Question about buying gold?

"To pay income tax on something you at least have to earn $50,000 from all sources." <- Really?!

Anyway, I think investing in gold is much different from most other investments at least in the US.

a) The gold market is heavily influenced by the futures markets. Gold seems to be traded on every two-bit futures exchange in the world. If you are buying and selling spot gold, know that it is also being priced by the futures market. This can cause some dramatic swings in the price of gold - for instance, gold miners often sell gold ahead in the futures market to sell their gold in the ground at a fixed price. Unfortunately for them that allows squeezes when they have marked to market losses on the short contracts but can't pull gold out of the ground fast enough to cover the losses. It also means that the no-arbitrage price of gold includes the gold lease rate (the rate you get for leasing gold to those guys who can't pull it out of the ground fast enough). If yu can't lease your gold, you are playing on an uneven playing field (so I will eat your lunch). Further, the tax treatment for gold futures is section 1256 which says that 40% of the gains are long-term even if you hold for 5 minutes. If you profit in the spot market, you need to do it for more than a year or the futures market is better. Gold is also way more liquid in the futures market than in any way you are likely to be able to trade it (except ETF's which just package gold futures).

b) Gold bullion and coins are considered collectibles by the IRS so the long term capital gains rate is 28% not 15%. That's a big hurdle.

c) Storing gold is a pain in the butt for most people. If you own enough gold, like taking delivery under a futures contract, you get a receipt for gold in a vault somewhere, you lease it and get positive cash flow. At your house, you do what with it? I knew a very rich hedge fund owner who used to use a gold bar as a door stop but for most of us it's a liability to have around the house. You need to insure it and keep it safe.

d) Despite the earlier "the dollar goes down" comment, "the dollar goes down" means the dollar goes down relative to something. It might mean the Euro or the Yen or it might mean gold. The dollar going down might mean exactly that gold went up. Gold still has some unique standing as a global currency as gold reserves are part of a nations capital account.

e) Gold carries some political risk. A noted hedge fund owner in CT who just ran for Congress whose name will be left unmentioned buys gold bullion and stores it in New Zealand in part because he believes that the political risk of confiscation is high in the US. The govt has an interest in people using fiat money. If gold starts becoming the coin of the realm the govt will shut that down and it might be by making it illegal to own gold.

f) John Maynard Keynes once said something like the biggest waste of human effort in the world is going to exotic, dangerous, and faraway places to dig up gold from underground then ship it halfway around the world to bury it back underground in govt vaults. The fact is that govt have tons of it and if they choose to start influencing the price of gold by selling it, you're wrecked.

g) Everyone who has never invested in their lives wants to buy gold. I'm getting set to sell like crazy. When the least informed, most risk averse people come to the party, the party is over and gold will be in freefall. We are close.

Edit Oh yeah "if the price of the house goes up, you have to pay income tax." is not true and keep quiet about that because Obama might think it's a good idea.

First, you don't pay income tax on the gain from your residence. You might pay capital gains tax if you sell that house and don't buy another to live in.

Gold is an investment asset, just like stocks or bonds. If you buy it and sell it within 12 months you would pay short term cap gains, which is the same as the ordinary income tax rate. If you hold it for longer than 12 months you would pay long term cap gains tax, which is generally less than your ordinary income rate. What happens to the dollar has absolutely no effect on your tax situation. Have you ever invested before?

Sometimes you pay income tax on earnings - but never pay income tax on house - even though it is an investment. You may pay a Property tax on a house, and you may pay taxes on income if you rent your house out. You may pay an income tax on a house if you sell it for more than you paid for it - but only if you've owned it for less than 5 years. As far a Gold as an investment - if you buy gold today for 12.00 an gram or invest in a gold stock - you would only pay an income tax on any profit from the sale when you sold your investment. I imagine now that someone has offered to sell you a gold coin, and has told you that the price of gold is going up up up! True, but the coin will not double in value for at least 10 years from now and if you sold that coin (and earned less than 50.00 in profit - that would not be added to your income tax liability. To pay income tax on something you at least have to earn $50,000 from all sources.

BUT BUT BUT..... If you buy Currency Grade Pure Gold Bullion, you aren’t subject to any Capital Gains Tax either!!! BOOM! :)

thats why its the only type of god i will buy, and also because it is an “asset” of a government created coin, it is also not seizable by an government, when they decide to make another round of taking all their citizens gold (just like they have already done a few times in history, one of which in my lifetime)

If you want to buy gold, there is absolutely no better option then to buy Currency Grade 999.9% LBMA Certified Pure Gold Bullion!!... no taxes to pay on it ever, and the government can’t come take it away ever, and the company i get mine form gives free off-shore account to anyone who desires/needs that service. whether temporary or permanent.

ill provide the link to the company i go with, for any passerby’s perhaps seeking a reputable company :)

http://bit.ly/1uzxR1h

hope that helped someone

If you sell Gold, you have to pay capital gains tax on it. The tax is usually higher for gold than for stocks and bonds.