Here is a good excerpt from OwnTheDollar.com that gives their insight on when the IRS is involved with precious metals.
"What Levels Trigger IRS Reporting?
The Internal Revenue Service’s reporting requirements for precious
metals dealers varies based on the type of gold or silver that is being
traded. In most cases, reportable sales of gold are triggered when
twenty-five or more ounces are traded in a single transaction.
Incidentally, there is actually not IRS gold reporting requirements for
American Gold Eagles regardless of the quantity traded. Only pre-1965
U.S. silver coins sales are reportable when the sale’s face value totals
more than $10,000. Like most financial transactions, $10,000 is usually
the magic number that draws IRS scrutiny. And IRS gold reporting is no
different."
In short, if you engage is transactions less than $10,000 generally there is no IRS involvement at all.
The recent drastic drop in the price of gold had some calling that the gold bubble popped. However, the numbers do not indicate that.
The chart above shows that only 1% of all financial assets are in gold. Whereas in the 1970's when a real gold bubble hit, 26% of financial assets was in gold. This tells me that gold is not in a bubble. If anything, the price of gold still has a ways to go UP.
Indians and Chinese buy gold because they love it, not because they are fearful of the economy. This article describes this type of demand as the love trade.
Anyone who is serious about what affects the price of gold, must seriously look more deeply into the live trade.
Here's a direct quote and chart from the article:
"You can visually see the strength of the Love Trade below in the
year-over-year change in total consumer demand in tons for gold jewelry,
bars and coins. Indian demand grew the most, increasing 27 percent
compared to the previous year. Demand for jewelry, bars and coins in the
greater China area increased 20 percent, as “seasonal strength in
China, related to Chinese New Year purchasing, exceeded all previous
peaks, marking a new record quarterly high,” says the WGC. Even U.S.
residents had a love for gold, with demand growing 22 percent over the
previous year."
I consider Yahoo finance a very mainstream and thus generally a state approved media source. Meaning, that site usually reports news that benefits the paradigm supporting Federal Reserve policies.
" '300 tons,' says Tom Lydon, the editor of ETF Trends, in the attached video, calling the disposal of over 600,000 pounds of gold so far this year "amazing" and "incredible."
This, of course, as the largest metal-tracking fund has gone from
briefly being the biggest ETF, to being a top-5 player after being cut
in half to approximately $46 billion in value today, holding just over
1,000 tons of gold in its vaults. "
This is a clear sign that people are ditching paper gold and going into other investments.
Financial institutions have an insiduous habit of lending out more money than they actually have. For instanace let's say a bank has one million dollars of physical bank deposits. In an effort to make more money off of interest, they decided to loan 10 million dollars. They do this so they can collect interest off of the $10 miliion.
They do the same thing with gold. They have $1miliion in gold, but they lease the gold at an interest rate then take that interest and buy US Treasuries or other investment vehicle so they can make money. Problems arise when the paper they sell gets turned in and someone wants their gold.
Last week gold had one of the biggest two day drop in modern history. So what is going on? The media has you trying to believe that people are losing faith in gold want wanting to stay in paper dollars. The gold bugs are saying it is some kind of conspiracy by those who hold the power in order to supress the price of gold.
While I do not believe the media, I am not 100% into the conspiracy theory. I feel that the following video gives a good insight on what is happening:
There is over 100 times more paper gold than there is physical gold. When something is 100 times bigger than something, that will have a greater affect on the price. Paper gold is 100 times bigger than physical gold, so when something happens to the paper gold market it will have a much bigger affect on gold overall than when something happens in the physical gold market.
So what is happening in the paper market. I feel that after Cyprus, some who hold paper gold have realized something dramatic. They have realized that their paper gold may not be as desireable as it once was. Some paper gold holders fear that their paper gold cannot be actually converted to physical gold. So they are dumping some of their paper gold holdings. The thinking is that they do not trust banks anymore to deliver their gold if they asked for it. Cyprus showed the world that banks are not to be trusted.
Ben Graham also famously said, ‘You shouldn’t buy a
stock if you wouldn’t be delighted to see it fall 20% of 30% further in
the next week so you can buy more cheaper.’
I discovered this website called Hard Assets Alliance. It is a place to buy and sell gold and silver. It is worth noting because it appears to be a very cheap and secure source to buy gold and silver. If that is the case, then it is worth taking the time to learn more about it.
I'm going to use this blog post to document what I've learned about it.
Squidoo Post
Here is a direct quote from a Squidoo post on the benefits of HardAssets Alliance:
Hard Assets Alliance is a new precious metals investment program
designed for you to buy and store gold, silver, platinum and palladium
with these benefits:
Physical sovereign coins and LBMA bars allocated to you in storage or delivered to you - your choice!
Lower prices when buying gold, silver, platinum, palladium, higher prices when selling, lower storage fees
More choices for storing precious metals offshore including Australia and (soon) Singapore
More account types available, including Living Trusts! Corporate accounts of all types welcome, too.
More
convenient, less expensive ways of funding your account. Forget those
expensive, time consuming international bank wire transfers.
How to use the Hard Assets Alliance Website Video (Buying and Selling Gold)
Initial Impression
After doing some quick research on the site, I noticed a couple of things. The biggest is that there seems to be a $5,000 minimum purchase requirement. The prices seem rock bottom. However, it seems to only work for the person who has the money to invest at least $5,000.
One option is to open an account for any amount since there is no minimum to open an account. Then add dollars to the account when available. Then, when the balance goes above $5,000 purchase the discounted price gold or silver.
Price comparison for gold
Here is the price of a 1oz, gold American Eagle.
Current spot price = $1591.16 At Hard Asset Alliance it is $1674.69 or $83.53 over spot.
At Morton Grove Coin Store - a local coin shop I recently paid $67.09 over spot for a 1 oz coin or $55 over spot for a 1/2 oz coin.
In short, the coin shop price is actually better for gold. For silver, I still have to evaluate the difference.
Price comparison for silver
Here is the price of a 1oz, silver American Eagle.
Current spot price = $28.91 At Hard Asset Alliance it is $31.92 or $3.01 over spot.
At
Morton Grove Coin Store - a local coin shop I recently paid $3.50 over
spot for a 1 oz coin
In short, the coin shop price is only $0.49 over spot more than the price at Hard Alliance.
Summary
Hard Asset Alliance has a purpose for someone. However, for someone that is looking for the best price, Hard Asset Alliance may be very competitive- but not necessarily the lowest. Hard Asset Alliance does provide some advantages like competitively low prices and some remote storage options that are worth looking into.
Is gold right for you? To help answer this question you gotta look at 5 broad areas:
1. Income
2. Asset acquisition/management
3. Asset protection and liability protection 4. Leverage
5. Information (be prepared to exit or move to another asset class at the right
time)
1. Income- you gotta first have money to buy gold. So, if you don't have money, it may be best to make it before you buy gold.
2. Asset aquisition/management- Now that you have income, you can buy gold right? Only if you follow the pay yourself first principal. You gotta be able to pay yourself first by buying gold (or other assets) before you pay your mortgage, your car loan, food, entertainment, internet, phone, vacations, etc.
3. Asset protection and liability protection- Another are to consider is asset protection. What is the use of having gold if you lose it. You gotta make a plan not only to buy gold, but you also gave have a rock solid plan (and process for improvement) to keep it and prevent it from being stolen. And I don't just mean stolen from burglers. I mean from being stolen by the government and even own friends, family, or business associates.
4. Leverage-Just following the first 3 areas can lead to a prosperous life. However, to take it to another investment level, consider possible leverage plans to be able to acquire even more gold. What do I mean by leverage. You can think about acquiring gold through the use of other people, other peoples money, and other people's time, and other creative means.
5. Information (be prepared to exit or move to another asset class at the right
time)- Gold is money. However, it does not mean you can't lose money. People can and will lose money if they don;t know what their doing. So in this area, you gotta decide if you are disciplined enough to educate your self on things like exit strategies for gold and buying and selling cycles for gold.
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