Coin dealers feel stung by tax reporting rule

People who deal in precious metals could find themselves under tighter government scrutiny because of an obscure provision tucked inside national health care reform – and they are not pleased.

Signed into law March 23, the Patient Protection and Affordable Care Act has a revenue-generating component intended to collect as much as $17 billion in uncollected taxes over the next 10 years. Those who buy and sell gold and silver coins are just learning about new rules requiring them to use IRS Form 1099 to report transactions exceeding $600 during a calendar year.

“I am sort of reeling from that sort of a revelation. It would ruin my business,” said Stockton’s Bob Hallam, owner of Avenue Coins and Currency on the Miracle Mile.

He learned this week about the strange provision in the health care bill in an e-mail from a friend.

Although all small businesses are potentially affected by the law, the loudest outcry has come from coin dealers. An ABC News story has prompted many to call for the rule’s repeal.

Some members of Congress have responded and are trying to get the provision – set to go into effect in 2012 – removed.

“I signed up 10 new co-sponsors just today because of the article,” said Rep. Dan Lungren, R-Gold River, who introduced legislation to repeal the rule in April.

Lungren’s bill, HR5141, has been languishing in the House Ways and Means Committee since then, even though it has more than 100 co-sponsors.

“We’ve got people calling us now. We are getting calls from all over the country from folks that deal in gold coins.”

Lungren said the rule is offensive, because it assumes that many people who sell goods to businesses are cheating on their taxes.

“I call this the universal snitch act,” Lungren said.

Form 1099 is used to track and report miscellaneous income associated with independent contractors or self-employed individuals.

This tax code change, according to some experts, would help pay for national health care reform.

Expanding the form to cover all goods purchased by businesses goes far beyond the original purpose of the IRS form, Lungren said.

“Everybody you buy a single thing from, you are supposed to report on them,” Lungren said.

Even though the reporting rule is not a new tax, the increased paperwork burden and the prospect that some customers may be unwilling to provide a Social Security number and birth date to sell gold are problems enough, coin dealers say.

Some sellers also worry that the legislation gives the government the capacity to track the buying and selling of precious metals.

Historically, gold has been seized by certain governments during severe economic downturns.

In April 1933, Executive Order 6102 was signed by President Franklin D. Roosevelt, requiring U.S. citizens to deliver all but small amounts of gold to the Federal Reserve.

Berlene Horne, office manager for Calaveras Coin and Collectibles in Angels Camp, said the new law has the potential to shut down her business. She said the shop would have to add an employee to its five-person staff just to keep up with the paperwork.

Horne said employees at Calaveras Coin and Collectibles are telling customers about the reporting rule.

“I would guess they are calling their senators and stuff,” she said.

In Stockton, Hallam said he’s also hoping the reporting rule will be repealed.

Otherwise, he predicted, it will drive gold and coin transactions underground.

“It will immediately establish a black market,” Hallam said.

Contact reporter Dana M. Nichols at (209) 607-1361 or dnichols@recordnet.com. Visit his blog at recordnet.com/calaverasblog.

UPWARD TREND IN GOLD PRICE DURING SECOND QUARTER 2010 BACKED BY STRONG FUNDAMENTALS, SAYS THE WORLD GOLD COUNCIL

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By World Gold Council on Tuesday, July 27, 2010
Filed Under: Commentary and Opinion, Gold & Silver Bullion, Press Releases

By Debbie Carlson of Kitco News
Chicago — (Kitco News) –The dog days of summer have the gold market in its teeth, keeping prices in a stubborn range and not shaking loose of its prey.

Without a catalyst gold prices could very well hold in its roughly $100 range between $1,170 and $1,270 area. The first catalyst, however, could come in the form of selling, rather than notching a new high.

The events that have drawn investors to gold have lost their urgency: concerns about sovereign debt are beginning to subside; currencies like the euro are stabilizing; inflation is less of a worry. So far, nothing shocking has leaked so far from the stress tests the European Central Bank are conducting on banks there. Without fundamental news to entice buying, gold prices are drifting.

Gold’s meandering has caused the investment crowd to start to lose interest in owning the yellow metal at these levels. Without buying by investors, gold’s price could start to creep lower by default. And that seems to be what is happening right now.

“We’re starting to see some liquidation in the ETFs, pruning back some of their longs,” said Frank Lesh, futures analyst at FuturePath Trading.

In the futures market at the Comex division of the New York Mercantile Exchange, he said some traders are starting to sell rallies and are trying to play the market from the short side. He stressed the positions were “nothing definitive” but that some traders were putting on shorts simply because the market is drifting lower.

Sterling Smith, commodity trading adviser and market analyst at Country Hedging, said there’s been some selling of gold call options in the futures market above the market.

How the market acts in the coming days could signal whether the current floor can hold. The $1,170 area for the August futures is a big trendline, Lesh said. If that trendline is seriously broken, prices could crumble to $1,100. He said there are a lot of sell stops under the market that would be tripped if prices spiked down.

That could be a significant win for the bears, if it happened. He noted $1,100 is an important level because that’s where prices ended 2009. That means anyone who bought this year would be left with a losing position. Conceivably a break of $1,100 could bring gold to the $1,000 area.

Smith said he doubted the small speculators who have bought gold on this year’s rally would look to exit positions. “They’re a very stubborn lot; they like to hold gold through thick and thin,” he said.

He also added if prices sunk to the $1,120-30 area, it might entice some jewelry fabricators back into the market to get some coverage. Jewelry demand has been a casuality of this year’s investment-driven price rise.

In addition to possible technical pressure, Smith said if the stock markets were to fall sharply, that could pull gold with it. On heavy down days, gold has fallen in sympathy with equities. Poor economic news could also trigger a break, he said.

On the upside, strong economic data or something that might signal inflation could push prices back to their highs, he said. Otherwise, renewed problems in Europe, such as a flare up for Hungary as it tries to deal with its debt situation might eventually cause the euro to buckle. Hungary still uses its own currency, the forint, but problems there could spill over to the euro. He also said the rally in the euro might have run its course. There is some sense the gains in the euro came from ideas the common currency was oversold after its recent losses versus the dollar and due for a rebound. Short covering was likely a factor in its upswing.

Commerzbank sees the third quarter average price for gold at $1,150 and back to $1,250 by the end of 2010 and into the first quarter of 2011 and at $1,350 by end of 2011. The bank, in a Wednesday research noted, agreed the doldrums have struck gold now and expects this consolidative trend to last.

In the short-term prices could decay, but longer-term they remain bullish on gold. They said selling of gold scrap fell 43% in the first quarter of 2010. “As incomes rise, households are obviously less obliged or willing to sell gold in order to obtain liquidity,” the bank said.

Mining is likely to increase, but the activity will likely come from China and Russia, which probably will put that in storage in its own central banks. India could purchase its gold from the International Monetary Fund as it has done before.

“As is evident from India’s central bank’s gold purchases in the autumn of last year at record prices of $1,045 on average at that time, India will not be put off either by a high price level,” the bank said.

By Debbie Carlson, contributing to Kitco News;dcarlson@kitco.com

Wednesday, July 21, 2010

2010 Proof Silver Eagle Update

J&T Coins, LLC is now selling 2008-W Burnished Gold American Buffalo’s. 

4 piece sets and individual pieces are now available for sale.

Click here to view our inventory and order.

For an excellent article on the 2008 American Buffalo Gold Coins please click here.

Friday, March 12, 2010

Deconstructing 2008-W Gold Buffalo Coins

2010 Proof Silver Eagles at Risk of Cancellation

July 16, 2010 | Filed Under Silver, US Mint

One of the consequences of the record pace of United States Mint silver bullion coins might be the cancellation of the popular Proof American Silver Eagle for the second year running.

The Proof Silver Eagle had been issued each year from 1986 to 2008. During this period, it has sold between 372,168 and 1,092,477 coins per year and had firmly established itself as one of the United States Mint’s most popular products.

2009 Proof Silver Eagle (not issued) 

The offering was abruptly canceled for 2009 to the dismay of many collectors. The US Mint explained that it was legally required to produce the bullion version of the American Silver Eagle in quantities sufficient to meet public demand. They were not under any legal requirement to produce the collectible proof or uncirculated versions of the coins. Because demand for silver bullion coins apparently outweighed production, the US Mint sourced all incoming blank supplies towards the production of bullion coins.

The announcement of last year’s cancellation came by way of a press release issued October 6, 2009, which highlighted the two collectible precious metals offerings that would be available in 2009, before enumerating the long list of products which were canceled. As if in validation of the high demand for US Mint bullion Silver Eagles, in late November the US Mint was forced to temporarily suspended sales of bullion coins after inventories were depleted.

During 2010 to date, Silver Eagle bullion coin sales are running at a higher pace than the prior year. An average of 3,028,083 ounces have been sold per month this year, compared to an average of 2,397,208 ounces per month last year. Demand shows no signs of abating, as investors continue to buy every silver bullion coin the US Mint can produce.

The US Mint recently unveiled a numismatic product release schedule for the remainder of 2010. The 2010 Proof Silver Eagle and most other precious metal products were conspicuously listed as “TBD.” The Mint is still preserving some hope that these coins may be issued, but the situation looks rather bleak.

Why can’t the United States Mint produce bullion coins in sufficient numbers along with the traditionally issued collectible precious metals products? Is it the result of the onerous requirement that precious metals must be sourced from newly mined domestic sources? Is there a lack of manufacturing capacity? Or is it a case of managerial incompetence?

The same excuse of blaming “unprecedented demand from investors” is getting a bit old after two years

More Clueless Mainstream Commentary on Gold

– Posted Tuesday, 13 July 2010 | Digg This Article | Share this article| Source: GoldSeek.comBy Jordan Roy-Byrne, CMT Once again we see another bearish piece on Gold in the WSJ. Rather than attack the author personally, we want to illustrate how the article is another example of the lack of any quality gold commentary both in general and in mainstream publications. First, its important to note why you won’t see much quality gold-related commentary (or any positive commentary) in publications such as the WSJ and the Economist. It’s because these publications can’t make any money (yet) selling gold-related advertisements. If I’m advertising something related to stocks or bonds, I don’t want to see any gold advertisements in that publication nor do I want to see any gold-friendly content. This is similar with the television networks. When CNBC can make lots of money advertising gold, you’ll see them become friendlier to gold. Why does Fox News talk up Gold? It’s because they are selling Gold advertisements. Secondly, most professionals in today’s world are biased towards stocks because they grew up during a historic bull market. The only people who really saw and experienced the last bull market in gold are 60+ years old now. Go back to the 1970s and most professionals were skeptical of stocks and saw the value of gold. Today’s 40-year old professional, just three years ago had barely seen anything other than low inflation and a stock and bond bull. This illustrates why it is pointless to compare stocks against gold. Both are different asset classes and there is a time and season for each. To try to say one is better than the other just shows bias. Gold bulls will start their comparison in 1971 while stock bulls will start their comparison in 1980. There is a time and season for everything. Moreover, it’s important to understand why the stock market rises over time. It is because market indexes have a survivor-ship bias. The Dow of today is not the Dow of 1980 or 1920. It is always changing as stronger companies replace weaker companies. Hence, it is designed to go higher over time. Now if Altucher wants to make a good argument against gold he should do some more research by attending our upcoming Webinar. He starts off picking 1980 (as a comparison date), which any stock bull does. That immediately shows bias. Secondly, he can’t figure out a “use” for gold. This is where stock bulls really fail. Centuries ago Aristotle said gold and silver were money because they fit the five properties of money. Kings and governments used gold for international transactions. JP Morgan, 100 years ago, said gold was money and nothing else. If Gold has no use or utility, then why do central banks own it? Why does the US own gold and no paper reserves? It is because gold is money and the ultimate backstop to our monetary system. Throughout history no currency other than gold and silver has kept its value. You can’t get a stock bull or gold bear to admit to this, because it defeats their central argument against gold. Altucher makes more mistakes. He talks about “recent spikes” in Gold due to hedge fund money. Where has this guy been? Gold has been rising for 10 years. It is actually up every year since 2000. Recent spikes aside, seems to me there were some buyers five and ten years ago. Gold has been rising for a variety of reasons but the main reason is that there is serious question about the creditworthiness of governments. That is the “fear trade” that no one cares to clarify or explain. Unless you think the US, Europe and Japan can grow out of their debt problem, then there is little reason to be bearish on gold. Every major debt crisis, credit contraction and depression has seen a rise in the real price of gold. Gold will continue to outperform until there is a new monetary system or until the world can grow its way out of the debt problem. This isn’t doom and gloom. It is probable based on the facts. The facts also tell us that stocks are not a good inflation hedge (as Altucher tries to assert). Look at the data. Commodities always outperform in periods of rising inflation. Altucher thinks that the stock market has grown greater than inflation, consistently for 200 years. How is this relevant to our lives? What is relevant is the next five or ten years. Stocks are in a bear market and will continue to suck wind for another five or seven years. In the meantime, precious metals are the only asset (aside from bonds) in a full-fledged bull market. Bears often say “everyone is bullish on gold” but this is simply not the case. The bears provide zero research to back this claim, because there isn’t any! Barely anyone owns precious metals. Take a look at the charts in my last editorial. Less than 1% of global funds are invested in the precious metals sector. By the way, that figure was 26% in 1981. Given that statistic, it is obvious that too much money is in stocks and bonds and not precious metals. Furthermore, it is obvious that we aren’t even at the outset of a big move into precious metals. Moreover, as we recently showed our subscribers in a premium research report, bull markets typically accelerate in the ninth or tenth year and then begin a final acceleration three to four years later. It is not difficult to see why we are on the cusp of acceleration in the precious metals. European banks still need to rollover $1.65 Trillion in debt by the end of 2011. Our big states are likely to need bailouts by the end of the year. The Fed will begin a new round of quantitative easing in a desperate attempt to help the banks recover so they can lend again. Furthermore, it is just a fact that the US, UK, Europe and Japan can’t grow their way out of the debt mess. A new currency regime is coming. It is only a question of when. It could be five years or ten years if we are lucky. Precious metals will continue to crush stocks for another five to seven years. However, a portfolio of quality emerging gold and silver stocks will outperform gold. Eventually silver will outperform gold. While we are bullish on the metals, we do agree with Altucher that silver is preferred and stocks are the way to go- as long as they are gold and silver stocks. Hence, while we analyze the short and long term developments in the metals (in our premium service) we also focus on about 50 gold and silver stocks. We would urge you to consider a free 14-day trial to our premium service. If you want to learn more about gold and silver and investing in the respective companies, then consider attending our free Webinar, sponsored by the CME Group. It is absolutely free and we promise it will be well worth your time. Jordan Roy-Byrne, CMT Jordan@thedailygold.com http://www.thedailygold.com/newsletter

]]> http://blog.jtcoins.com/more-clueless-mainstream-commentary-on-gold.html/feed 0 http://blog.jtcoins.com/preventing-your-government-from-stealing-your-gold.html http://blog.jtcoins.com/preventing-your-government-from-stealing-your-gold.html#comments Tue, 13 Jul 2010 19:45:13 +0000 Jim http://blog.jtcoins.com/?p=1719 Opinion

Preventing Your Government From Stealing Your Gold

By Jeff Nielson 07/12/10 – 12:23 PM EDT

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By Jeff Nielson of Bullion Bulls Canada

With the U.S. government having already stolen the gold of its own citizens once, a question which I have often been asked by American readers is, “Do I think the U.S. government will steal [their] gold again?” My reply has always been that in the absence of a gold standard there is no motive for simply confiscating all gold again.

With U.S. debts and liabilities exceeding $100 trillion, while all the gold inside the U.S. is worth considerably less than $100 billion (at current values) even a quadrupling of the gold price from today’s price would still make it totally inconsequential in restoring solvency to the U.S. government. If the government were to stoop to directly (and openly) stealing from its citizens, it would be much more likely to pillage their bank deposits, which are more than ten times as large as their gold holdings.

However, there is a further point which I should have made which relates to this issue. Specifically, even without formally “confiscating” our gold, all of our governments have already created a vehicle to steal a portion of our gold: our taxation systems. The pretext our governments use/will use to steal our gold (and silver) via taxation is “capital gains.” This is such a perversion of the concept of a “capital gain” that such tax treatment for gold and silver is simply evil.

Keep in mind that if you buy physical bullion and sell it for a profit that most of that gain is merely the money you didn’t lose by foolishly storing your wealth in our paper, “fiat” currencies. In other words, there was not a capital gain for your gold or silver, but more properly there was a capital loss on all paper currency.

Once we recognize this obvious truth, it leads to another, equally obvious truth. If the government believes it has the right to tax our capital gains we make in gold vs. paper, then it must allow claims made on the commensurate capital losses in our paper, “fiat” currencies versus gold.

In fact, our tax codes refuse to acknowledge those equally valid capital losses — and for an obvious reason: it would amount to receiving a tax deduction for inflation. Since inflation is the vehicle which governments and bankers use to steal our wealth in the first place (which creates the need to buy gold and silver), the last thing they want to do is to slow down that theft.

July 12, 2010, 12:18 PM EDT

Bloomberg:

By Pham-Duy Nguyen

July 12 (Bloomberg) — Gold futures fell as the dollar’s rally eroded demand for the precious metal as an alternative asset.

The greenback gained as much as 0.6 percent against a basket of six major currencies. Last week, investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, dropped 0.4 percent, ending a 10-week climb. Before today, gold prices gained 10 percent this year.

“The dollar is holding gold back,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “There isn’t much fear at the moment to make people rush in and buy gold.”

Gold futures for August delivery dropped $9.20, or 0.8 percent, to $1,200.60 an ounce at 12:12 p.m. on the Comex in New York.

Bets on higher prices by hedge-fund managers and other large speculators dropped. Speculative long positions outnumbered short positions by 209,042 contracts on the Comex in the week ended July 6, down 15 percent from a week earlier, government data showed.

“The highs for gold have been seen for the year,” said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois.

U.S. Borrowing Costs

Gold historically has moved inversely to the dollar. Futures reached a record $1,266.50 on June 21. Last month, the metal also rose to all-time highs in euros, U.K. pounds and Swiss francs amid Europe’s sovereign-debt woes.

“Gold is stronger in non-U.S. dollar terms than it is in dollar terms,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. Gartman has recommended selling euros and buying gold.

Gold will retreat once the Federal Reserve begins to raise borrowing costs, said Kaplan of Prospector Asset Management. The Fed has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 to spur growth.

“Gold has been strong because there’s nowhere else to put your money,” Kaplan said. “But there’s going to be a rise in interest rates fairly soon.”

Silver futures for September delivery fell 11.3 cents, or 0.6 percent, to $17.96 an ounce.

Platinum futures for October delivery declined $7.70, or 0.5 percent, to $1,525.50 an ounce on the New York Mercantile Exchange.

Palladium futures for September delivery dropped $1.95, or 0.4 percent, to $455 an ounce.

–With assistance by Nicholas Larkin in London. Editors: Patrick McKiernan, Steve Stroth

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net