Grandpa says:
As I wrote when gold was $700 per ounce, “I think gold as quoted in dollars will at least double in the next few years — but not because of any new or unusual demand for gold.” Now that as of 2011 gold’s spot price has hit $1400 per ounce, I think it can double again in the next year or three.
Gold (silver, oil, and most commodities) are denominated in a now-fickle currency called the US$, that is poised to head far South. Thus it is fast becoming irrelevant exactly how many dollars a troy ounce of gold is worth, or how high or low it will rise or fall. The very yardstick (the dollar) is melting.
Today it makes far more sense (for the world market) to denominate the shiny stuff in CHF, for example.
What should you “invest” in? Gold coins and maybe a bag of Zircons (fake diamonds) that you can hide for emergencies. Swiss francs held either in cash bills, are OK too. Your secret stash must be secret – well hidden, available when needed, and otherwise untraceable.
My guess is that AU and CHF will stay in relatively close alignment for the next few years, with CHF probably outperforming gold slightly. This is only because a strong currency earns interest, and it is more useful, i.e. It can be more easily transported, wire-transferred, etc.
Yes, I know there are a new bunch of digital gold “banks,” but one of the best of these was run by a guy whose name sounded like “Well Done Crabbe.” His digital gold hoard sank without a trace a few years back. The customers lost everything. Ever since, I realized that all these private, unregulated “Online Banking” outfits were as safe as a leaky sugar-cane raft in a typhoon.
From a non-reporting, non-tax point of view, i.e. strictly for survival purposes, of course one should have a stash of assorted, small denomination, relatively common coins. What coins? Consider the Italian Marengo, British Sovereign, French Napoleon (Rooster), Swiss VRENELIS, and American Eagle coins.
Silver coins, some claim, will be more useful and better to trade for eggs and bacon or safe passage across a lake than heavy gold bars. From what I have heard, silver coins are not good for very much. People in disaster zones don’t want anything of such little value as a dime or silver dollar. For purposes of recognition, it’s best if your emergency coins are minted in the country where you will use them. Reason is simple: border guards, farmers and others you will have to bribe to save yourself want coins they can recognize and are familiar with. -Grandpa
GOLD COIN SELLERS ANGERED BY NEW USA TAX LAW REQUIRING FULL REPORTING OF ANY TRANSACTIONS OVER $600 IN VALUE
Amendment Slipped into Health Care Legislation Would Track, Tax Coin and Bullion Transactions
July 21, 2010 By Rich Blake, ABC News
Those already outraged by the president’s health care legislation now have a new bone of contention — a scarcely noticed tack-on provision to the law that puts gold coin buyers and sellers under closer government scrutiny.
The issue is rising to the fore just as gold coin dealers are attracting attention over sales tactics.
Section 9006 of the Patient Protection and Affordable Care Act will amend the Internal Revenue Code to expand the scope of Form 1099. Currently, 1099 forms are used to track and report the miscellaneous income associated with services rendered by independent contractors or self-employed individuals.
*Coin Dealers Flipping*
Starting Jan. 1, 2012, Form 1099s will become a means of reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year. Precious metals such as coins and bullion fall into this category and coin dealers have been among those most rankled by the change.
This provision, intended to mine what the IRS deems a vast reservoir of uncollected income tax, was included in the health care legislation ostensibly as a way to pay for it. The tax code tweak is expected to raise $17 billion over the next 10 years, according to the Joint Committee on Taxation. [Grandpa’s Note: Over and over these published expectations are based upon taxpayer behavior being unchanged by new laws. Taxpayer behavior is directly influenced by tax laws, and reporting requirements. That is why expatriation and citizenship renunciations are up by over 1,000% over prior years. Rich French left France after Mitterand instituted a “Wealth Tax.” Americans who see the handwriting on the wall are relocating today.] Taking an early and vociferous role in opposing the measure is the precious metal and coin industry, according to Diane Piret, industry affairs director for the Industry Council for Tangible Assets. The ICTA, based in Severna Park, MD., is a trade association representing an estimated 5,000 coin and bullion dealers in the United States.
“Coin dealers not only buy their inventory from other dealers, but also with great frequency from the public,” Piret said. “Most other types of businesses will have a limited number of suppliers from which they buy their goods and products for resale.”
So every time a member of the public sells more than $600 worth of gold to a dealer, Piret said, the transaction will have to be reported to the government by the buyer.
Pat Heller, who owns Liberty Coin Service in Lansing, MI., deals with around 1,000 customers every week. Many are individuals looking to protect wealth in an uncertain economy, he said, while others are dealers like him.
With spot market prices for gold at nearly $1,200 an ounce, Heller estimates that he’ll be filling out between 10,000 and 20,000 tax forms per year after the new law takes effect.
“I’ll have to hire two full-time people just to track all this stuff, which cuts into my profitability,” he said.
An issue that combines gold coins, the Obama health care law, and the IRS is bound to stir passions. Indeed, trading in gold coins and bars has surged since the financial crisis unfolded and Obama took office, metal dealers said.
The buying of actual gold, as opposed to futures or options tied to the price of gold, has been a particularly popular trend among Tea Party supporters and others who are fearful of Obama’s economic policies, gold industry members such as Heller and Piret said. Conservative/libertarian commentators, such as Fox News Channel’s Glenn Beck, routinely tout precious metal on the air as being a safe, shrewd investment in an environment in which the financial system — and paper money backed by the rest of the world’s faith in the U.S. government’s credit — is viewed as increasingly fragile.
Congressman Anthony Weiner, a New York Democrat, told ABC News his office has conducted an investigation into Goldline’s sales practices. He called the relationship between Goldline and conservative talk shows an “unholy alliance,” and said viewers should be told “there’s a dumb way and a smart way to buy gold.” Weiner said Goldline pressures consumers into purchasing coins instead of pure gold, which he called a “rip off.” (ABC News)
The recently revealed investigation by California authorities into consumer complaints against Goldline International, which has used Beck as a pitchman, and Superior Gold Group (which has not) has put a spotlight on what one liberal leaning politician, Rep. Anthony Weiner, D-N.Y., calls the “unholy alliance” between gold coin sellers, such as Goldline, and conservative talk personalities, such as Beck.
Beck, who through his spokesman, Matt Hiltzik, declined to comment for this story, and Goldline marketers portray gold coins as a better alternative to owning bullion in the event that the U.S. government ever decides, as it did under FDR in 1933, to make it illegal for private citizens to own physical gold. At that time, the U.S. dollar was still pegged to the price of gold; the gold standard was abandoned during the Nixon administration.
Rep. Daniel Lungren, R-Calif., has introduced legislation to repeal the section of the health care bill that would trigger the new tax reporting requirement because he says it’s a burden on small businesses.
“Large corporations have whole divisions to handle such transaction paperwork but for a small business, which doesn’t have the manpower, this is yet another brick on their back,” Lungren said in a statement e-mailed to ABCNews.com. “Everyone agrees that small businesses are job creators and the
engine which drives the American economy. I am dumfounded that this Administration is doing all it can to make it more difficult for businesses to succeed rather than doing all it can to help them grow.”
The ICTA’s Piret says identity theft is another concern because criminals may set up shops specifically to extract personal information that would accompany the filing out of a 1099.
The office of the National Taxpayer Advocate, a citizen’s ombudsman within the IRS, issued a report June 30 that said the new rule “may present significant administrative challenges to taxpayers and the IRS.”
Full story here.
From A Client , To Grandpa:
Those who criticized Goldline are partially right as there is zero protection in owning non-rare gold coins of any age vs. bullion, courtesy of new laws after 9/11. However, we are only talking here about the possibility of government again confiscating all privately held gold as they did under Roosevelt. It is highly likely as the paper dollar devalues and the government needs to tap the citizenry for more than just taxes to keep itself afloat.
This is of concern only to USA residents or taxpayers.
It’s all about legally rare vs. not rare, and totally dependent on value vs. metal content. The argument assumes the U.S. government will exempt rare and collector coins from confiscation as Roosevelt did.
I feel there is no reason to assume that.
Bolsheviks, Nazis, and dictators like Taylor of Liberia, Mugabe, and all others grabbed ALL assets!
In World War II, Great Britain and the U.S. government seized all the registered gold and foreign accounts of all citizens!
In the next financial crisis don’t you think the governments will grab whatever it can from the “haves” to re-distribute to the “have-nots?” And of course to pay the smart neutral countries for essential war materials like imported oil, uranium, etc.
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