Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
China has taken yet another step to transform the yuan into the dominant global currency, a long-term initiative that could ultimately dethrone the dollar as the world's top unit of exchange.
In the last four months alone, China has signed currency swap agreements worth more than $95 billion (650 billion yuan) with an array of nations – including: Argentina, South Korea, Indonesia, Malaysia, Belarus and Hong Kong – that are only too glad to move away from the increasingly shaky U.S. dollar.
For Westerners who are struggling to come to terms with the notion of a disarrayed dollar, the thought of oil, gold or other commodities being priced in yuan instead of dollars has to seem about as likely as having another country put a man on the moon.
But the Chinese yuan is already well on its way to becoming that globally accepted standard unit of exchange and the proverbial genie, as they say, is out of the bottle. In fact, I'd even go so far as to say the dollar's days of dominance are numbered and with each new round of bailout chicanery, the clock is winding down ever faster.
Asia's Long-Term View
In such Asian markets as Japan, Hong Kong and Mainland China, the long-term planning that's an anathema to Corporate America is actually standard fare. During the height of Japan's dominance in the 1980s, the Western business press – with a touch of derision – wrote about how some Japanese companies routinely formulated business plans with durations of 100 years or more (while working in Asia early in my career, I actually even contributed to several such plans … but that's another story for another time).
That's neither here nor there to most people who note smugly that Japan is getting its comeuppance. But what they don't understand is that Japan is not alone. In fact, many people I talk with are shocked to learn that at a time when the West is still busy handing out Band-Aids in an attempt to deal with the greatest financial crisis on record, China has been quietly and shrewdly reinventing itself with the same kind of long-term vision.
Take commodities, for example. While companies in the United States, Great Britain and Europe are being forced to shed promising assets in order to compensate for massive losses or to pay down debt, cash-rich China has been able to operate as a buyer in a buyer's market. While the rest of the world has interpreted this as a sign that China's interested in buying the things it needs to grow, what they have not understood is that China's also interested in using physical assets as a source of "currency" that offsets an increasingly eviscerated U.S. dollar.
This is actually a double-whammy of sorts, for while the rest of the world has been grappling with the global slowdown, China has been locking up supplies of commodities that are only going to become more scarce (and more valuable) as global demand escalates.
In fact, as I've suggested for months, now, China isn't just going to consume those assets; it's going to use them as part of the same long-term vision it's been staking out with regard to its own currency, the yuan, which it fully intends to boost in status to the point where it becomes an internationally accepted currency.
The Once-Dominant Dollar
Even now, despite the travails of the U.S. economy, the dollar remains the world's most widely held reserve currency and, as such, is the standard unit of exchange in most international transactions. In fact, many non-U.S. firms (such as Airbus SAS) actually price their manufactured products in dollars. And the dollar is the de facto unit of pricing for such commodities as oil (hence the term "petrodollar"). Several countries even use it as their "official" currency.
But the global financial crisis is threatening that dominance.
The United States has already "injected" into the world economy trillions of dollars that are collectively worth more than 60% of this country's entire gross domestic product (GDP). And the prospect of still more injections for California, GMAC LLC and other "national" interests is extremely worrisome – and not just to millions of Americans, either. If Washington stays on this path, the result will be a currency crisis the likes of which few are capable of imagining and a near-complete devaluation of the once-almighty U.S. dollar.
Ironically, both events will only further embolden China, speeding up its efforts to boost the yuan's international acceptance.
The "New" Yuan
While some experts may question Beijing's motives, it's hard to question China's long-term strategic vision, since the country is actually being forced to take these steps that ensure its own survival. Unfortunately, our leaders in Washington don't seem to understand this, so they're only making matters worse – when they instead could be actively working with China and the world community on this instead of summarily ignoring the fact that the yuan may well be the world's next reserve currency.
At the very least, China's currency is likely to be granted a global status on par with the current major currency trading pairs for purposes of settling international transactions, whether the West wants that to happen or not.
I've outlined this scenario many times in recent years and, quite frankly, too often received blank stares in return. Most folks here in the West just aren't prepared to deal with the idea that the U.S. dollar could be finished and that another currency could replace it after more than 60 years of global dominance. But they better get used to the idea – and in a hurry.
China is acutely aware that not having international currency convertibility hampers both its development and – thanks to the ongoing financial crisis – its potential survival. Not only has China been forced to accept huge reserves built upon previous trade growth (its $2 trillion in reserves is an all-time record), but its own policies have contributed to its relative inability to flex its capital-market muscles. That's especially true in transactions involving U.S. dollar/yuan exchange rates.
What for us sounds quite theoretical in nature represents a very real problem for businessmen such as Dong Xianbin, the chairman of the Guangxi Sanhuan Enterprise Group Holding Co. Ltd. He estimates that he's lost more than 150 million yuan (about $22 million at current exchange rates) on international trade in the past three years alone because of exchange rate changes between the dollar and the yuan. So he's keen to see yuan-based transactions that will reduce exchange-rate risks, or eliminate them entirely. And he's not alone. Thousands of Chinese companies are chomping at the bit for the same reasons.
As a nation, not having a universally accepted currency is a huge issue. China's record reserves are now at risk thanks to the U.S. government's bailout boondoggle, because each new greenback printed debases the value of every other dollar out there, including the ones China holds.
Historically, Beijing sought to mitigate that risk by diversifying its holdings into other currencies most notably the European euro and the Swiss franc, for instance. But now China's facing the kinds of problems that massive mutual funds closer to home must deal with when they hold a disproportionately large amount of money: China's reserve fund is so massive that there's literally no other single currency that can absorb all that liquidity. So even if China wanted to diversify more aggressively, it's going to be hard pressed to do so.
Incidentally, this is precisely why China's so-called "nuclear option" will never become more than a theory bandied about by conspiracy buffs. Under such a scenario, China will either "dump" its dollars, and/or stop buying them, causing the value of the greenback to plummet. China might start selling, but there literally is not another currency on the planet that could absorb a wholesale liquidation.
Therefore, the reality is that China needs to have the U.S. boost the value of the dollar – even as the United States needs to have China do all it can to maintain the dollar's value.
Shopping for Commodities
At this point in time, China essentially has two alternatives:
- It can seek out other stores of value, such as natural resources, which are highly liquid and reasonably "deep" in global markets, but which can also be very volatile from a pricing standpoint.
- Or it can elevate the credibility of its own currency in the international financial markets and effectively remove the exchange rate risks associated with its own partially blocked yuan.
Never one to leave anything to chance, China is pursuing both strategies. For instance, China's been buying gold like there's no tomorrow – and is looking to add to its holdings. Since 2003, China has boosted its holdings of gold by 73% to an estimated 1,054 metric tons, with an approximate value of $31.3 billion. This makes China the fifth-largest holder of gold on the planet, followed by the United States, Greater Europe, and Switzerland.
China's also gone global in its hunt for oil – which, of course, is the only other global "currency" truly in international demand.
While there's a real benefit to having locked up supplies of commodities, they aren't an ideal store of value. And that suggests that what China really needs to do is elevate the global prominence of its own currency at the same time, whether U.S. leaders aid the process or not.
History shows that strong economies tend to have strong currencies. And the actions that I've reported on recently from China – the cross-Straits agreements reached between China and Taiwan, the Hong Kong yuan-trade agreements and the "yuan carry trade," to name a few – only reinforce the effort China is putting forth to achieve this goal.
Speaking of goals … there are obviously plenty of Doubting Thomases on this issue – but they were around years ago before China announced that it wants to put a man on the moon by 2020.
[Editor's Note: Money Morning Investment Director Keith Fitz-Gerald just recently completed his investing tour of China. His conclusion: Every investor has to have a China strategy. As this essay shows, the global financial crisis has re-written the rules for global investing. It's also generating a whole host of new profit plays, having created what Fitz-Gerald likes to call "The Golden Age of Wealth Creation ." Investors who ignore this "New Reality" will get left behind. But those with the courage and conviction to press ahead could well find this to be the greatest profit opportunity of their lifetime. China's just one such opportunity. To find out about the others, please click here .]
.
News and Related Story Links:
- Money Morning Special Report:
How the New 'Yuan Carry Trade' Will Add to China's Global Muscle, and Possibly Even Accelerate the U.S. Recovery. - Wikipedia:
Currency Swap. - Money Morning News Analysis:
China Flexes its Muscles and Finds Support in a Bid to Dump the Dollar as the World's Main Reserve Currency. - Wikipedia:
The Renminbi. - Money Morning News:
What Companies Are Profiting From China's Commodities Crusade? - Wikipedia:
Petrodollar. - Money Morning Market Analysis:
Profit from China's 'Nuclear Option.' - Money Morning News Analysis:
China/Taiwan Investment Accords Will Lead to Profit Plays for Investors. - News Sophisticate:
China: Man on the Moon by 2020? First Lunar Orbiter Launch Successful.
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.
How are options on these ETF's treated for tax purposes?
Also, ETFs that hold physical commodiities, like GLD and SLV, do not have the K-1 problem because they are not organized as partnerships.
If you hold these funds in an IRA or a Roth IRA will there still be a K-1 and tax issues?
If you purchase gold within a ROTH IRA there is no tax when you withdraw funds for use…per the rules of ROTH IRAs. You buy with already taxed dollars and pay no tax on earnings.
This is a perfect example of how the government is trying to clamp down on entrepreneurs. Sure, they may be able to tax profits, drive companies out of business with tons of regulations, tax gold profits, tax anything that benefits someone other than them and their friends.
This is all true.
But (so far) they can't stop people from saying enough is enough and leaving the country. I imagine that right around the time that they do try to stop people from leaving, they "The Government" will be facing serious problems @ home.
so if this is the case then it would be seen as likely that many will abandon eventurally these ETF's and go to more 'traditional' stock investments.
Its funny,
this kind of argument always put forward by people who missed the bus intially.
you always pay texes on 'profits', whatever may be the defination in texman's books.
and gold buyers will remain winner for very long.
If gold is a stupid investment, first seller should imerge from Fort Knox :)
Good answer…US owns more gold in Ft Knox (8100) tons than any other Country….
or so they claim. Bullion (tungsten/gold) has not been seen (audited) for decades…
If you are a non-resident allien will there still be a K-1 and tax issues?
Central Fund of Canada (CEF) which only holds approximately equal quantities of gold and silver is treated differently from GLD, etc. since it pays a cash dividend. Any profits from sale of the funds shares is treated as a capital gain, and taxed accordingly. There are special tax forms that must be submitted, and the fund does usually trade at a premium over the value of its metal holdings.
There is a 15% tax in Cnanada…….
I would like someone to discuss the IRS treatment of losses in regard to K-1s. As I understand the situation which I could be completely wrong the loss reported on a K-1 can only be used against gains on K-1s and the loss cannot be used against income other than K-1 income. Losses have to be carried back or forward to years when a K-1 gain was incurred. Also how does an investor handle the lost on the sale of an ETF such as USO or UNG and still have at year end a loss on the K-1 with no other K-1 gains to offset the K-1 loss? There are IRS instructions included with the K-1s when they are sent out(they are usually sent way late) but as usual for the common person such as I they are clear as mud as to the treatment of losses. Of course any interest income included in a K-1 is always reportable income. There should be a warning in all brokerage firms warning investors about the tax problems associated with ETFs that are LLCs. There are many investment advisory idiots(for the lack of a better word) that push these type of ETFs either not caring what they are pushing or they are just plain dumb as to the tax problems.
This is yet another reason to deal with gold the way my friends do. For several years, whenever they receive their paychecks, they pay their mortgage or rent in dollars, then convert most of the rest into physical gold.
The key is, they never sell their gold. Instead, when they want to buy something, they exchange the appropriate number of 1oz gold bars (or coins) for whatever they want to buy. This worked surprisingly well. Once they figured out a few techniques to improve their odds to convince reluctant people and stores to accept gold, they found they could exchange gold for more than 90% of the products they would have had to buy otherwise.
It has been amazing to watch how they convinced virtually every store to exchange products for gold. Lately, however, resistance to gold has turned into anxious, happy acceptance of gold, as everyone realizes the fiat dollar scam is unraveling. You should see other customers just stare when my friends exchange a tiny gold bar for a huge pile of goodies at Fry's for example — a sight to behold. :-)
This is a great way to avoid all these problems. Because your savings are held in gold, you protect the value of your savings from destruction by the elitist gangster banksters in the FederalReserve and government. When you exchange your gold for products you want or need, this is an equal exchange (and unrecorded too, since they never provide their real names, much less any form of legal ID).
Forget paper — paper is the most astronomical scam in the history of mankind (paper money, paper stocks, paper bonds, paper futures, paper options, every paper instrument). Though you don't lose your shirt every time, you do feed the beasts that have utterly destroyed civilization, and turned most folks into lifetime debt slaves.
As an aside, few folks understand how much lower prices would be if "fiat debt" did not exist. The full price of a house, for example, would be less than the 20% down payment on a conventional mortgage. All products would be vastly cheaper, and careful analysis implies the average products would be 8 times cheaper (cost 12% as much as they do now). This is the main reason two parents must work to survive, when only one needed to work a generation ago. This is the main way the elitist gangsters have stolen the world from honest productive folks. They have the power to simply print money at zero cost, then loan it to working folks and pocket the interest they charge. What a scam! But even worse is the phenomenon I mention – that eventually the cost of all products rises to the point where they can "afford" the monthly interest payments on the items they buy where previously ONE of those payments was the entire price of the item!
Get physical gold, and never "sell it" in the conventional sense. In other words, throw off the shackles and return to the simple life. All you need to remember is "money == gold". You can even find this in the constitution (never repealed).
In gold we trust.
UNLESS SOMEONE DRILLS THE BARS?
I believe your horror stories (nasty surprises) are somewhat misleading – all those investors / traders would adjust the basis in their positions by an amount equal to the gains / losses income / expense reported on the K-1. This makes the k-1 income / loss a wash matching the real world.
e.g. trading purchase price $1000, selling price $900 (trading loss=$100), interest reported on K-1 = $100. REPORTED: proceeds from sale = $900, adjusted basis = $1,000 + $100 = $1100 => loss REPORTED = $200
There is a way to sell your gold holdings without having to pay a 28% tax on the capital gain just as there is a way to sell real estate and stocks without paying a tax on the capital gain.
I've written about it in my book, "Buy Gold Safely."
Also Dave (comment #6), taking possession of gold doesn't preclude you from paying taxes on the gain when you sell it. You are on the honor system to do so. Whether or not the government knows about it doesn't excuse you from paying the tax.
My book, which also exposes gold dealers can be found at http://safelybuygold.com/gc.html
It's not cheap, but neither is the tax you pay on gold profits.
Disclosure: I don't sell gold, I just write about it.
The IRS has made an exception for gold and silver ETFs held in an IRA. On August 10, 2007, the IRS privately ruled that shares of ETFs in the form of a trust that mirror the price of physical gold and silver do not constitute an acquisition of a collectible if they are acquired in an IRA. As a result, the IRS does not consider money invested in shares of gold and silver ETFs within an IRA to be a distribution subject to an early withdrawal penalty.(1)
This is really good news because it means: (1) you can hold shares of gold and silver ETFs in an IRA, (2) the money you’ve invested in gold or silver ETFs in an IRA won’t be considered an early withdrawal, and (3) you won’t be subject to the 28% long-term tax rate on collectibles on those shares. So there’s no reason (at least at this time) to worry about how to avoid the collectibles tax rate when holding gold or silver ETF shares in an IRA. It doesn’t apply.
Susan–thanks so much. Very helpful info.
Individual investors who, as individual investors, lost money on ETFs must nevertheless pay taxes for profits??? This is a NEW DEFINITION for the word "profit." It is not just a new way of taxing profits.
It is interesting that gold dealers tipically pitch as a difference between gold bullion and other gold coins that bullion can be taxed as a normal investment instead of being taxed as a collectible. E.g. http://www.coingallery.com/faqLegal_IssuesGold.htm#Do I have to pay taxes
This IRS ruling is really wrong. It is a pure and simple tax grab.
I didn't know about the collector rule until after I sold an item for a windfall. That being said, I had the pleasure of owning and enjoying the art work I sold for a windfall until I sold it.
A Gold ETF is at most a piece of paper(stock) and more realistically a line on a stock account statement purchased for the purpose of hedging/investing in a commodity for profit.
A buyer of this ETF most likely could not take possession of any gold without selling the ETF and replacing it with purchased gold.
The ETF is invested in with the purpose of making money or protecting the rest of a portfolio, not to enjoy the shine/craft of the the gold or goldsmith.
To Marlys:
No, you will not be sent a K-1 for GLD, SLV, etc. if in an IRA.
Yes, you WILL be sent one for ETFs that are actually Master Limited Partnerships (MLP). These include DBA, DBC, USO, etc. Always read the prospectus!
If you hold MLPs in an IRA, I believe that the K-1 shows taxes owed by the custodian of the IRA (the company you have the IRA with). But the company/custodian would likely bill you for this or ask that you pay it.
May I forward this info to others? I'm building a web site and may want to include this ETF tax problem in it. Is that OK ? Credit to MM is a given. Also, How does this affect folks who shorted these ETFs naked or legal?
Isn't one sure way to avoid these tax troubles is to take physical possession of the gold instead of buying the paper.
That's what I did and I don't regret that one bit.
I am assumung that options in these ETFs will not present a tax problem unless the option is exercised. Response?
While the IRS does not allow "collectibles" to be held in your Roth IRA, exceptions have been made for certain gold and silver coins. So it is possible to avoid these taxes through your Roth IRA, and still invest in gold and silver. However, as with any investment, take the time to understand the potential pitfalls before jumping in.
Taxing gold profits should be illegal.
First you exchange the fiat paper currency to preserve whatever value it has. The Governement with the help of our central bank debases these pieces of paper so they are worth even less. Then when you want to exchange the gold back into currency, the Government taxes us for having protected ourselves from their theft.
This is insane, immoral, and criminal.
Sure, it's insane, immoral and criminal. The whole stinking Internal Revenue Code is also, along with the IRS itself, because the 16th Amdt was never properly ratified by the states. It will hurt, when our rotten system collapses. But when it does, I believe former IRS revenue officers and tax-thugs will be in the same position that the East German STAZI found themselves when the Communist regime collapsed. I hope each and every one of these vicious bastards gets prosecuted for crimes against the American people. And the judges of the lower Federal Courts who gave them permission to "stick it" year after year to American wage earners should be hung from the nearest lamp – post.
What do they say about allocated digital gold currency like GoldMoney.com ?
Mark
HIGH ANXIETY
Keith's other suggestions pointing out that much of the future economic growth in the world will be outside of the United States correct. Still, 25% of the world's GDP will still remain in the U.S. We are still a big country, even if a less well managed one. However, many of the same challenges to investing apply overseas, as well as at home.
Picking the best companies in the right sectors is always a challenge. Most important, not paying too much for any investment is still very important. If you overpay for GOLD (at current prices) or a domestic or foreign stock, you may not make near as much money as otherwise would be the case.
Clearly, the abilitiy to consistantly pick winning stocks ("10 Baggers") at a good discount and hold them long term to enjoy a "home run" is a fairly rare ability. Many professional portfolio managers can not consistantly do it. Instead, they trade in and out of companies, producing mediocre total returns.
In order to show above average returns, you need an Apple or two in your portfolio- not necessarily Gold. Gold is responding to today's legislative, fiscal, and monetary policy mishaps. Eventually, all the distortions must be wrung-out of our economy. In Japan, it took over ten years (1990-2002), also known as the "Lost Decade". Until then, high volatility and anxiety will remain, going into the New Year.
After WW2 in Japan the grocers had so much gold in their cash registers that they refused to take any more in exchange because they couldn't exchange it. So exchange became Lucky Strikes, Camels, chocolate bars etc. You see folks you can't eat or drink gold. Guess all the crowd are "youngin's". Thanks for the conversation, intriguing times. De old man.
Nice post, young man.
It reminds me of advice I've read: namely, that we can eat canned SPAM more easily than gold.
Then there's that particle of Roman history which describes how molten gold was poured into the throat of someone named as tyrant/terrorist, perhaps.
I suspect the noble metal was retrieved.
Regards to all.
where do you buy physical gold without the premiums ?
The post by "TAXES" is right on the money (figuratively and literally). Taking the first example in the article where the trader has a $741 loss on USO and then receives a K-1 reporting different amounts, you simply make the necessary adjustments/offsets to back into the true figure of a loss of $741. You are supposed to file your tax return using the actual gain or loss notwithstanding the fact that a different figure might be reported elsewhere. Of course, this cuts both ways. If you have a larger gain than what is reported on the K-1, you might be tempted to file your return using the lower K-1 figure and plead ignorant that the gain was actually more. Good luck should you decide to use that strategy! "Ignorance" never holds up in tax court.
I am just happy that I can afford to buy gold and other investment vehicles. There are too many among us, though not likely readers of Money Morning, who are trying to figure out how to stay in their homes or pay the rent, decide whether to have electricity or food, medicine or heat. My accountant used to tell me to be grateful to be one of those making enough that I actually paid some tax. "Tis the season.
I just purchased Vienna gold coins as a life insurance policy. When I am much older and fiat currency will be worthless I will still be able to put food on the table.
I could live with the commission I paid but was rather surprised of the high premium cost.
hi Keith, Im writing to you to see if you can help me get started with my investments. Over the past years Ive lost a ton of money trying to time the markets. I have purchased you china trader and am reading your book Fiscal Hangover, my problem is I have a bout 20k to get started and need a little help finding the right stock to buy to make those 100 and 200% profits and build from there, please help me get satarted, just looking for some guidance thank-you Arnold Wenzler. my account number is 000051157411 thx again arnold
you just lost me as a reader when you bought a Toyota…nice American!!!!!!
I AM NOT MAKING ANY COMMET ON THE VARIOUS SUBJECT PEOPLE WROTE TO YOU ABOUT.I WANT TO ASK YOU SOMETYING ABOUT OPTIONS.IF I AM BUYING A CALL OPTIONAND I WANTTO PUY A (STOP LOSS)DO I PUT THE STOP ON THE (ASK PRICE) OR THE STOCK PRICE? THE MAIN REASON IS THATI DO NOT WANT TO LOOSE ANY MONEY AS YOU KNOW BEEN A TRADER YOUR SELF .TAKE FOR E.G THE S.PIS $40.00 S.P IS 20.00 PREMIUM IS 3.00,WHERE DO I PUT MY STOP IF I DO NOT WANT TO LOOSE ANY MONEY IS THIS A CONTINGENCY ORDER?I AM GETTING CON FLECTING IN FORMATION FROM DIFFERENT COMPANIES.I WOULD APPRECIATE A REPLY THANK YOU.
Do you know about the Zurich Kantonal Bank Gold Corp? In the U.S. it is traded on the OTC pink sheets and is very thinly traded under the symbol ZKBGF. As I understand it, each share represents 1oz of gold and is priced accordingly. Zurich KB stores the gold in their vaults and is segregated as to shareholder. I have not been able to find an English prospectus for this, only a simplified version of the prospectus, which isn't complete. They will not make a shipment of gold outside of Switzerland but will transport it to another Swiss Bank to be delivered in bullion to the US.
Can the U.S. Government confiscate the gold bullion if it's stored in Switzerland or only gold that is held in the U.S. as was done by Franklin Roosevelt?
Hope you can shed come light on this.
C. Chappell
Well we all talk about the printing press running wild on the dollar, What happens when the drilling press starts and we get over flowed with GOLD will that drive down the price of gold also?
I never hear about the dilution of gold.
a small farmer all my life now trying to invest am always told I must have a broker. I want to invest directly with whom I will place my investment
Someone has to say it: If you don't hold it, you don't own it.
Kieth Fitz-Gerald warns that we are taxed on our share of an ETF on the fund's annual K-1. Is that based on the total return for the year? How is "our share" computed? Suppose I am in and out of GLD five times during the year, some gains and some losses. What is my share of the total fund. How is performance during the time I was in related to total performance? Looks like a bookkeeping nightmare. What'ds a man to do? Avoid GLD?
Joe
The question (Mar. 11th) re: where to place the stop order on an option……I use the "Bid" price.
What is the reason to talk about gold and k-1's being related. I thought k-1 partnerships
could only be energy related.
please send us some guidline how to invest into general Motor.
rubbish, you don't buy gold (bullions or otherwise);
you buy mining companies doing 100% gold spot basis,
and that is just a company like any other, so tax capped.
stay away from GM,
it is not general and it is not motor.
it is a black hole, a cash trap.
xxi century and still producing v8 camaros!
gimme a break
As the Dollar depreciates in value (Fiat Furrency ) , so does the Gold increase its value in dollars !
So you are not really making any money when the price of Gold goes up the roof; you are only compensating for the devaluation of the Dollar. And if on top of that you have to pay 28% taxes on the profit that you did not really make, you are being royally screwed ! Your are better off just spending your money as soon as you get your hands on it, before it devalues more, and before the US Dollars stops being the World's Reserve Currency, when it will officially become practically worthless and the Rimimbi will own the world as we know it. God SOS . CQ
Question; What do you suggest on IRA withdrawals. I will be taking my 1st withdrawal this year and I will have to pay taxes on what I withdraw. If part of the withdrawal comes from gold-GLD etf will I have to pay on the etf and my total withdrawal. Will I be paying taxes twice? John Kish
In regards to the 2009 article by Keith Fitz Gerald:
I bought gold ETF's back in 2008-2009. At rhe time, no one told purchasers that these would be talked of their taxes,(if they made any money). When I skaed the Schwab agents who were often in chateg of he;ping to sell thees and other stocks or "products", I was repeatedly assured that thee was no such thing as a special tax on gold (or silver, platinum, palladium , copper or other rare precious metals). Later, after I had made some profit onn this investment, it began to become clear as I was told by more sophisticated and expert tax aspecialists, that, indeed,m there was a 28% tax on all of the precious metals in et funds,(includiong copper!), equal to 28% of the profit.
So if you earned $500 over several years on a $1000 investment, your $500 "profit" gained nothing by being several years old. It would be treated as if it were a six week jump in value that you want to realize immediately.
This is bad, What is far worse is that 95% of the sales force who pushed such investments were under the impression that they were treated just like regular investments. When I insisted they get their "tax specialist" on the phone, lo and behold, these investments instantly lost over a quarter of their profit value to federal taxes.
I personally feel that this was a massive near fraud by such companies as Schwab, for allowing its agents, with no expertise in taxes, to pontificate about how gold ETF's were no more taxable than any other investments, when this was the exact opposite of the truth. It is not enough to say "let the buyer beware", when big firms, like Schwab are profiting from every sale, whether gold, or broomsticks.
I became furious. My experience with Schwab employees has shown me how ignorant and badly prepared they are. (They're nice but ignorant.)
Schwab keeps its offices far from NYC, because they can get away with hiring art history grads to man the phones at pay, only slightly higher than for pizza truck drivers. In NYC they would have to hire people who knew what they were doing, or who faked it well.
The most important thing I learned is that no one who does not have a fiduciary responsibility for your money is qualified to even count it, much less to advise you where to invest it.
I l;earned the hard way. I hope everyone else will learn that those who do not share the pain as well as your gains have little reason to make sure your investments will keep and continue to make money.