Gold/Silver OTC trading illegal for US residents after July 15, 2011?

Hey hawkiye, it's me again. When it comes to valuating long-term portfolio performance some people employ a very simplistic mindset...a-self deceptive frame of reference that allows them to feel wealthier as long as their nominal account balance continues to grow. A few may even have convinced themselves that USD 2011 is somehow equal in value to USD invested 30 years ago in the S&P....go figure.

They remind me of a little boy who buys a candy bar for $2 using the crisp new $20 dollar bill that his grandmother gave him for Xmas ...and feels richer when he receives six bills back in change (three $5s, and three $1s). His little Batman wallet is certainly fatter, but is he really wealthier ?

This is where the S&P:Gold Ratio cuts through the noise.

Dated...but related, from 2000 > On The Cusp Again - THE DOW/GOLD RATIO

GL

reply to post by hawkiye


Come on really?

It is looked at form the IRS POV as a "collectible" and you will be taxed up to 28% on all gains.

In the United States, sales of a gold ETF are treated as sales of the underlying commodity and thus are taxed at the 28% capital gains rate for collectibles, rather than the rates applied to equity securities.[5]

This goes the same for physical

link

By the way, I am waiting for your reply on how gold is the only true retainer of value.

That is obviously false, and so is your view on taxation. Is there anything else that needs to be cleared up?

There are as many creative ways to deal with precious metals tax issues, as there are good reasons for making gubmn't issued American Eagle coins your preferred bullion investment vehicle.

And here comes another one.

Three senators propose eliminating capital gains taxes on gold, silver coins

The Salt Lake Tribune
Salt Lake City, Utah
Tuesday, June 28, 2011

WASHINGTON -- Utah Sen. Mike Lee joined with fellow Republicans on Tuesday to introduce legislation that would jettison federal capital gains taxes for gold or silver coins.

Lee's measure would treat gold or silver coins the same as regular U.S. currency in transactions, a change that he hopes will encourage a change in the nation's monetary system. - Full Text

New York Sun: A first step to sound money

11:43p ET Tuesday, June 28, 2011

Dear Friend of GATA and Gold (and Silver):

The New York Sun tonight quickly endorsed the legislation introduced this week by Utah Sen. Michael Lee, South Carolina Sen. James DeMint, and Kentucky Sen. Rand Paul to eliminate capital gains taxes on gold and silver coins -- the Sound Money Protection Act. The Sun's editorial is headlined "A First Step to Sound Money" and you can find it here: - More

This new bill picks up where the Fair Treatment for Precious Metals Investors Act left off. This bill was referred to committee in congressional session 2009 - 2010, but never came-up for debate before the session retired.

GL

As I said now for the 3rd time there is no taxes on PM's there is only tax if you trade them for FRN's they are then treated as a commodity and the tax must be paid in FRN's because it is using FRN's that causes the tax. However as OBE1 mentions US minted eagles are legal tender and only taxed at face value which usually means no tax as opposed to their price in FRN's. I am sure some will still not get it though preferring to repeat false rhetoric rather then facts based on research and experience.

reply to post by hawkiye


What you are saying is ridiculous. It is priced in FRN's ( or dollars ). You can't escape the taxation without having accredited investments such as limited partnerships ( DPP's ) to write off for such things as passive investments.

You don't have any idea what you are talking about nor do you understand the relationship between money and commodities. That is fine, PM's aren't taxed in your world. I guess I will live in my ignorant world.

reply to post by Dance4Life

I guess I will live in my ignorant world.

First true thing you have said. You indeed live in your own little ignorant world. I speak from experience when I say there is no tax on PM"s not something I read on some biased blog! Tax is derived from FRN's and both FRN's and taxes derived from them are unlawful they both operate in defiance of the laws of the land. Fools may mock and ridicule however the truth is still true!

Something I'm noticing more these days are people who are falling into the trap of using precious metals as their sole investment. I suppose many have taken big hits in other departments. Their stocks went down (and they sold when they were down). Their home went down, and some sold, even losing there too. This is something of a "short-term" rehash of our recent history.

During this same period, not surprisingly, precious metals have done very well. The thing that might be troublesome is that the same people who have continually jumped out of everything, only to now find metal, might be prematurely regarding PMs as their "savior".

Since I deal with many of these folks, I have seen a bit of "laziness" set in with some of them. Good for me, as they tell me that the funds for their current purchase just came from them finally "cashing my last stock in". Well, even though I'm one of those who tells people often about diversification, and the traditional "10%" rule, and take the time to explain that metals might be considered better as "insurance", instead of a "true" investment, fewer are listening these days.

I'm not really complaining, it's good for me, but I'm not so sure it's going to be so good for them. The problem is that EVERYTHING goes up, and down. The bigger picture is that there are cycles. Beyond those, fiat currency / political issues. Beyond that might even be manipulations, that can really mess with various segments, but primarily in the short-term.

And that's the thing that's going to get some of these folks. In the short-term, there can be corrections. Worse, there can be extended corrections, and reversals. So, even if I am telling the truth, saying that I believe PMs still have considerable upside, especially with continuing world upheaval, and fiat excess, what's going to happen is a correction. And guess what some people will do, when they see PMs take a dump?

What many will do, I'm almost positive it's going to be a high percentage, they will repeat their personal history, and dump their metal. Could happen this summer, which more often than not, will see a seasonal dive. If that seasonal dive is accompanied by anything else to depress metals, the drop could be just big enough to spook out this crowd I speak of.

But if you asked them today if they would do such a thing? Nope! Not them! They are in for the long haul! EXCEPT, when the correction surpasses their expectations, which are too often not really based on much homework at all.

OH WELL. Some of them will be back in October. (When the price is higher than when they sold in early August!)

JR

Selling gold teeth to make ends meet in Greece
Thu Jun 30, 2011

ATHENS, June 30 (Reuters) - A smartly dressed woman waits as a young man behind a glass screen weighs her gold earrings, bracelets and rings and counts out 1,600 euros.

"I'll see you again soon," she says, slipping the bills into her purse. Behind her, a grey-haired man shuffles towards the counter. "Do you buy gold teeth?" he asks.

In the Greek capital, gold is marking a divide between the "haves" and a growing number of "have nots". - Continues

Similar to Greece, when the true US fiscal condition is eventually exposed to be anchored in a sea of Fed double-booking, FASB accounting gimmicks, and criminal regulatory capture...our politicians will move swiftly to protect the bankers and financial elite....at the expense of the little people who elected them.

Have you protected yourself ?

Will you be a Have..or..a Have Not ?

GL

reply to post by OBE1

Have you protected yourself ?

Will you be a Have..or..a Have Not ?

Great info, as usual.

I think we all face quite a challenge when it comes to this issue. We're a bit too comfortable perhaps, and we don't live long enough.

Like many people, I mention the lessons of history now and again, I'll trot out the Weimar Republic, etc. Typical responses can say a lot about our mutual predicament: "But, that was so long ago!" "Things aren't like that now!"

And what about Zimbabwe? "That's Africa! Duh! You don't think anything like that would happen in regular countries, do you?" Is Greece a "regular" country? "Huh???"

Actually, there are lots of examples when fiat failed, and it's simply not prudent to imagine that these things can't happen to us.

Everyone needs to protect themselves, as you so ably point out. After that, the usual, true "investment" characteristics of precious metals can be examined further. But first, get the basics under control. I continue to go with the old fashioned "10%" as a minimum, but this is an opinion of course.

I personally believe that silver is one of the best investments out there. Whether I'm right, or wrong, this doesn't mean I'm going to mortgage / sell everything I have to buy silver. Why not? Because I don't have a crystal ball, and for all I know, a fabulous opportunity to buy more of this metal, at "bargain" prices, is still ahead of us. And other considerations too. Plus, I need a house, and cars, etc. Can't just have a pile of your favorite stuff, that would be silly!

And yet, there are some out there who are maybe in a "good" investment, but it won't help them. That's because they are usually the ones who don't even understand when you say something like, "I'm long silver until..." I've already lost some at the "long"!

The average person out there may get the right vehicle, and even get in it at the right time. But, they missed the bigger picture, which is that we don't have all the info! That being the case, even if we are "sure" of something, it's still not "smart" to expose all your assets to one risk profile, and worse, to expose yourself to timing disadvantages, that could have been avoided by old-fashioned dollar-cost-averaging. And simple diversification eliminates the "one-basket" risk. Well, maybe not so "simple", but hopefully some reading will be helped by this.

Obviously, I'm preaching to the choir in some respects, a few on this thread are very knowledgeable, and I learn something all the time by reading some good posts.

But, I do wonder about some who are attracted to threads like this, because they might be vulnerable to reaching the wrong conclusions.

I think the best advice anyone can get is along the lines of "do your homework". Lots of things sound wonderful, at first. But then, more is revealed. Could be more good, but also some bad. Either way, it's good to reach a "critical mass" before taking any significant action.

Thanks again for such great info.

JR

Originally posted by OBE1

Selling gold teeth to make ends meet in Greece
Thu Jun 30, 2011

ATHENS, June 30 (Reuters) - A smartly dressed woman waits as a young man behind a glass screen weighs her gold earrings, bracelets and rings and counts out 1,600 euros.

"I'll see you again soon," she says, slipping the bills into her purse. Behind her, a grey-haired man shuffles towards the counter. "Do you buy gold teeth?" he asks.

In the Greek capital, gold is marking a divide between the "haves" and a growing number of "have nots". - Continues

Similar to Greece, when the true US fiscal condition is eventually exposed to be anchored in a sea of Fed double-booking, FASB accounting gimmicks, and criminal regulatory capture...our politicians will move swiftly to protect the bankers and financial elite....at the expense of the little people who elected them.

Have you protected yourself ?

Will you be a Have..or..a Have Not ?

GL

Nice find OBE1... Some folks don't understand the difference between an investment in paper and protecting thier wealth with real money.

reply to post by hawkiye


Jesus, you don't know when to quit do you? 99% of the stuff you have said on this thread is laughable. 10 year cycle etc. This is just all just curve fitting data to suit an outlook. Trust me, I do a lot of statistical work and none of it has shown me that the US Equity Markets correlate with anything on a 10 year cycle. Ask your friend OBE1 ( whom states he owns quite a bit of gold ) what he incurs in taxation on his gains. And I am sure OBE1 has gains to say the least.

Btw, now I remember why I even replied to your original message. First because it was false, and second because diversification and DCA is king in the end. You will always be a net loser unless you do those two things if your investment capital is < 5MM

reply to post by Dance4Life


i always get a good laugh out of folks who act like they know something despite embarrassing themselves time and again and have no clue they know squat about the topic. They think because they read something somewhere they are an authority. As for equities I hate to break it to you but OBE1 has not agreed with you on a single thing. Get get educated and learn the difference between paper trading and real money and you might begin to get a clue. I won't hold my breath though and I am sure we will most likely get another mentally challenged comment from you....

But at least you are good for a few laughs...

reply to post by JR MacBeth

Another star-worthy contribution JR.

Even though individual risk appetite will vary, comon sense dictates that one should never commit a substantial percentage of their liquid net worth to any investment without having a firm grasp on market fundamentals, especially as they relate to the preferred asset class or sector. As you know, this kind of work requires abundant time and persistent vigilance. Fundamentals and investor sentiment seldom remain static over an extended period. Some individuals may be born with an innate sensitivity to the rhymes and rhythms of supply pressures, capital flows and market sentiment (Jesse Livermore for example) but most of us will have to work to acquire these attributes...which in the end, always remain more art than science. Prospective investors may wish to make their dollar investment and their time investment proportional.

I believe it's the nature of a bull market to shake-out as many investors as possible as it progresses across time, some at a profit, others at a loss...but that's what makes a market...winners and losers. Jim Sinclair often comments on this dynamic when he reminds us how few of the early adopters will ever make it to the finish line for the really large payoff. Livermore's motto was "Be right and sit tight". He defined the most self defeating trait common to the majority of market participants of his time...as the proclivity to trade-out of a winning position too early in the cycle.

When making a substantial move into any bull market, it's important to develop a general exit strategy. Imo, this would include addressing relevant tax issues beforehand with a qualified specialist.

We can all cherry-pick arbitrary trends and time scales to support our arguments for, and against investing in a particular asset class, e.g., If you bought Gold at the precise top in January 1980 [when it traded briefly intraday at $850] you would have....etc. It's all theory...history based on a fabricated series of what if's. Some folks missed the Gold train and they're priced-out at current levels. They'll be quick to remind us that Gold was a terrible investment 1980 - 2000.

The reality is we're here, we're now, and we trade the trends we have.

*This post is not meant to be taken as gospel. It simply represents my personal opinions as an independent investor.

GL

This ban is on Silver and Gold. However, it is initially only "OTC". This is set forth by the Dodd-Frank Reform and Consumer Protection Act. Please read section (742) to get a clearer understanding of the financial situation.

In my opinion, and i'm from Ireland where it doesn't apply to me, the law change is not about protection for the average joe on the street, but it's once again about the FR. The Federal Reserve are doing this because they want the price of Gold and Silver to go down so that the U.S. dollar will get stronger. The U.S. dollar is very weak at the moment, and it is hurting the U.S. exporting industry, i.e. other nations (especially the E.U.) are paying very little for the goods coming in; and on the other hand it's expensive for the U.S. to take in our goods.

This law does not include buying Gold and Silver and having it delivered. This only applies to "on the spot" transactions...in effect closing down all the physical trading of Gold and Silver over the counter. This is very unfair, to say the least. Having gold bunnions with "worth 50 U.S. dollars written on it, means that if it trades for $1,000 an ounce on the market, you'll only get the 50 dollars guaranteed by the Government...no wait I mean the Federal Reserve!!!

In conclusion...this is very unfair on the American people who have invested in Gold for their retirement. The Government is really taking back all the gold, and trying to make it worth less and less.

I, as a true Christian, say the following: "Have food and clothes and be therewith content". The Lord loves you, so don't worry about this. Your Heavenly Father will provide for you. The heathens run after all the money and finance. They say "money makes the world go round". They are wrong. Jesus does. We brought nothing into the world, we will take nothing out. A man's life does not consist in the abundance of his possessions.

reply to post by johnireland

In my opinion, and i'm from Ireland where it doesn't apply to me, the law change is not about protection for the average joe on the street, but it's once again about the FR. The Federal Reserve are doing this because they want the price of Gold and Silver to go down so that the U.S. dollar will get stronger.

To bad for them it won't work. Physical gold has decoupled from the paper market already to a degree and will just cut itself loose from it all together as they tighten the screws. this does not look like it applies to over the counter physical gold and silver but to margin trades and leverage's.

reply to post by Dbriefed


One might interpret (Executive Order 6102 |) as having to do with "Fine Gold" backing the U.S currency in those days - This is not the case today as it is backed by (G.D.P) "I think" but not Gold for sure.

To be honest it was not until recently before I became aware of this as I always thought good old Fort Knox was the investment behind the value of the Green Back.

Seems like this could be challenged easily but these days the Judaical Branch is turning a blind eye to "recent legislation" all to often.

I will borrow this from Donny "I am out of my element"

Just a thought then how will this effect Foreign Countries mining Gold in the United States and shipping it back to there homeland. Several years ago I watched a 20/20 or similar and China was sending a huge amount of gold back from there current "Gold Mine Operations" in the States, mind you they did pay tax on it not sure what the rate was.

God Bless

reply to post by hawkiye


That is never going to happen with all the World Wide Financial conflict / trouble.

I wonder what would happen if one tried to file a "Gold Claim" these days!

Kind O.T but a thread on "Factual / Questionable legislation" changes, might be a good idea to bring it all under one thread and not spread out, under different topics and threads.

Cheers and God Bless

today is the ban the gold day. Any takers that gold price will top 1600$ an oz? will the US gov say we will buy gold at a fixed of 500$ an oz, forcing the dollar down and gold market up. FDR did this back in 34' so why not now. i hope you read this www.the-privateer.com... but then why would you. from the link

January 31, 1934
The day after the passage of the Act, President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold "nine-tenths fine". The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold - or by 69.3 percent. The Treasury, which had become the possessors of all the nation's Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now "owned" the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.

The new ratio of $US 35 was adopted at Bretton Woods in July 1944. The U.S. Dollar was made the world's Reserve Currency and the IMF and World Bank established in 1947. The now international ratio of 35 U.S. Dollars to one troy ounce of Gold lasted until August 15, 1971.

still confused? it works like this

The day after the passage of the Act, President Roosevelt fixed the weight of the Dollar at 15.715 grains of Gold "nine-tenths fine". The Dollar was thereby devalued from $20.67 to one troy ounce of Gold to $35.00 to one troy ounce of Gold - or by 69.3 percent.

and the gold value up

The Treasury, which had become the possessors of all the nation's Gold on the previous day, saw the value of their Gold holdings increase by $US 2.81 Billion. The Treasury now "owned" the Gold, and no one else inside the U.S. was allowed to own any Gold except by the express permission of the Treasury.

do you get it now , mind you this law only effects US citizens.
just i case you want to know the price www.kitco.com...

well now there is no news on the law, how it is going to effect you and the PM market so here is a link that says well no big deal so if you believe this i can sell you beach font prop in AZ learngoldcoins.com... from the link

Recently the US Congress enacted the Dodd-Frank Act, which is a new regulation aimed at increasing the protection of consumers in investing and financial related matters. One of the impacts of this regulation is that it prohibits US residents from trading over the counter precious metals, starting on July 15, 2011.

ok but does this law ban me from owning gold??? too soon to tell, but the good news is gold is up to almost 1600$ an OZ!!!! Just to clear things up, this law only effects them that have "gold paper" not gold bars, so sell you paper and get the bars. goldsilver.com... from the link

Will ownership of gold and silver be prohibited on July 15, 2011?

No, not for those who own physical gold and silver.

It will impact those who own paper gold and silver.

The Dodd-Frank Act was enacted to help bring financial stability and to improve accountability and transparency to the financial system. In summary, the Dodd-Frank act is another packet of financial regulations.

so we that have the real gold , bars, coins, nuggets,and flake(dust) are safe