"Eventually, Ruffino appealed[15] the conviction to the Circuit Court of Appeals 9th District in 1940; however, the judgment of the lower courts was upheld based on the President's executive orders and the Gold Reserve Act of 1934."
The Gold Reserve Act of 1934 that was used to quash Ruffino's appeal in 1940 against gold possession charges laid against him (Ruffino, a resident of Sutter Creek in California-gold country, was convicted of possessing 78 ounces of gold and was sentenced to 6 months in jail, paid a $500 fine, and had his gold seized) and its amendments are the legal basis for the US treasuries Exchange Stabilisation Fund which it can use to defend its currency in currency exchange markets.
“The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s, the Act provides in part that ‘the Department of the Treasury has a stabilization fund …Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.”
If that fund comes under pressure and gold starts playing a part in the process of devaluing the USD rapidly the power remains to make gold illegal again.
Personally as I've argued else where I don't think gold has that power anymore because if you divide up all the gold outside of the reserves of central banks in the world there is that little of it, that by the time you divide it all up it loses its safe haven status by effectively becoming an intangible asset. If there is not enough of it for investors outside of the central banks to divide up between themselves, its core utility as a tangible asset that you can hold, store and that can't be destroyed is lost. You need enough of it to go around outside of the CBs for it to act as the ultimate safe haven currency, without that it will never be a big threat to the USD, so I think its for this reason that it won't become illegal again, its not a big enough market with a big enough physical supply outside of the central banks. You can forget about Rickard's $50k/ozs calls in gold, they are based on nonsense, he is just a gold spruiker and he uses that spruiking to sell books and subscriptions to news letters. Even the World Gold Council acknowledges that one of the core drivers for the demand for gold stems from rising wealth and economic growth, so the opposite might also be true. Everything at the moment including the gold is priced by pure speculation. Hopefully we can get back to a point one day when everything is priced by real risk and return, not the system we have now where risk is discounted to zero by the printing presses of the central banks and return is measured by asset prices not real and sensible earnings multiples as it should be.Esh
