Video News/In Focus with Jeremy Szafron

(Kitco News) - Americans forced to hand over their gold in 1933 at $20.67 an ounce captured none of the windfall when Washington repriced it months later at $35, according to Phillip Magness, an economic historian at the Independent Institute. Speaking with Kitco News, Magness said the Gold Reserve Act of 1934 handed the Treasury a revaluation gain of roughly $2.8 billion, of which about $2 billion capitalized the Exchange Stabilization Fund that the government can still use in currency markets today. He noted that private holders who had already surrendered their metal did not share in the gain, adding that "it's always the private sector that gets the bad end of it." Magness also pointed to what he called one of the great mysteries of the Nixon era: the roughly 261.5 million ounces of US gold still carried on the federal books at $42.22 an ounce, valuing the hoard near $11 billion against a market value above $1 trillion. He traced the pattern from 1933 through Bretton Woods and the 1971 Nixon shock, arguing that governments repeatedly turn to currency revaluation for financial room when raising taxes is politically unpopular.