Where do you buy gold & silver?

[hineslaw]

This is my first post, so please be gentle. We're looking at buying gold &/or silver coins to hold personally in the event of a US hyperinflationary depression. A few questions:

1. For a US citizen, where would you suggest buying gold & silver coins? Specific recommendations and reasons why you like the particular firm would be appreciated.

2. What recommendations as to type & quality would you suggest?

3. What recommended allocation of total net assets would you allocate to precious metals where you take actual custody?

Thanks for any thoughts.

hineslaw

[metalman]

Re: Where do you buy gold & silver?

This is my first post, so please be gentle. We're looking at buying gold &/or silver coins to hold personally in the event of a US hyperinflationary depression. A few questions:

1. For a US citizen, where would you suggest buying gold & silver coins? Specific recommendations and reasons why you like the particular firm would be appreciated.

2. What recommendations as to type & quality would you suggest?

3. What recommended allocation of total net assets would you allocate to precious metals where you take actual custody?

Thanks for any thoughts.

hineslaw

searched existing threads on this topic for ya...

Buying physical GOLD , Please advise ?

Best way to buy and store physical PM's

[hineslaw]

Re: Where do you buy gold & silver?

Thanks for the threads!

hineslaw

[Guest]

Re: Where do you buy gold & silver?

What recommended allocation of total net assets would you allocate to precious metals where you take actual custody?

Hineslaw - sorry for the belated answer here - actually the Metalguy is a great source for advice on this, as he's been one of the "early early birds" with PM's way back around 1999 - 2000. I think there is probably zero finesse or mystery in buying metals - buy from a reputable dealer, and buy the best combination of cheap metal type with assayed security you can. Metalman could probably send you a two line email with "complete instructions on types and portions".

I was at a 24 hour fitness just an hour ago swimming. Sitting in the hot tub with a mixed bag of people, the conversation veers to inflation, and several of us get to talking. I'm talking to a retiree who asked what percentage of total assets to have allocated to this current inflationary stew of an environment, and very cautiously told him he should have "at very least" 15% of his assets in gold and silver.

We discussed other things, and at a certain point another guy there chimed in, noting he's a certified investment advisor (one of the more clued in ones apparently) who opened my eyes to how much headway this theme has made in the past year or two since I last checked around in the general public.

Even taking into consideration the gentleman in question was a 73 year old retiree, this smart young investment advisor chimed in that the percentage in the escalated risk world of 2008 should be "about 30%" of one's total net worth. I recently increased my own allocation of my total investments "well north of there", so this may give you a rough triangulation of where various people are placed in terms of inflation hedges.

I think frankly if you are in your mid-career earning years, you should be holding in advance of that 30% which this investment adviser was mentioning for the 73 year old retiree. There are some macro trends converging here which virtually assure events upcoming which will be "distinctly anomalous" to any scenarios which investment advisors of the past 30 - 40 years would have had as familiar components of their investing landscape.

The McKillop article posted today on the News page sketches out some parts of the emerging macro trend - and the strictly monetary aspects are decidedly only a part of the overall trend. All fiat currencies in the advent of some large and truly secular (i.e. global - massive) disruptions of the global status quo will be used as "shock absorbers" for the societal stress. It's only a small step from there to understanding that when fiat currencies are used as shock absorbers, the precious metals will benefit.

Notwithstanding the fact that this chain of reasoning is so sublimely simple and straightforward, there are still many people who are extremely hesitant to abandon their almost childlike fear that "daflation" will emerge from all this - i.e. that somehow out of all this trashing of fiat moneys to work as shock absorbers for global resource dislocation, all goods and services will instead DEPRECIATE" vs. the paper money, and that hence precious metals would be a disastrous investment. To call this chain of logic chicken brained does not do it justice. We are being provided with a very large cue as to the massively inflationary macro-outcome today, all over the world.

Therefore if you begin to percieve this inflationary trend as a "long, slow, fat pitch down the middle of the field", then your task is to catch that pitch squarely, by seeing that macro theme ever more clearly and positioning yourself with non-trivial asset allocation to benefit from it's hedges. Sounds easy and straighforward, but a lot of people react as "deer in the headlights", allocating 10% to inflation hedges and then watching that position with extreme skittishness and selling it all at the first pullback.

Their misconception is that they have the wisdom and overview of events sufficient to "trade the event" - history shows us that those "clever traders" got fleeced of the really large returns in the past inflationary wave - and the new inflationary wave is shaping up to utterly dwarf the old one. Buying the metals to catch this macro event is utterly straighforward. It is the "holding" afterwards that is so tricky. Like a hall of mirrors, the feints and twists of these assets will buck a lot of people off, while they think they are being merely "prudent" or "clever".

[Thailandnotes]

Re: Where do you buy gold & silver?

Is there anyone out there who has bought gold, sold gold, and then paid taxes on the profits?

I'm assuming that when you sell gold to an outfit like APMEX or Southern Coins, or a local dealer, the buyer must report the transaction to the IRS.

But if there is no record of you having bought the gold, can't you just say you bought it last week when the price was higher and you have sold it at a loss?

[Slimprofits]

Re: Where do you buy gold & silver?

Is there anyone out there who has bought gold, sold gold, and then paid taxes on the profits?

I'm assuming that when you sell gold to an outfit like APMEX or Southern Coins, or a local dealer, the buyer must report the transaction to the IRS.

But if there is no record of you having bought the gold...

I have in the past paid those taxes, but what you said in paragraph three probably works too. The local coin dealer here writes out a receipt, but only with figures - there is no information about the customer on it. It is not like Radio Shack in which they demand a phone number and address from every customer.

EBay/Paypal is another matter entirely: Electronic Transaction Reporting Slipped Into Senate Bill

"The Senate mortgage bill proposed by Sen. Chris Dodd (who was the recipient of a sweetheart deal on his mortgage from Countrywide, one of the beneficiaries of the bill) includes an attempt to sneak into law a requirement that all electronic payment processors send detailed transaction data to the federal government. The proposed law contains an exception for businesses with fewer than 200 transactions or a total value less than $10,000. Quoting FreedomWorks chairman Dick Armey (former House majority leader) from the article: 'This is a provision with astonishing reach, and it was slipped into the bill just this week. Not only does it affect nearly every credit card transaction in America, such as Visa, MasterCard, Discover, and American Express, but the bill specifically targets payment systems like eBay's PayPal, Amazon, and Google Checkout that are used by many small online businesses. The privacy implications for America's small businesses are breathtaking.'"

This is the same bill that contains a controversial provision to fingerprint all mortgage brokers.

[hineslaw]

Re: Where do you buy gold & silver?

While I've held some (not enough) SLV and GLD (ETF's) for awhile, the need for physical possession of some silver and gold seems increasingly clear in the US, especially with politicians considering nearly doubling the national debt for bailouts.

I'm looking at using the Tulving Company for at least some of my PM purchases.

On a side note, are there any Copper Mining companies that anyone likes currently?

H

[Basil]

Re: Where do you buy gold & silver?

Is there anyone out there who has bought gold, sold gold, and then paid taxes on the profits?

I'm assuming that when you sell gold to an outfit like APMEX or Southern Coins, or a local dealer, the buyer must report the transaction to the IRS.

But if there is no record of you having bought the gold, can't you just say you bought it last week when the price was higher and you have sold it at a loss?

Part of the trick is to find a good dealer who understands why many of us own PMs. I have not sold any of mine yet, but I have found businesses that are willing to space out small checks and do cash transactions. This approach does require that you do your due diligence and build relationships so that no one is in a position to fleece you. But considering the potential savings it is well worth the effort.

[c1ue]

Re: Where do you buy gold & silver?

Let me put it this way:

So far the IRS reviews on gold sales have not been extremely thorough.

But unless the dealer is willing to pay more taxes, I can guarantee you the dealers record and report (at least in sum) the true value of what they buy and sell.

Should the transaction be over the counter and in cash and not that large an amount ($2K or less), then it is likely your name isn't involved - just an anonymous receipt.

However, if you use a credit card, write a check, do a wire transfer, or any other form of payment other than a big suitcase, your name IS involved.

Furthermore, if the sum is quite large: over $2.5K, there is a record of the withdrawal as well.

And note: if you've EVER done one of the actions linking your name to that dealer, that is retrievable with about 10 minutes and a Homeland Security database. Another 10 minutes to pull up the legally mandated money laundering records (i.e. $2K or more deposited in cash with 1 transaction; $10K or more of anything deposited; not sure on withdrawal amounts but likely similar).

How much more effort do you really think it would be for the IRS and/or Department of Treasury to start linking names with gold transactions?

Let's say you want to buy $1M in coins anonymously.

If your name is linked to one dealer, then 20 minutes would be enough to bring up your bank transactions - now all that's needed is the dealers records.

$10K x 100 trips would be pretty glaringly obvious no?

Or how about $2K x 500 trips?

Sure, if you're buying 5 kruggerands, once, no problem.

But don't assume you're safe if substantially more is involved.

[Slimprofits]

Re: Where do you buy gold & silver?

great post as usual c1ue. My perspective is that of a small, cash buyer.

[Guest]

Re: Where do you buy gold & silver?

Spot on C1ue. I just consulted with my accountant two weeks ago (incl. all intl. accts) and came to precisely the same conclusion - and almost all of my holdings fall under the onerous "collectibles" 28% tax bracket. There is nothing quite so foolish in this general area as attempting to be "clever". Don't even go there, or you run the risk one day of being stripped of a lifetime of assets in punitive fines. It does not require any great wisdom to see the risk / reward is absolutely not worth it.

______________

Let me put it this way:

So far the IRS reviews on gold sales have not been extremely thorough.

But unless the dealer is willing to pay more taxes, I can guarantee you the dealers record and report (at least in sum) the true value of what they buy and sell.

Should the transaction be over the counter and in cash and not that large an amount ($2K or less), then it is likely your name isn't involved - just an anonymous receipt.

However, if you use a credit card, write a check, do a wire transfer, or any other form of payment other than a big suitcase, your name IS involved.

Furthermore, if the sum is quite large: over $2.5K, there is a record of the withdrawal as well.

And note: if you've EVER done one of the actions linking your name to that dealer, that is retrievable with about 10 minutes and a Homeland Security database. Another 10 minutes to pull up the legally mandated money laundering records (i.e. $2K or more deposited in cash with 1 transaction; $10K or more of anything deposited; not sure on withdrawal amounts but likely similar).

How much more effort do you really think it would be for the IRS and/or Department of Treasury to start linking names with gold transactions?

Let's say you want to buy $1M in coins anonymously.

If your name is linked to one dealer, then 20 minutes would be enough to bring up your bank transactions - now all that's needed is the dealers records.

$10K x 100 trips would be pretty glaringly obvious no?

Or how about $2K x 500 trips?

Sure, if you're buying 5 kruggerands, once, no problem.

But don't assume you're safe if substantially more is involved.

[Jim Nickerson]

Re: Where do you buy gold & silver?

Spot on C1ue. I just consulted with my accountant two weeks ago (incl. all intl. accts) and came to precisely the same conclusion - and almost all of my holdings fall under the onerous "collectibles" 28% tax bracket. There is nothing quite so foolish in this general area as attempting to be "clever". Don't even go there, or you run the risk one day of being stripped of a lifetime of assets in punitive fines. It does not require any great wisdom to see the risk / reward is absolutely not worth it.

______________

Perhaps mistakenly, I thought the capital gains on gold, silver, art, etc. was 35%, but I have never had occasion to need to verify it. I'd be happy to be wrong.

Failure to declare income for federal tax purposes has no statute of limitations as I remember an accountant telling me many years ago, so if you fail to declare taxable income, the IRS can always come after you.

[Slimprofits]

Re: Where do you buy gold & silver?

Jim, the rate is 28%...I sold some silver in '07 and am one of the people that throws all savings into metals.

[Jim Nickerson]

Re: Where do you buy gold & silver?

Jim, the rate is 28%...I sold some silver in '07 and am one of the people that throws all savings into metals.

Thanks, babbit, gut genug. Pleased to have been mistaken.

I finally purchased a bit of actual gold and silver. The best I can do with it, as I see the probablilites, is exchange it for paper dollars and pay the spread and hopefully a capital gains tax of 28%, might come to a total of 32% on the gains. What is wrong with CEF (50% gold, 50% silver--vaulted) or GTU (100% vaulted gold) when to my understanding the capital gains on these are treated as regular capital gains. Except for some nearly unimagineable crisis, these two closed end funds are no brainers. CEF usually sells at a premium (currently 13.76%, which is the highest I remember), and GTU currently 3.02%, but GTU is very thinly traded and usually has a 1% or so spread. But in either case the capital gains treatment makes both seem preferable to me than the buy and sell spreads on physical metals and the capital gains (assuming we all get them some day).

[raja]

Re: Where do you buy gold & silver?

Jim, the rate is 28%...I sold some silver in '07 and am one of the people that throws all savings into metals.

From my reading, the tax rate on collectibles is 28% IF held over one year, but taxed at ordinary income if bought and sold in under one year.

(Note: I am not a tax expert.)