Financial Advisor Peter D’Arruda Discusses What You Should Know Before You Buy Gold
Cary, NC – March 4, 2013 – Peter D’Arruda, President of Capital Financial Advisory Group, LLC, recently discussed the difference between reportable and non-reportable gold investment and why the distinction is important. Mr. D’Arruda explains:
There are tax consequences to getting this wrong and there are other government issues to consider. The key discussion should be: What is a reportable vs. a non-reportable commodity purchase? Gold & Silver Bullion of any size is a REPORTABLE commodity. So, if you are fearful of the economy, or a possible future demise of the dollar, this money is “on the radar.”
In 1933, the U.S. dollar was convertible to gold, rendering the government incapable of printing more money, as it is apt to do today. With fiscal discipline enforced by this convertibility, our faithful politicians (even back then) did the next best thing — they promptly confiscated American citizens’ gold, via executive order 6102 (signed by Franklin Delano Roosevelt), while remunerating them for the then-fair market value of $20.67 an ounce. Upon the successful completion of its gold confiscation, the U.S. government adopted the Gold Reserve Act in January 1934, which revalued the nominal price of gold from $20.67 to $35.00 per troy ounce. What a risk-free profitable trade for the federal reserve!
Mr. D’Arruda continued by providing an anecdote explaining why it’s important to ask whether a purchase is reportable or non-reportable:
Let’s say you have a shady seller who sells you a 32.15 oz Johnson Gold Kilo Bar for $56,100 today and does NOT report it as required. Five years later gold hits $5,000 an ounce (awesome for you !), BUT that dealer is gone. With more governmental enforcement, all buyers of gold will report (because they will face this same tax nightmare on their purchase if they don’t) and they enter you into the system with a $160,750 sale. What’s your capital gain?
Since you “worked” the system and stayed off the radar by getting a seller to not report; your basis is $0.00. Now when you sell you are taxed on a $160,750 gain – this is NOT subject to debate – this is fact and it is easily researched – you’ll pay 20% (or, the then current capital gain tax rate). Buying reportable commodities sets you up for tax scrutiny (FYI, I am not suggesting you buy non-reportable metals to avoid taxes – you are subject to gains and losses, but, the record keeping is your responsibility).
In addition, as you can see from above, the government tracks reportable commodities and the last go around proved that the seller (the American public) got a lousy deal. Does it make sense to buy gold coins? Please don’t hesitate to contact me to help you understand your best options!
For more information on this topic, or to learn how Peter D’Arruda can help you, please visit www.coachpeteradio.com.
About Peter D’Arruda:
Peter D’Arruda is a Registered Financial Consultant & Investment Advisor. He is the author of four popular financial books and his radio show, “Coach Pete’s Financial Safari”, is heard weekly on radio stations across the country.
D’Arruda is a highly sought after speaker, and each year, he dedicates time to educating both investors and financial professionals. He also continues his own education by attending advanced planning and industry meetings annually to improve his own knowledge base.
D’Arruda has been featured for his insight and commentary on television and in many national articles and publications such as Forbes, CNBC, Fox Business Network, The Wall Street Journal, Newsweek, SmartMoney, Barron’s Magazine, among others. He is the author of four books, the latest being 7 Baby Steps to a Ridiculously Reliable Retirement Income, which helps translate the complex financial world into clear and easy to understand English.