An increasing number of Americans are concerned enough about the threat of precious metals confiscation to want to store gold or silver overseas. But laws in effect in 21 states may stand in their way.
I learned about these laws last year when one of my subscribers in Arizona called.
He wanted to buy gold from a foreign dealer for storage offshore, but the dealer refused to sell to him. The reason: the Arizona Model Commodities Act. After some research, I learned that 21 states have enacted the MCA or some variation of it: Arizona, California, Colorado, Georgia, Idaho, Indiana, Iowa, Maine, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, Utah, and Washington.
I looked into the Nevada law, which a lawyer in that state told me was typical of MCAs in other states. Basically, residents of Nevada can purchase “commodities” only under circumstances which effectively exclude having precious metals delivered a non-U.S. storage facility.
The MCA came into existence in the 1980s, after a series of commodities scams in the 1970s.
One of the most notorious ones was International Gold Bullion Exchange (IGBE). Beginning in 1979, William and James Alderdice built their tiny jewelry business in Fort Lauderdale into a multi-million-dollar enterprise with over 1,000 employees.
IGBE advertised in The Wall Street Journal, Barron’s, and many other respected financial publications. In exchange for discount prices, customers waited three months or more for delivery. But many customers never received anything. When authorities finally caught up with IGBE, much of the gold supposedly stored for customers turned out to be railroad ties painted gold. In the end, customers lost millions of dollars.
With this background, it’s not surprising that states acted to protect their residents from commodities scams. But the laws appear to prohibit commodities purchases for delivery overseas.
Fortunately, companies that sell precious metals for storage overseas have developed some creative ways to deal with these laws. One option is for the buyer to use the address of a friend or family member in a non-MCA state. Another is to purchase the metals through an IRA with a custodian in a non-MCA state. A third is to sell the metals to an offshore structure that the buyer controls or is a beneficiary of.
Ultimately, though, the lesson of IGBE and similar scams is “buyer beware.” Wherever you buy, if you don’t take physical possession of precious metals you purchase, make sure that the company you’re dealing with is storing real gold, silver, platinum, or palladium—not railroad ties painted to look like the real thing.
Now, Here’s How to Report Them…
Unfortunately, neither the IRS nor the U.S. Treasury has provided direct guidance on how to report metals held offshore. As a result, I generally recommend that my clients report such ownership, although there appear to be some exceptions.
First, a little background…
U.S. citizens and residents have an annual obligation to report the existence of all “foreign bank, securities or ‘other’ financial accounts” if the aggregate value of those accounts exceeded US$10,000 at any time during the preceding year. Those failing to do so face a fine up to US$250,000, imprisonment up to five years, or both. (In an earlier blog entry, I described how non-U.S. persons have the same obligation if they are “in or doing business” in the United States.)
The report, which the Treasury Department cleverly calls Form TD F 90-22.1, is due by June 30 of the following year. Thus, you must file this form by June 30, 2009, if you had any reportable foreign account relationships anytime in 2008.
You have a separate obligation to disclose any “reportable” foreign accounts on Schedule B of Form 1040. Hopefully, you already made that acknowledgment when you filed your 2008 tax return. If not, you should file an amended return and make the required disclosure (check “yes” on line 7a of Schedule B).
The Treasury Department and the IRS construe the term “financial account” very broadly. The definition unquestionably includes bank, securities, and other accounts that hold financial instruments. However, it does not include individual bonds or stock certificates. This is an important distinction. If you have a foreign brokerage account that contains stock, this is a foreign financial account. If you hold individual shares of the stock directly, it is not reportable.
By analogy, the same rules would presumably apply to gold or other precious metals held offshore. If you hold the metals in a safety deposit box or private vault, without opening a bank or other financial account, you don’t appear to have any reporting obligation. (However, at many foreign banks, you must open an account in order to rent a safety deposit box.) On the other hand, if you purchase the metals through a foreign bank account and the bank stores the metals in its vault as part of your account holdings, the relationship would be reportable.
What if you arrange for a company to purchase gold or other metals on your behalf and that company stores those metals on your behalf in a foreign bank’s vault? While nothing is certain in life (other than death and taxes) a strong case can be made that this is not a “foreign financial account” if the following conditions apply:
Naturally, the IRS might disagree with this analysis. And if you enter into such an arrangement, I highly recommend confirming my interpretation with your own tax advisor.
January 15, 2010
Since 1990, Mark Nestmann has helped hundreds of clients seeking wealth preservation and international tax planning solutions. He is the author of many books and reports dealing with these subjects and a popular public speaker.
Beginning his career as an investigative journalist in 1983, Nestmann now serves as President of The Nestmann Group, Ltd., an international consultancy assisting individuals to achieve their wealth preservation goals. He also is the Tax and Asset Protection editor for The Sovereign Society. Nestmann divides his time between offices in Vienna, Austria and Phoenix, Arizona.
Mark Nestmann is a leading writer and speaker on offshore topics and financial and personal privacy issues. Ron Paul describes him as "Mr. Privacy." He is the author of many books, including the well-regarded How to Achieve Financial Privacy in a Public Age, Privacy 2000, and Asset Protection 2000.
Pingback: Tweets that mention Keeping Precious Metals Offshore -- Topsy.com()
I disagree with several of your statements. “…if you purchase the metals through a foreign bank account and the bank stores the metals in its vault as part of your account holdings, the relationship would be reportable.”
Gold is not a security nor is it money. Physical gold, owned by you, does not need to be reported no matter if it is burried in your back yard, held by a friend (better be a good one), or in a bank vault.
Interesting question…which makes us more nervous, holding a valuable our own government could confiscate, or having title to something in a foreign country where either the country, or rebels, or the bankers could appropriate it? If I ate junk food I would be considering the half life of Hostess Twinkies.
I wonder however what the status of Gold Maple Leaves and Gold Pandas are, since they are also, at face value, foreign currency. If a country confiscates another country’s currency, since a currency belongs to the country of origin, that could be seen as an act of hostility. In other words, would such gold coins escape any FDR-like attempt?
Interesting topic, I live in Canada. Most people are not aware that gold nuggets are not classed as real gold because they are unrefined. So they are classed as “rocks”, gold dust is classed as “dirt”. It makes sense doesn’t it? Who knows what the real grade of those “rocks and dirt” are until they have been refined into gold bars or further processed into real money as in gold coins. So my soluition is to purchase as much gold in nugget form and gold dust form as you can, don’t forget it is not “money” at that stage. CanadaNorth
Take GoldMoney.com, for instance. To buy gold, you first have to transfer funds into a holding account. The account, by UK law, MUST be interest bearing. There are a few microseconds, no matter how hard you try, when you have a foreign account. I think you need to report it.
Non-reported off-shore metals? – I agree with OILWELLDOCTOR’s post up above. The commodities trading markets are always unique, learn from someone with 10+ years of experience!
tengo el placer de haber utilizado su producto por un par de meses y me encanto he dado las mejores recomendaciones y amistades mias las an comprado al ver el exito que logre con ellas bajando mucho de peso.
Pingback: makia julpo()
Pingback: Surrey SEO()
Pingback: Forex Strategy Master, Forex Strategy Master discount, Forex Strategy Master review, Forex Strategy Master bonus()
Pingback: London Escorts()
Pingback: rhinebeck math tutor()
Pingback: buy twitter followers()
Pingback: read more()
Pingback: Lyons NJ()
Pingback: manila dating()
Pingback: watch hentai()
Pingback: la bourse pour les nuls()
Pingback: mark mania()
Pingback: Internet Banking()
Pingback: John Barban The Venus Factor Review()
Pingback: naturalyte lawsuit()
Pingback: dog videos()
Pingback: click to view()
Pingback: handy orten()
Pingback: Insurance Money Information()
Pingback: cat videos()
Pingback: view video()
Pingback: Kyra Hearne()
Pingback: Rheba Sanson()
Pingback: exeter letting agents()
Pingback: Mirena IUD Lawsuit()
Pingback: handy orten kostenlos()
Pingback: universal remote()
Pingback: Las Vegas Escorts()
Pingback: click to investigate()
Pingback: РљР°Рє РїРѕС…СѓРґРµС‚СЊ С‰РµРєР°Рј СЃРѕРІРµС‚ : РљР°Р»РёРµРІР°СЏ РґРёРµС‚Р° РґР»СЏ РґРёС‚РµРё()
Pingback: Clark Contrell()
Pingback: Milan Sabados()
Pingback: Virgilio Montano()
Pingback: Monte Terrill()
Pingback: Bradford Belko()
Pingback: online backup()
Pingback: Kris Ziobro()
Pingback: План побега фильм 2013 торрент Змо()
Pingback: deezer gratuit()
Pingback: Dallas wedding videographer()
Pingback: sports camp()
Pingback: charlottesville real estate()
Pingback: РЁРµСЃС‚СЊ СЂР°Р· 2013 СЃРјРѕС‚СЂРµС‚СЊ РѕРЅР»Р°Р№РЅ РІ hd РєР°С‡РµСЃС‚РІРµ()
Pingback: Университет монстров 2013 смотреть онлайн в отличном качестве()
Pingback: Гравитация смотреть online всем тут бомба премьра()
Pingback: Частное пионерское 2013 смотреть онлайн в hd качестве()
Pingback: полный фильм режиссерская версия Джастин и рыцари доблести()
Pingback: Ледник 2013 смотреть онлайн в hd()
Pingback: youtube network()
Pingback: Прощай, Париж 2013 смотреть онлайн фильм полный()
Pingback: Улики смотреть полностью()
Pingback: Грязь 2013 смотреть онлайн ЕЮп()
Pingback: fastest way to get abs()
Pingback: план побега трейлер на русском()
Pingback: лего одинокий рейнджер vPdJ()
Pingback: смотреть Va-банк онлайн в хорошем качестве (Elektri4ka)()
Pingback: Убойный уикенд смотреть онлайн кинофильм в хорошем качестве без смс()
Pingback: план побега трейлер T7rp()
Pingback: План побега смотреть фильм онлайн ЙОу()
Pingback: canada goose online()
Pingback: РљСѓСЂСЊРµСЂ РёР· В«Р Р°СЏВ» С‚СЂРµР№Р»РµСЂ РЅР° СЂСѓСЃСЃРєРѕРј Р”С„С…()
Pingback: wells dentist()
Pingback: longchamp uk()
Pingback: РџРµСЂСЃРё Р”Р¶РµРєСЃРѕРЅ Рё РњРѕСЂРµ С‡СѓРґРѕРІРёС‰ СЃРјРѕС‚СЂРµС‚СЊ РѕРЅР»Р°Р№РЅ 2013 Р»С€Р¶()
Pingback: С„РёР»СЊРј РҐРѕР±Р±РёС‚: РџСѓСЃС‚РѕС€СЊ РЎРјР°СѓРіР° СЃРјРѕС‚СЂРµС‚СЊ РѕРЅР»Р°Р№РЅ РЎРћР()
Pingback: garcinia cambogia review()
Pingback: С„РёР»СЊРј РђРЅРґСЂРѕРёРґ С‚СЂРµР№Р»РµСЂ РџРєРґ()
Pingback: natural garcinia cambogia()
Pingback: tablet pillow for kids()
Pingback: Невероятная жизнь Уолтера Митти уЕс()
Pingback: Друзья друзей ЫбС()
Pingback: Karen Millen DP199 Black()
Pingback: cannabis seed bank()
Pingback: Payday Loans()
Pingback: social bookmarking()
Pingback: mouse trap()
Pingback: test and tag()
Pingback: all ipad accessories()
Pingback: Bee Safe Pest Control()
Pingback: pre bonded hair extensions()
Pingback: смотреть фильмы онлайн в хорошем качестве Одноклассники.ru: НаCLICKай удачу 2013 ЬЛЧ()
Pingback: travel agent school online()
Pingback: Dating Tester()
Pingback: Bail Bonds Gainesville()
Pingback: tgn youtube partnership()
Pingback: bee extermination Laredo()
Pingback: lakeville jurong()
Pingback: hacker un compte facebook()
Pingback: david sills scout()
Pingback: Software Point of Sales Online Omega POS Cloud()
Pingback: Unlock iPhone Saudi Arabia()
Pingback: Cheats for Poptropica()
Pingback: Unlock iPhone Egypt()
Pingback: Nitric Oxide()
Pingback: Controlled Labs()
Pingback: concrete stain colors()
If you’re just tuning in, we’re two parts deep into our three-part conversation with Richard Duncan. Part III continues with talks on globalization, deflation, quantitative easing, the dollar crisis and more. Read on...
Modern anesthesia makes critical operations possible that few humans could survive otherwise. But according to a new study published in the journal Geophysical Research Letters, some of the numbing agents we breathe may also be significant contributors to global warming.
Look, we ain’t gonna see $100 oil anytime soon. That's great news for businesses guzzling a lot of fuel. Operating costs are way down, which means higher profits. And higher stock prices. And yes, you can still find plenty of great opportunities to book profits as companies save money on fuel…
If you missed it, we featured Part I of a conversation we had with our friend economist and author Richard Duncan yesterday. Today, Part II of our conversation with Richard Duncan continues. Read on...
This past Monday, we had a long conversation with Richard Duncan encompassing his perspective on how capitalism has died… Read on for Part I of our conversation with author and Macro Watch publisher Richard Duncan...
Nuclear power has been hammered since the Fukushima disaster in Japan four years ago. But as Greg Guenthner explains, nuclear power is making a comeback as countries around the world appreciate its great potential. He’ll also tell you exactly how to play this trend.