Financial Advisor Michael Canet, JD LLM Discusses What You Should Know Before You Buy Gold
Glen Burnie, MD – March 4, 2013 – Michael Canet, JD LLM, Founder of Prostatis Financial Advisors Group LLC, recently discussed the difference between reportable and non-reportable gold investment and why the distinction is important. Mr. Canet 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. Canet 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 28% (Because bullion and coins are collectibles, the long term capital gain realized when an investor sells any of these forms of gold is subject to a maximum federal rate of 28% rather than the usual 20% that applies to realized gain in publicly-traded securities or non-commercial real estate). 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!
To learn more about Michael Canet, JD LLM and Prostatis Financial Advisors Group LLC, visit http://www.prostatisadvisors.com or call 410-863-1040.
About Michael Canet:
Michael Canet is the author of Amazon #1 best-seller, Surviving the Perfect Storm: How to Create a Financial Plan That Will Withstand Any Crisis and can be heard every Thursday night from 6-7 pm as host of the Savvy Investor Radio on AM680 WCBM. His television show, The Savvy Investor, airs weekly on ABC, NBC, and The Live Well Network. He can be heard every Saturday at 9am on AM 730 in the DC area as the financial expert on Financial Safari Radio. Mr. Canet can also be heard on WFED 1500 AM Sunday mornings at 8AM. He has been published in The Baltimore Sun and Fox News and appears locally on NBC and ABC affiliates. Everybody deserves a sound retirement and there are no shortages of good opinions, see the professionals at Prostatis Financial Advisors Group for your personal retirement plan.
Michael and his team at Prostatis Financial Advisors Group LLC have been providing comprehensive financial planning to their clients for more than 20 years. They do this by taking a holistic approach to the estate, tax, and financial planning process. It is not how much risk you can tolerate, rather, it is how much risk must you take to accomplish your goals. After all, it isn’t how much you make; it is how much you keep. With a legal background in estate planning, a Master’s Degree in taxation, and being a financial planner – Michael has the necessary skills to guide his clients into and through retirement.
With four offices, Michael Canet and his team serve clients in Maryland, DC, and Northern Virginia as well as retirees across the country.