GOLD, 'nuff said.

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Rob, first off, that was one of the best posts I have read on this board. I loved it! You put the obscenity of excessive taxation into simple and easy to understand sarcasm. Well done!

As for the ‘common good’ and how it might suffer? I already paid taxes on the greenbacks used to buy the silver numerous times. I paid my regular income tax on it. I then had to pay sales tax when I made the purchases. And the final insult of the government is that Uncle Sugar wants one-last pound of flesh from me in the form of taxation because I will give these things to my kids upon my passing. By the time they are done I will have been taxes $1.10 per dollar ‘invested’. And somehow, they feel just in this obscene treatment of a once free American.

Also, I told my wife to buy a young, stud husband immediately after planting me! She could use the metals to pay for the gigolo and that’ll be tax-free. Pretty darn generous of the government, ain’t it…
 
In God We Trust said:
I believe that cheating on your taxes in any way you can get away with is a patriotic DUTY. Every dollar you keep out of .gov hands is blessed.
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While I agree that the government should go to bed hungry, I have to object to your terminology. I believe that it is your duty to ensure that you take advantage of every single line of the 72,639 page tax code to ensure that you pay the correct amount of taxes due. Given the adversarial foundation of said tax code, you are obliged to work towards coming up with the minimum possible tax liability. The government in turn employs thousands upon thousands of trolls to dig through the returns of the 53% of taxpayers who contribute to the common welfare in order to ensure that those people pay the maximum possible tax liability.

For the OWS protesters who think I don't pay my fair share, I do apologize that my contributions to local and global hunger and disaster relief organizations reduces my overall tax liability(while taking money out of my pocket and making the world a better place), but I still pay more taxes than a couple of tentloads of you, so #&!*@#* !
 
So, how many of the "Gold, Nuff Said!!!" pitchmen bother to tell buyers that Gold, Silver, etc. - even if held as raw metal, bullion, or bullion coins with no numismatic premium is considered a "collectible" under the federal tax code, and that there is no concept of a long term captial gains rate on collectibles meaning a federal tax on profits of about twice the long term (held over 1 year) capital gains tax rate?

Sure, this is irrelevant if you are considering edge cases like post-apocalyptic survivalism; criminal tax evasion; criminal bankruptcy fraud; criminal hiding of assets when qualifying for medicaid; or fraudulent hiding of assets from the prevailing party in civil litigation. But, for the "expected case" of anyone buying in "investment quantity" (a non-trivial portion of your portfolio, not a few coins or ounces you buy because it's cool to own Gold and Silver), the tax implications are significant, and paying twice the rate you do on other assets is a non-trivial factor that all the sellers are conveniently forgetting to mention.

Of course, if your bet is based on the concept that society will collapse; dogs and cats will live together; government and the banking system will collapse; and you won't even be able to buy a Fiat with fiat currency, none of these concerns are relevant. But, if you make that the primary basis of your decision you could end up like that guy who keeps predicting the end of the world - and keeps finding an error in his calculation when doomsday arrives and the earth is still here.
 
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Rob Boudrie said:
So, how many of the "Gold, Nuff Said!!!" pitchmen bother to tell buyers that Gold, Silver, etc. - even if held as raw metal, bullion, or bullion coins with no numismatic premium is considered a "collectible" under the federal tax code, and that there is no concept of a long term captial gains rate on collectibles meaning a federal tax on profits of about twice the long term (held over 1 year) capital gains tax rate?

Sure, this is irrelevant if you are considering edge cases like post-apocalyptic survivalism; criminal tax evasion; criminal bankruptcy fraud; criminal hiding of assets when qualifying for medicare; or fraudulent hiding of assets from the prevailing party in civil litigation. But, for the "expected case" of anyone buying in "investment quantity" (a non-trivial portion of your portfolio, not a few coins or ounces you buy because it's cool to own Gold and Silver), the tax implications are significant, and paying twice the rate you do on other assets is a factor that all the sellers are conveniently forgetting to mention.
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I have bought and sold PMs a few times and it's always a cash transaction with no ID required. I always pay what I think my fair share of the taxes should be, because the .gov does not know that you own it and won't send you a letter from the IRS.
 
Rob, in terms of investment, if I end up paying taxes, that is a good thing. IE profit and not loss.
 
In God We Trust said:
I have bought and sold PMs a few times and it's always a cash transaction with no ID required. I always pay what I think my fair share of the taxes should be, because the .gov does not know that you own it and won't send you a letter from the IRS.
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There is a difference between selling a few thousand dollars worth, and liquidating tens or hundreds of thousands. I doubt you will find it easy to legally liquidate, for example, $50K in gold for cash at "brokerage house margin rates" (rather than "retail shop spreads") and get a stack of greenbacks with no ID or paper trail.

Everything changes in reporting, record keeping, and the probability of the seller providing sales info to the govt when you move from small numbers to medium/big numbers.

Rob, in terms of investment, if I end up paying taxes, that is a good thing. IE profit and not loss.
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True, but my point was that a Gold investment that yields 20% is actually 14.4% after the federal collectible tax rate of 28%, whereas it only takes a 17% yield on an investment that qualifies for long term capital gains (15%) to yield the same rate. Add to that the fact that even in the best case scenarios, the buy/sell spread on gold is going to be on the order of 3%, rather than a fraction of a percent for stock.

Sure, there are cases where metals will outpace other assets even after all of this. My point was not that gold was a bad investment, but that simple comparisons like "Gold gained x% while stocks gained y%" need to be adjusted for the realities of different tax treatment and buy/sell spreads.

Of course, the gold bugs will simply explain that gold will always do better than paper investments and what a $20 gold piece from 1933 would be worth. (Trick question - a $20 piece from 1933 is worth $0 or millions; one from 1932 has a more typical old coin value). They won't bother to compare that to what $20 invested in the market index in 1934 would be worth today.

-------------------------

One rep point to the first person who an point out the web address for a big name precious metals brokerage firm that makes information about the "collectible/not capital gains" tax issue clearly available on their web site.
 
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Rob Boudrie said:
One rep point to the first person who an point out the web address for a big name precious metals brokerage firm that makes information about the "collectible/not capital gains" tax issue clearly available on their web site.
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I have never seen one. They all like to say that the SALE of the metal to you isn't reported to the government, but then they don't mention what happens if they buy it back from you, or what the taxes might be. If this is a trick question and the correct answer is "none", do I get the rep point?

And, I didn't realize it was taxed as a collectible. Good thing I have none.
 
I know gold jewelry is not the best way to invest in gold but I was thinking I could satisfy Christmas shopping for my wife and increasing my PM portfolio at the same time. Anybody else do this?
 
yogi said:
I know gold jewelry is not the best way to invest in gold but I was thinking I could satisfy Christmas shopping for my wife and increasing my PM portfolio at the same time. Anybody else do this?
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I'm not a big fan of jewelry, but have been thinking about this lately: if you are willing to spend money on jewelry with a 100% markup or higher, suddenly spending 10-15% extra on metals doesnt look like such a bad idea. I guess the win for me is that my bride would probably like a gold coin or two. Still seems like a lot though.
 
yogi said:
I know gold jewelry is not the best way to invest in gold but I was thinking I could satisfy Christmas shopping for my wife and increasing my PM portfolio at the same time. Anybody else do this?
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If you decide the value of gold is dropping (or you just need some money, or you want to diversify), you might want to sell some of your gold. I'm guessing it would be a lot easier to convince the Mrs. to sell some of your gold bars than to sell some of her jewelry.
 
yogi said:
I know gold jewelry is not the best way to invest in gold but I was thinking I could satisfy Christmas shopping for my wife and increasing my PM portfolio at the same time. Anybody else do this?
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In Argentina during their economic meltdown, gold jewelry was better than gold because you couldn't get gold's true value except at banks.

See the checklist here on page 6 under "Gold".

I have been giving 18 ct. gold and sterling silver earrings and necklaces to the daughters and the wifey just to diversify my PM investments. [wink]
 
Hey Rob, you wisely point out that the ‘profit’ in gold is then taxable. But so is the capital gain of stocks and bonds. Remember, the two things we can count on are death & taxes. No matter what we do (legally) Uncle Sam gets his pound of flesh whenever it is possible. And I am not one to do illegal things because of two reasons. (1) I will always get caught because that is my luck. (2) I still want to set a good example to my kids and employees. I know, that sounds stupid but that’s how I feel.

I am still buying silver a couple times per month. I do not have a ton of ‘extra/ cash so I buy a little every now and then. It is my tradition to give every employee a Silver Eagle dollar for a Christmas gift. So I had to drop $700 to get enough to cover the purchase of the coins I use as gifts. I really didn’t mind writing the check when silver was $10, but as long as my business can afford it, I will continue that tradition. Some of my agents have 13 years of free silver coins. Luckily, I always buy a few extra because you never know when you’ll need it.

I see nothing wrong with buying precious metals as long as one’s budget can handle the expense. I only buy them when I have some extra cash… and I am not buying new firearms or ammo. Brass comes before precious metals!
 
excoastie said:
Hey Rob, you wisely point out that the ‘profit’ in gold is then taxable. But so is the capital gain of stocks and bonds.
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But not at the same rate [smile]

Actually, I was pointing out that the gain on the sale of gold and other precious metals is taxed as the sale of an appreciated collectible, and the sale of stocks held over a year is at the lower long term capital gain rate. This is probably not an issue for someone who buys a few when they can afford it, but if you have a $1M portfolio and are thinking of putting $100K into metals, it is something that needs to be considered.

This does not mean Gold or Silver is a bad idea, but that gains on its sale are subject to a higher tax rate than gains on stocks held longer than one year.
 
Prepper said:
I have never seen one. They all like to say that the SALE of the metal to you isn't reported to the government, but then they don't mention what happens if they buy it back from you, or what the taxes might be. If this is a trick question and the correct answer is "none", do I get the rep point?

And, I didn't realize it was taxed as a collectible. Good thing I have none.
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Sell a couple of eagles to the local dealer and get caught by the fed and as a practical matter, the bulk of the risk is a tax deficiency notice with interest and penalties. Sell an "investment quantity" of, say $50K or $100K in gold with a few tens of $K in profit, and $20K or more in unpaid taxes, and there is serious risk of felony charges for tax evasion.

My point is the stuff about "Not reported, nobody will know" is just not going to cut it for "strategic investment quantities" of a savings ore retirement portfolio, and that strategies when you sell to Ziggy at the corner for cash aren't going to cut it when you ship a hundres ounces or so to a metals broker and get a wire transfer in return.
 
Rob, gotcha! I wish I had to worry about where to invest my million dollars. But unfortunately, I am not subjected to such agony.

When I buy metals, I do get charged state sales tax UNLESS I buy $1,000 or more. And I have never had to sign any paperwork or give the dealer my name, etc. I do not believe that there is a tax when selling. How could anyone prove how much they paid for their silver & gold when the price fluctuates all over the place?
 
excoastie said:
How could anyone prove how much they paid for their silver & gold when the price fluctuates all over the place?
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Assuming that metals are just like every other investment, you have to say when you bought it and for how much. This determines your 'cost basis' and taxes are calculated based on the difference between your cost basis and selling price(dividends are a separate matter.) Sure, you could lie, but if the numbers don't work, you can get in trouble for that as well. I've had a few times when I've sold a stock that I held so long that the brokerage didn't have basis information. I had to go back and reconstruct the cost basis. It was a pain. Especially so for a stock that does pay dividends that are reinvested...but i digress.

If you are dealing in small amounts, and there are no written records, then I suppose it's entirely your responsibility to ensure that you properly handle the tax implications of your metals transactions...similar to the way I'm sure that people report their lottery winnings.
 
similar to the way I'm sure that people report their lottery winnings.
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Lottery winnings over $600 are reported by the lottery; below $600 the reporting responsibility falls on the taxpayer. Not sure which side of the line exactly $600 falls on.
 
Rob Boudrie said:
Sell a couple of eagles to the local dealer and get caught by the fed and as a practical matter, the bulk of the risk is a tax deficiency notice with interest and penalties. Sell an "investment quantity" of, say $50K or $100K in gold with a few tens of $K in profit, and $20K or more in unpaid taxes, and there is serious risk of felony charges for tax evasion.
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Does that ever happen? I do have a few (okay dozens) numismatic Morgan silver dollars. If I sold them today, I doubt any of them would actually sell for more than I bought them despite silver being much more valuable now (that's the problem with numismatics), but I have no way to ever prove what I paid for them... it was too long ago and ordering them one after another on eBay tends to become a big blur. If I have 5 of them all year 1873, I don't stand a chance of remembering which one was the MS63 and which was the MS64, etc. I just need to be able to, for example, sell a Morgan dollar for $50 without leaving my name with them... no government cheating is intended here (despite them having long ago lost any moral authority to legitimately collect taxes like this), I just don't want to pay taxes on something just because I can't prove I didn't buy them for $0.
 
If anyone is interested, today may be a good day to buy. Commodities are down quite a bit, and apmex.com is selling silver eagles for 2.49 over spot and gold eagles for 79.99 over spot. Perhaps not the best possible deal, but better than I have seen, and spot prices at lowest point since October.

Caveat emptor, since the driver for prices today seems to be weak demand in emerging markets.
 
I agree but I tink the floor hasn't been reached yet....need to let the move to cash continue....through end of year...then when reality hits in Q1 2012....that is if reality even exists......it will be time to buy
 
Yeah, maybe you don't want to back the truck up, but getting in a bit at a time is probably good. It's worth observing that while this morning sell prices were good, some companies adjusted their spreads quite a bit to account for the large price changes. I only paid about a dollar more on Monday than the current quote for silver eagles at apmex than current, even though the price is a lot lower.

Their Christmas sale abruptly ended around the time silver hit 28.50 this morning.
 

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