Buying Reporting Requirements
Investing in precious metals can be a confusing experience when you are just beginning, but just like with anything else, a little knowledge can go a long way.
When the client is purchasing precious metals in any quantity, you are not required to report the specific transaction to any governing agency, unless the client pays in cash, for a total of more than $10,000, in which case, the dealer must fill out IRS form 8300.
Checks and bank wire transfers do not require any reporting by the bullion dealer.
1099 Exempt Gold Bullion
The following coins are exempt from form 1099 reporting requirements in any quantity:
- American Gold Eagle Coins
- American Gold Buffalo Coins
- Gold Austrian Philharmonic Coins
1099 Required Gold Bullion
The following coins require form 1099 reporting in quantities of 25 ounces or more:
- Canadian Gold Maples
- South African Krugerrands
- Chinese Panda Gold Coins
- Gold Bars larger than 24oz
1099 Exempt Silver Bullion
The following coins are exempt from form 1099 reporting requirements in any quantity:
- American Silver Eagle Coins
- Canadian Maple Leaf Silver Coins
- Austrian Philharmonic Silver Coins
- Mexican Libertad Silver Coins
- Chinese Panda Silver Coins
1099 Required Silver Bullion
The following coins require form 1099 reporting in quantities of 1000 ounces or more:
- .999 fine silver bullion bars (any sizes)
- .999 fine silver bullion rounds (any sizes)
- $1000 face value bag or more of 90% silver coins (50 cents, 25 cents, 10 cents)
The above information applies only to the reporting requirements that your coin dealer should legally be following. Please consult with your CPA in regards to any reporting requirements, you are required to follow.
Precious Metals Investment Options
At Polyak Precious Metals, we provide guidance in helping you choose the best way to invest in various precious metals. As investors, it can be quite a tricky process to decide the best way of investing in precious metals. There is no right or wrong way to invest in precious metals, there are only preferences and we help you make the decision that matches your needs.
It is known that the fiscal condition of the United States is deteriorating causing the national debt to hit rock bottom, affecting interest rates. This is despite the easy money policy enacted by the Federal Reserve.
In this scenario, the stellar performance of gold and silver must be considered. Many financial experts recommended the investment of 5-20% of an individual’s assets on precious metals, for increased returns.
Precious metals exchange-traded funds (ETFs) are designed to move in sync with the price of gold. They are traded on the major stock exchanges, including London, Paris, and New York.
Many investors choose this option to invest because they feel that there is an advantage of investing in precious metals, without having to worry about the burden of storing it.
However, many experts are skeptical about the amount of gold these funds actually contain, and whether or not gold can be delivered to investors in the case of a run on the metal, or another global panic.
Many analysts recommend investing in gold mining companies’ stocks or mutual funds involving these stocks. They claim the advantages of these are that they follow precious metals prices closely enough. This is while the current long-term capital gains’ tax on these investments is lower than that of physical precious metals.
However, the risks far outweigh the potential rewards. It could be that you don’t know exactly what you are investing in, if the companies are managed poorly. The profits can drop and your stocks will go down in value, while gold prices may very well go up.
Also, this investment option rarely moves in sync with precious metal prices. And, if the overall stock market is down, there is a good chance that your stocks will be down too, even if gold is up.
A futures contract is simply a deal to trade gold at terms (i.e. prices and amounts) decided now, with a planned future delivery date, usually three months. Many active traders prefer this method because it is easy and convenient to trade large amounts of precious metals at the push of a button, or a phone call, than handling the physical commodity.
However, this is a tool for short-term speculators, and people who track the markets full-time, to make money with heavy margin borrowing. There is only a small amount of people who have the time and resources to devote to futures trading, and even a large percentage of them end up under-performing the general gold market, due to its speculative nature.
Also, the heavy margin activity involved in this type of trading can make the losses pile up very quickly.
This is the tangible ownership of precious metals. This is owning a physical asset, that you can maintain possession of, at all times, and see, feel, and touch.
The main advantages of choosing this investment option are physical ownership of your investment that can be safely stored at a vault, safety deposit box, home or office safe, or sent to a depository institution.
This option makes it significantly easier to hold an investment for a very long time. It makes it much easier for those who wish to pass on their wealth to children, and avoid the complications of transferring paper investments such as stocks or bonds.
Privacy and lack of reporting requirements standard with most other forms of investment makes this a secure process. There are essentially no reporting requirements to purchase physical precious metals.
The other advantage of physical holdings is that the premiums on physical precious metals appreciate over time that cannot be realized, otherwise.
As demand increases for gold and silver, the premiums which are paid for specific coins can appreciate as well. For example, South African Krugerrands sometimes become scarce in the market place, and dealers are willing to pay a higher premium for these specific one ounce coins based on the laws of supply and demand.
Physical holdings are the ultimate protection from bank failures, hyperinflation, and other worst-case scenarios. When people purchase insurance for their homes, they don’t anticipate their homes to be destroyed.
But most people understand that they need this type of insurance to protect them in case something bad happens. Precious metals are the same, and they protect citizens in case something happens to the government fiat currency system the world is currently running on.
There have been countless examples throughout history of governments printing too much money, and devaluing the legal tender currency. Although we all hope that this never happens here in the United States, people need to own an asset that will help protect at least a portion of their wealth from forces outside of their control.
We believe that precious metals should be a long-term investment. Most people don’t have the time or patience to actively manage their investments on an everyday basis.
Physical ownership is the best option for those individuals who would like to have a portion of their portfolio in precious metals for the long term, preferably at least for 10 years.
Although it is extremely difficult to predict the short-term price movements of the precious metals markets, there is a very good chance that gold and silver will continue to appreciate in value over the long-term, based on the history of the last 5,000 years.
We work with clients to help them achieve their investment goals, while offering the most competitive prices in the industry.
In the early days of human history, trade and economic activity was essentially based on barter. People would trade pigs for wheat, or eggs for wood. This became an inefficient way to transact as economies became more advanced.
First of all, barter meant that there must always be a coincidence of wants for a transaction to occur. A pig farmer, who needs wheat, must find a wheat farmer who needs pigs.
After several failed attempts at making perishable, unsustainable items into a medium of exchange, gold and silver became the preferred money of many developed societies.
There are three vital traits that make gold an excellent medium of exchange - divisibility, scarcity, and durability.
Gold is easy to divide into smaller denominations. Pure gold is very soft and malleable, which gives it a great advantage over other metals.
There is only a certain amount of gold in existence. It isn’t easy to find gold or mine for gold, and governments in the past couldn’t easily manipulate the supply of gold, unless using fraudulent methods such as debasing the metal used in currency.
Most of the gold that has ever been mined is still in existence today. Gold doesn’t go bad or spoiled, it doesn’t tarnish, and it can last for a very long time. Understanding the importance of these three traits will help one understand the role of gold in a sustainably growing economy.
Our modern society has adopted a medium of exchange which isn’t backed by any tangible asset, where supply can be manipulated by governments to achieve certain goals, such as unsustainable war and entitlement spending.
Throughout all of history there has never been a fiat currency which hasn’t ended in failure. Governments have financed their lavish expenditures by accumulating debt and simply debasing the currency to make good on those debts.
The United States government is no different; they’ve let our national debt grow to the point where it’s almost impossible to service. The U.S. Government and Federal Reserve have embarked on a campaign to increase inflation of the U.S. dollar in the name of economic growth.
Whether or not you believe the largest national debt in the history of the world will lead to a Weimar Germany style hyperinflation, or even an annual inflation rate of 5%, gold is an excellent hedge and store of value.
Remember, 100 years ago an ounce of gold could buy you a nice suit. Today an ounce of gold can buy you a nice suit and then some.
Many folks just dismiss doomsday type predictions as conspiracy theories, which they may well be. But in the event that a hurricane or an earthquake hits your hometown, you would wish you heeded these warnings and stayed prepared.
Some people build underground bunkers, others grow their own food and are 100% self-sufficient. But many of us don’t have the time or the means to devote to these activities.
Buying gold and silver will help you to trade for goods and services that your family may desperately need if ATM’s are down, or if paper money has lost all its intrinsic value altogether.
We don’t buy insurance because we expect an unfortunate event to take place, but we are prepared in case it does happen.