 11, 1985, “formally denying South Africa its most lucrative market for gold coins” and punishing the “white-run Pretoria government for its racial policies.”
While the Canadian Gold Maple Leaf Coin stood to fill the supply gap created by the Krugerrand ban, the U.S. wanted to join the national gold coin business, too, which is where the Gold Bullion Coin Act of 1985 enters into the picture.
The details of the Gold Bullion Coin Act
During the 1980s, the state of the world economy and political scene made for favorable demand for gold bullion coins. Relations between the U.S. and Russia were rough, American unemployment was on the rise, and Social Security was on the rocks—to name a few factors.
In 1984, reports Coin World, “the Krugerrand still held about two-thirds of the gold bullion coin market worldwide. By early 1986, that distinction belonged to the Maple Leaf.”
The Gold Bullion Coin Act, however, paved the way for the U.S. to compete with the likes of the Canadian Maple Leaf. It required that the U.S. Mint start producing a family of 22-karat gold bullion coins in one-half, one-quarter, and one-tenth denominations and it defined everything from the coins’ diameters to their design.
In short, the Gold Bullion Coin Act of 1985:
Directed the Secretary of the Treasury to mint and issue gold coins in $50, $25, $10, and $5 denominations
Mandated that the specified gold coins be issued in quantities sufficient to meet public demand
Required the gold for such coins to be mined from natural deposits in the U.S. or in a U.S territory, within one year after the month in which the ore was mined
Prohibited the Secretary from paying more than the average world price for gold
Allowed gold to be used from U.S. reserves in the absence of available supplies of such mined gold at the average world price
Required any profit from the sale of such coins to be deposited in the Treasury and applied towards reducing the national debt
This legislation offered support to American miners, eventually led to the establishment of the American Eagle Gold Bullion Program, and in 1986 the production of one of the world’s most popular gold bullion coins: the Gold American Eagle.
Source:
https://www.usmoneyreserve.com/news/coins/gold-bullion-act-1985/