When Does a Gold Purchase Become a Government Record?

0:00Knowing where a private transaction becomes a reportable transaction is part of understanding what you actually own and what dependencies still sit between you and it. Really, the goal is not to hide. It's to understand the rules accurately enough to make informed choices. That's what we're all about. If you are asked me a really good question, Lynette, will you please speak to the new government rules requiring identification for metals, purchases and of course the 28% tax? Where is privacy? Where is protection? And before we get upset about a new rule, I want to separate a couple of things that are getting kind of mixed together because I went looking and I cannot find any new federal rule requiring everyone who buys gold or silver to show identification for every purchase.

1:06There are reporting rules and of course we always have to comply with know your customer rules and there's a new Finson proposal involving precious metals dealers but those aren't the same thing. So first, the $10,000 cash rule. If a business receives more than $10,000 in cash in one transaction or related transactions, it generally has to file form 8300 with the government. That form includes identifying information about the person making the payment. But this is important because that rule is not new. The reporting requirement has existed for decades. What changed more recently was that many businesses became required to file the form electronically. And cash now would be this stuff. And cash has a specific legal definition here.

2:07In certain retail transactions involving collectibles like these and that includes metals and coins, some cashier checks, money orders, bank drafts and travelers checks of $10,000 or less can also count toward the reporting rules. A personal check drawn on your own account is not treated as cash or for that form 8300 purposes. Now here's what I think some of the current concern may be coming from. Johnson has a new proposed rule updating anti-money laundering requirements across financial institutions, including dealers in precious metals, precious stones and jewels. But it's a proposal. It's not a final rule at least yet. And when I went into the actual proposed language, it requires covered dealers to have risk-based

3:10anti-money laundering programs and specifically talks about evaluating risks involving customers and directing more attention toward higher risk customers and activities. But what I don't see in that proposal is a new blanket federal requirement saying every person buying older silver must now present identification. In fact, the proposed precious metal section updates the AML program rule 1027.210. It does not add the kind of separate customer identification program rule that exists for banks, broker dealers and some other financial institutions. Individual dealers like us can still have their own identification or compliance policies, of course. But now let's deal with the 28% tax because that wording can sound much scarier than what

4:15the tax code is actually saying. There isn't a flat 28% federal tax for buying physical gold or silver. We're actually even for selling it. For federal capital gains purposes, gold, silver and platinum bullion and many coins are classified as collectibles. And that classification, you know, we talk about it all the time. That actually matters. So if you sell a collectible after holding it more than one year and have a gain, that long-term gain falls into the 28% maximum collectibles capital gains category. Maximum is the important word. The IRS specifically says that if your regular tax calculation produces a lower rate, the lower-cale calculation applies. So this is not by $10,000 of gold and owe the government $2,800.

5:18It's taxation of a gain when you sell or liquidate and 28% is the maximum long-term collectible rate. And I will tell you that we are not legally obligated on your behalf to report most any of the transactions. I mean, there's some differences. But you get to deal with that tax event the way you and your accountant see fit to do it. But this is what I think the viewers, bigger question. It's still a good one. And that is what is privacy. Where is that? Is privacy and financial transactions increasingly isn't a simple yes or no question? It really depends on how you transact, the size of the transaction, which reporting thresholds you cross, and which payment rails you use, and what compliance obligations the businesses

6:19between you and the assets have. That's the part that's really worth understanding. Not because every gold purchase has suddenly been registered with the government, because it hasn't. But because knowing where a private transaction becomes a reportable transaction is part of understanding what you actually own and what dependencies still sit between you and it. So ask your dealer what information they collect when they're legally required to collect it and why and keep good records of your own cost basis. And please don't try to break transactions apart to evade a reporting requirement. That's very different issue and can create serious legal problems. So really the goal is not to hide. It's to understand the rules accurately enough to make informed choices.

7:21That's what we're all about. And thank you so much to the viewer who asked that question because this is exactly the kind of thing that's worth checking before a rumor turns into everybody knows. And thank you for being part of this conversation. And until next week, wherever you are in the world, stay safe, stay strong, and remember sovereignty begins with what you choose to earn.