The U.S. government has shaped the gold market through a series of major laws since 1792. The most consequential were the Coinage Act of 1792, the Gold Standard Act of 1900, Executive Order 6102 in 1933, the Gold Reserve Act of 1934, the Bretton Woods Agreement of 1944, and the end of dollar-gold convertibility in 1971. Each set rules that still influence how gold is bought, sold, owned, and taxed in the United States today.

The Coinage Act of 1792

The first U.S. coinage law set the country's monetary foundation. It defined the dollar in terms of both silver and gold, with a fixed ratio of fifteen to one. The Philadelphia Mint began producing gold coins, including the ten-dollar Eagle, the five-dollar Half Eagle, and the two-and-a-half-dollar Quarter Eagle.

This bimetallic system persisted, with several adjustments, until the Civil War.

The Gold Standard Act of 1900

After decades of political fighting between gold and silver advocates, Congress passed the Gold Standard Act of 1900. The law made gold the sole basis for U.S. currency. One dollar equaled 23.22 grains of pure gold, which works out to about $20.67 per troy ounce.

This price held for the next thirty-three years.

Executive Order 6102

In April 1933, with the country deep in the Great Depression, President Franklin Roosevelt issued Executive Order 6102. The order required U.S. citizens to surrender most of their gold coins, bullion, and certificates to the Federal Reserve, in exchange for paper dollars at the official rate. Holding more than five troy ounces of gold became illegal, with limited exceptions for jewelry, dental gold, and rare coins.

The order is one of the most striking acts of monetary policy in American history. It allowed the federal government to take ownership of the gold supply and then devalue the dollar against it.

The Gold Reserve Act of 1934

Less than a year after Executive Order 6102, Congress passed the Gold Reserve Act, which formalized the changes. The act nationalized the gold held by the Federal Reserve, repriced the dollar at $35 per troy ounce (a forty-one percent devaluation), and prohibited private gold ownership beyond the existing exemptions.

Private ownership of bullion gold remained illegal in the United States for the next forty-one years.

Bretton Woods and after

The Bretton Woods Agreement of 1944 pegged the dollar to gold at thirty-five dollars per troy ounce and made the dollar the reference for other major currencies. The system functioned until August 1971, when President Nixon ended dollar convertibility. For more on the gold-backed monetary system this replaced, see what is the gold standard. The Smithsonian Agreement of late 1971 raised the official gold price to $38, and a second devaluation took it to $42.22 in 1973, but by then the official price had become a fiction. The free market price climbed past $100 within months.

Legalization and the modern market

On December 31, 1974, the Ford administration repealed the prohibition on private gold ownership. American citizens could again own bullion. The Gold Bullion Coin Act of 1985 authorized the U.S. Mint to produce the American Gold Eagle, which remains one of the most widely traded modern bullion coins.

Reporting and tax treatment today

Modern gold ownership is unregulated in the sense that citizens may hold as much as they wish. However, dealers must report certain large transactions to the IRS under anti-money-laundering rules. The IRS treats gold as a collectible, which means long-term capital gains on physical gold are taxed at a maximum rate of twenty-eight percent rather than the lower rates that apply to most securities.

For most investors, the regulatory framework today is straightforward. Buying and selling is legal. Large cash purchases trigger reporting. Gains are taxed at the collectibles rate. The history of how that framework came to be, though, runs through some of the most dramatic monetary policy decisions of the twentieth century. For the broader sweep, see the history of gold; for the modern market mechanics, see how gold is traded.

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