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June 15, 2010
Alert 46-2
What’s Taking So Long?
And Other Important Questions.
Kevin Drost, the “answer man” here at ASI, returns with more answers to readers’ questions. If you have one for him, just click on the link at the bottom of this column and fire away.
Over the years I have purchased many gold and silver coins through ASI. I always get my coins, but recently it seems to be taking longer. Why would this be so? Roy V., Pittsburgh, Pennsylvania
Thank you very much for that question. You are not the only client to make that observation. It is true that, on average, it is taking longer to get orders to our customers. We regret that.
The reason for the longer delivery time is due in large part to the U.S. Postal Service’s reduction in staff and services. Fewer workers and more packages means, inevitably, longer delivery time.
Please don’t misunderstand: We have the utmost faith in the U.S. Postal Service and believe it is the safest, cheapest method of shipping merchandise to you. In almost thirty years of shipping bullion through the USPS, only one package was not delivered as promised. The Postal Service promptly paid for the lost merchandise.
We continue to research alternatives for shipping and handling of merchandise and will keep you posted when we find a more cost-effective and efficient means.
I am very confused as to the reporting requirements to the IRS when I purchase precious metals. Can you shed some light on this very murky and confusing issue? M. Powers, Sterling, Virginia
Let me answer that question clearly. There are NO reporting requirements when you purchase precious metals, regardless of the amount. There is no limit to the amount of precious metals you can own. In addition, precious metals dealers are not required to report any precious metals purchase, no matter the size. End of story … until you sell.
If you decide to sell your precious metals, and you choose to do so through a precious-metals dealer, he is required to file a 1099B for certain transactions. According to the IRS, the sale of any of the below items in one transaction mandates your dealer to file a 1099B:
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25 or more one-ounce Canadian Gold Maple Leafs, South African Krugerrands or Mexican Onzas. Gold Eagles or Buffalos from the U.S. Mint are exempt from this requirement.
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Gold bars totaling 1-kilo (32.15 troy ounces) or more.
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90% junk silver coins totaling $1000 face value or more. (But not Silver Eagles.)
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Silver bars totaling 1000 troy ounces or more.
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Platinum bars totaling 25 troy ounces or more.
It should also be noted that the sale of American Gold and Silver Eagles to a precious metals dealer does not trigger a reportable transaction, regardless of the size of the liquidation. Fractional gold coins of any origin are also not reportable when sold.
We should mention that, even if a dealer is not required to file a 1099B on your transaction, you do have an obligation to report and pay all appropriate taxes on any gains you enjoy. It is always advisable to consult your tax advisor before you sell.
My son recently told me that the 24-karat one- ounce gold Canadian Maple leaf was a better investment than the 22-karat American Gold Eagles I normally purchase from you. Is there any truth to this? Peter S. Moses, Lake, Washington
The American Gold Eagle is without a doubt the most popular gold bullion coin on earth. It is also the most liquid gold coin in the world. First minted in 1986, the Gold Eagle is minted in 22-karat gold, which has been the standard for U.S. gold coins since they were first produced in 1792.
Many people forget that 22-karat gold coinage has been the worldwide standard for gold coins for over 350 years. While the Canadian Gold Maple Leaf coin is an excellent investment, I believe that the narrow spreads in buy/sell prices, combined with the universal appeal of the American Eagles, give the Eagle an advantage.
Another advantage, which I mentioned above, is that precious metals dealers are not required to report when clients liquidate American Eagle coins. Sounds like your son can still learn a thing or two from you.
Kevin Drost
Manager, Preferred Client Relations
Please let me know if we can assist you in any of your precious metals or foreign-currency needs. To send me an email, just click here. Or call me at 1-800-831-0007.
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