Money Metals just released it current edition of the Insider with lots of relevant information. One section in particular always generates interest. It is the Frequently Asked Questions or FAQ’s. I found this issue had some very good content and it started out with this statement. Just about every gold and silver bug has been hit with questions from doubting friends and family members to the effect of, “What’s the point in owning these shiny objects?” We get lots of questions about precious metals. Some people are curious about the basics. Others are skeptical about the case for owning gold and silver. Still others are longtime customers who have highly specialized inquiries. Here we will answer a few of the most common, most broadly relevant questions we get… Even if you’re a seasoned metals investor, you can surely find value in this FAQ.
QUESTION: What is a round?
ANSWER: A bullion round is a term used to describe a privately minted coin-shaped item. For example, a 1-ounce silver round has the same weight and purity as a silver American Eagle, but it is not government minted and does not have a “legal tender” value denominated in any central bank currency. Rounds are generally a more cost-efficient way to obtain precious metals than their government-minted counterparts because they tend to carry a lower premium over the spot price. Rounds go through the same minting and coining process as government coins. It’s just that the government asserts (illegitimately) that, to reduce confusion, privately minted coins should avoid use of the word “coin” to describe them.
QUESTION: Will I have to pay taxes when purchasing or selling precious metals?
ANSWER: With respect to the federal income tax, shady IRS bureaucrats have mis-categorized gold, silver, platinum, and palladium bullion coins, bars, and rounds in the “collectibles” category, despite the fact that most such items carry no collectible premiums. As a result, if you sell your metals with long-term capital gains, your tax rate is 28% rather than the 15% (or 20%) rate on other types of capital gains. Bullion held less than one year is taxed at ordinary rates, just like short-term capital gains on stocks or bonds. It’s confusing (and unfair), but that is the way it is until the U.S. Treasury changes its regulations or Rep. Alex Mooney (R-WV) passes his Monetary Metals Tax Neutrality Act which would end ALL income taxation on precious metals. Meanwhile, as a result of a 2018 U.S. Supreme Court ruling in Wayfair v. South Dakota, tax-hungry state bureaucrats claim the power to reach outside their states and force remote sellers like Money Metals to assess sales taxes on behalf of those states, where applicable. Fortunately, 39 states exempt some or all precious metals from sales tax, thanks, in part, to the work of the Sound Money Defense League (www.SoundMoneyDefense.org).
QUESTION: Are you required to report my purchase to the government?
ANSWER: This is a relatively common question, and it reflects a concern which stems from the U.S. government’s shameful history of ordering citizens to turn in their gold in 1933. But dealers are almost never required to report your purchase of precious metals – with one extremely rare exception. For a disclosure requirement to be triggered, BOTH of the following conditions have to be met: 1. The transaction is (or related transactions are) larger than $10,000 in size 2. Payment is made using actual cash (i.e. Federal Reserve Notes and U.S. coins) OR with two or more cash instruments (defined as money orders, cashier’s checks, or traveler’s checks) which, individually, are $10,000 or less but when totaled together equal more than $10,000. Personal checks, debits, bank wires, and credit card payments are NOT considered cash or cash instruments, and, therefore, purchases using them do not trigger disclosure by a dealer regardless of their amount(s).
QUESTION: How do I sell my coins, bars, or rounds?
ANSWER: The bullion market remains liquid. In fact, precious metals dealers are now desperate to acquire inventory and will be happier than ever to buy from customers actually willing to sell. In recent months, Money Metals has repeatedly raised its buyback prices versus spot prices as a reflection of scarcity-driven premiums on coins, bars, and rounds. So please go to any product page at MoneyMetals and sell us your items if you wish – or call 1-800-800-1865.
QUESTION: Is there REALLY a silver shortage?
ANSWER: In terms of coins, bars, and rounds that are commonly desired by retail precious metals investors, there are shortages. This is due to extremely high demand so far in 2021 (and even 2020) and that has led to major bottlenecks at the mints, high premiums, and order backlogs. But large commercial gold and silver bars are NOT in shortage… yet. In fact, Money Metals customers can acquire them through our low-cost Vault Metals products. There is some reason to believe that continually high demand for silver – both industrial and investment – will lead to supply tightness globally, but supply and demand forces have not yet led to much higher prices. It’s a fact that banks and traders have illegally engaged in manipulation in the silver market. However, so long as silver investors focus on acquiring the actual physical metal rather than buying paper instruments, true shortages will eventually cause a return to free-market pricing (and probably higher silver prices).
QUESTION: How do I safely store my physical gold and silver?
ANSWER: We recommend a two-pronged approach. First, store some of your bullion at home in a well concealed safe for immediate access in case of emergency. Store the remainder of your bullion in a secure, insured precious metals storage facility. Insist on segregated storage to avoid any commingling of your bullion with metals owned by other customers. Safe-deposit boxes at banks are generally not suitable for precious metals storage. In fact, some banks have policies that explicitly prohibit gold bullion. Plus, your gold would be at risk in the event the bank goes under or gets raided by government agents. You don’t want your gold tied into the banking system, even indirectly.
You can get you own complete copy of the insider by following the link below. Sign up and you will receive a copy in your inbox each season of the year. Thanks goes out to the photograph section of Pixabay for their use of the associated visuals.You can also shop for silver bullion items on eBay at Captains Coins Cards and Silver or Great Lakes Bullion.
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