More Limits Coming Soon on Selling Precious Metals?

Adam Taggart
By Adam Taggart on Thu, Jan 10, 2013 - 1:33pm

Reader Livsez just sent in this summay of a bill under consideration by the Illinios General Assembly:

Short Description:  PRECIOUS METAL PURCHASING ACT

Senate Sponsors
Sen. Kirk W. Dillard

House Sponsors
(Rep. Patricia R. Bellock , Norine HammondMichelle Mussman and Pam Roth)

 
Statutes Amended In Order of Appearance
  New Act  

Synopsis As Introduced
Creates the Precious Metal Purchasing Act. Provides that a person who is in the business of purchasing precious metal shall obtain a proof of ownership, create a record of the sale, and verify the identity of the seller. Provides that a person who is in the business of purchasing precious metal shall not pay for the precious metal in cash and shall record the method of payment. Requires the purchaser to keep a record of the sale for one year or, if the purchase amount is over $500, for 5 years. Provides that a person who violates the Act is guilty of a petty offense and subject to a fine not exceeding $500. Provides that the Attorney General may inspect records, investigate an alleged violation, and take action to collect civil penalties.

Senate Committee Amendment No. 1
Authorizes inspection of records by local police departments. Requires reports to law enforcement on a daily basis. Exempts persons licensed under the Pawnbroker Regulation Act.

If passed, this Act will reduce the anonymity of precious metals transactions for the retail bullion investor. Records of identity, proof-of-ownership and transaction details will be kept for up to five years - reports of which will be made available to law enforcement on a daily basis.

I am less certain by what is meant by "a person who is in the business of purchasing precious metal shall not pay for the precious metal in cash". How are they proposing sellers be paid? (the bill does not specify) 

Sad to say, but further constraints against precious metals ownership are likely ahead of us. It's what you would expect from a dying fiat regime as it tries to stifle competition from other currencies as the value of its paper wanes.

For what it's worth though, if you live in Illinois, write/call your state legislators and express your opposition to this unnecessary Act.

Do the same even if you don't live in Illinois. Because if this bill passes there, how soon do think other states will follow suit?

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25 Comments

thc0655's picture
thc0655
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Trend remains intact

Who can say accurately what will happen in the future?  However, this news tidbit, like many others, indicates the trend toward a terribly hard landing lined with capital controls is still the direction in which we're moving.  Forewarned is forearmed.  Thanks, Adam!

Doug's picture
Doug
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frightening

I can see only one purpose for such a law, to track and restrict those who trade in PMs.  This is very concerning.  I had no idea things had regressed this far.  It's a good reason to have this specialized area of the site.  Keeping informed on the progress of such legislation will be key going forward into the abyss.

Doug

jrf29's picture
jrf29
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I can't believe Illinois didn't already have such a law

Massachusetts has had a nearly identical law since 1979.  It was enacted as an anti-fencing measure to make it harder for thieves to get rid of stolen goods. 

Mass. Gen. L. Chap. 266 sec. 142A wrote:

Gold, Silver and Platinum Dealers; records; penalty

Whoever is in the business of purchasing gold, silver or platinum shall enter in a book kept for that purpose a description of the item, quantity purchased, the purchase price and the name and address of the seller; provided that the purchase price of such item is at least fifty dollars. Any person who sells gold, silver or platinum shall be required to show to the buyer prior to said sale identification which includes a photograph of said seller. Said book shall at all times be open to the inspection of the chief of police of a city or town or of any other officer having similar duties or any officer authorized by either of them, or a state police officer. Whoever violates any provision of this section shall be punished by a fine of not more than one thousand dollars or imprisonment of not more than one year, or both such fine and imprisonment.

Similar record-keeping laws have existed dating back to about 1918.

What is unique about the Illinois law is the requirement that sellers not be paid in cash.  Although to my knowledge reputable coin shops usually pay by check anyway . . .

I'm less worried about what the states do, since their motivations are usually fairly honest.  If the federal government were to do this, I would be much quicker to take a dark view.

Adam Taggart's picture
Adam Taggart
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In CA the limit is $10,000

Identity capture, etc happens in California if you buy over $10,000 worth of bullion at a single time - for money-laundering prevention reasons. I can see the argument that few retail investors need to buy that much physical bullion on a given day.

But levels of $500 (or $50 in MA!) seem completely unnecessary. Hard to understand the rationale for those beyond trackability of who is holding sound currency.

Doug's picture
Doug
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Thanks jrf

I was unaware of the history of such laws.  When I read a statute or piece of legislation I interpret broadly   assuming that if it can be read to the citizen's disadvantage, no matter the intent, it will be eventually.

Doug

KathyP's picture
KathyP
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The Golden End Game - A Thought Experiment

I'm reminded of a two part piece from Zero Hedge, published in December, 2011.  Quite a "thought experiment" on limits to selling precious metals.

http://www.zerohedge.com/contributed/golden-end-game-%E2%80%93-thought-experiment

http://www.zerohedge.com/contributed/golden-end-game-%E2%80%93-thought-e...

Food for thought.

Nate's picture
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history

During my early teen years (1960's) my grandmother showed me 2 gold coins she had "hidden".  When I asked her why she didn't turn them in, she said "we didn't trust the government then and we don't trust the government now".  Later I found out all the neighbors had done the same.

After her death I found 3 dated German notes from the Weimar Republic.  The first was late 1922, and the next 2 notes were July and October of 1923.  Them Germans were sure good at adding zero's with time! 

War on gold?  How's that war on poverty, drugs, and terrorism worken for ya?

jrf29's picture
jrf29
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Yes and no

Adam Taggart wrote:
But levels of $500 (or $50 in MA!) seem completely unnecessary. Hard to understand the rationale for those beyond trackability of who is holding sound currency.

Well, remember that this law (like the one in Massachusetts) doesn't require ID for people to buy PM's, only people selling to dealers like coin and pawn shops. 

It seems to me that if a law had the real intent of tracking gold ownership, it would likely possess the following warning signs:

1).  It would be a federal law, national in scope.

2).  It would require that coin dealers to input their records into a central database of some kind, to which the federal government had direct access.  The kind of paper record-books required by the Illinois law would be almost useless to the federal government.

3).  It would require reporting of purchases as well as sales.

Considering that this is (a) a state law, (b) creates no central database, and (c) is similar to long-existing anti-fencing laws, I'm inclined to think that Illinois is honestly trying to cut down on the fencing of stolen goods.

BUT . . . this doesn't mean that I'm happy.  Speaking of the federal government, there is plenty to be miffed about there.  For example:

1). Borderline confiscatory tax treatment of gold and silver under current federal tax law

Suppose several years ago you bought a gold coin worth $100.  Then suppose that the value of the U.S. dollar drops 75%, and by the time you sell or trade your gold coin it is worth $400.  

Now everybody here knows that the value of the gold coin did not actually increase - it was the value of the dollar which decreased. 

But current federal income tax law treats the increase in the dollar value of the coin as a $300 capital gain, taxable at current capital gains rates!  In other words, holders of gold are currently taxed on non-existent paper "profits" simply for the privilege of holding a constant store of wealth.

2).  Laws forbidding competing gold currencies.

18 U.S.C. 486 - Uttering coins of gold, silver or other metal
18 U.S.C. 491 - Tokens or paper used as money

These two sections of the U.S. Code thoroughly kill any prospect of sound money competing openly with federal reserve notes.  The laws make it a federal crime to circulate, or attempt to circulate, any metal coins or tokens as money, whether or not they resemble U.S. coinage.

So if the federal government really wanted to crack down on gold, it wouldn't need to go through the trouble of conspiring with individual state legislatures to pass laws that are secretly intended to keep track of gold ownership.  Instead, the U.S. Congress could simply say that all transactions in gold or cash over $10,000 must be recorded for income tax purposes.  Bam.  Done.

Adam Taggart's picture
Adam Taggart
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Rick Santelli weighs in

This just came out on CNBC:

RJE's picture
RJE
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Adam, back in the day when we were a Democracy and...

...Capitalism ruled, you know "The Good Ole Days" this is how our leaders viewed Gold and Silver hoarding:

"continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people".

I'm assuming this is the motivation for the Bill.

You said:

"Sad to say, but further constraints against precious metals ownership are likely ahead of us. It's what you would expect from a dying fiat regime as it tries to stifle competition from other currencies as the value of its paper wanes."

I cant argue at all with your assessment but history clearly shows that the policy of the United States and I would further guess of all governments around the world will be the same. People don't own the Gold, Governments DO, we (the good Folks) are just care takers.

As things get worse then confiscation of all wealth will be the norm for the benefit of all, like it or not. Everywhere in the world.

Misery will have company for sure.

I still think that EVERYTHING will be done to save the dollars of all countries and fiat will still exist many, many years into the future. This Bill is the fore play to a devalued currency and Gold will be owned and priced accordingly by the Governments of the world but, hey, who knows right?

1 Trillion Dollar Platinum Coins! Hell, anything can be conjured up and no matter how rediculas it seems it can, and will, be done. Gauranteed. Must save the Republic after all.

Regards

BOB

http://en.wikipedia.org/wiki/Executive_Order_6102

KeithM1116's picture
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Dillard on the radio tomorrow AM

I was digging into this a little and discovered that our local conservative talk radio station in Chicago (AM560 WIND) is interviewing Dillard tomorrow morning.

I dropped the hosts of the show an email and suggested they question him about this bill and it's intentions.  We'll see if they do.  They stream their broadcasts on the web for any of you out of the midwest.

Keith

Oliveoilguy's picture
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$500 fine?

If push comes to shove, I will pay the fine and not give up any personal info. 

SingleSpeak's picture
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Don't need to track the PMs

because they already track gun owners. Why do they think we own the guns?

SS

shawns333's picture
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Adam Taggart wrote: ... I can

Adam Taggart wrote:

... I can see the argument that few retail investors need to buy that much physical bullion on a given day...

Please don't be in a hurry to condone or even acknowledge that this is a worthwhile argument.  Quantity discounts (as with virtually all purchases) are available to the buyer, that she would want to take advantage of when they are able.  Thus, buying a "monster box" of silver will easily put you above $10K for a given purchase.

We should not help people with their case, when it comes to the need for freedom of exchange and the privacy of transactions.

The "drug" connotation is mostly nonsense as is the usual "counterfeiters" and "speculators" arguments, whenever capital controls are introduced.  See the recent HSBC shenanigans to understand how underworld types take care of their money laundering needs (hint: via the full support of the banking system).

ao's picture
ao
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shawns333 wrote: Adam Taggart

shawns333 wrote:

Adam Taggart wrote:

... I can see the argument that few retail investors need to buy that much physical bullion on a given day...

Please don't be in a hurry to condone or even acknowledge that this is a worthwhile argument.  Quantity discounts (as with virtually all purchases) are available to the buyer, that she would want to take advantage of when they are able.  Thus, buying a "monster box" of silver will easily put you above $10K for a given purchase.

We should not help people with their case, when it comes to the need for freedom of exchange and the privacy of transactions.

Absolutely agree.  Virtually every purchase that I know of by family or friends has been above that figure.

cmartenson's picture
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Is it wrong for me...

....Is it wrong for me to distrust things emanating form Illinois more than I do from other states?  

I have to admit to a perception that Illinois is more corrupt and more dishonestly managed than most states.  

Heck, I even have a particular aversion to the Chicago trained economists where I mentally place them into a penalty box out of which they have to earn their way by not saying silly things for a period of years.

So my first instinct in reading this news was to suspect that something nefarious and grabby was behind it all. Perhaps this is simple anti-fencing activity but why single out precious metals?  Why not place a blanket provision across any business that buys goods from private citizens?  Has there really been a recent surge in PM theft that would draw such a precise focus?  What about jewelry, then?  Wouldn't that be the far more common form of PM theft?

At any rate, as things spiral further and further into the abyss I am fully anticipating more and more efforts by short-sighted legislators to track, control, seize, and otherwise assure that private wealth becomes public property.

Like this:

Spain Drains Fund Backing Pensions

Jan 3, 2013

MADRID—Spain has been quietly tapping the country's richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds, raising questions about the fund's role as guarantor of future pension payouts.

Now the scarcely noticed borrowing spree, carried out amid a prolonged economic crisis, is about to end, because there is little left to take.

At least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt, according to official figures, and the government has begun withdrawing cash for emergency payments.

Of course, efforts to increase the state's share of private income may not always work out as expected as the first readings from California's tax hikes seems to be showing:

California state revenues 10.8% below budget projections in November

State Controller John Chiang today released his monthly report covering California’s cash balance, receipts and disbursements in November 2012, showing total revenues were $806.8 million below (-10.8 percent) projections contained in the 2012-13 State budget.

Personal income taxes in the month of November were down $842.5 million (-19.0 percent). Some of the tax revenue associated with Facebook shares came in during the month of October, while budget planners had projected receiving those funds in November.

Corporate taxes were down for the month, coming in $187.8 million below (-213.4 percent) projections. A portion of this drop was due to higher than expected corporate tax refunds going out in the month of November. Totals for sales taxes were up $99 million (3.8 percent).

At some point the taking backfires and revenues fall and the economy and government finances stumble...

SingleSpeak's picture
SingleSpeak
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Safe to say..

we've reached that point.

CM wrote:

At some point the taking backfires and revenues fall and the economy and government finances stumble...

Furthermore, at some point the amount spent tracking down and levying penalties on all the violators costs more than the booty confiscated.

This is especially true when you consider the cost in value of productivity and not just the nominal value. The man-hours spent tracking and schemeing new ways to suck revenue from the populace is a regretful waste of labor and brain power IMO.

SS

Rector's picture
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Texas

Funny, Texas has an $8bn budget surplus this year.  Perhaps the Federal government should bailout the California and Illinois etc. and let Texans pay for it in the name of fairness and all.  The more fortunate should "pay their fair share" as I understand things today.

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FDRs confiscation scheme

1933 - FDR says hand it over... and then let it die!  Ever wonder why no draconian measures to confiscate the gold?  As I remember, only one trader was ever prosecuted.  Best reasoning I've come across is that FDR was only trying to change the MIND SET of the people to accept a FIAT currency in place of a gold standard.  To that date, the gold standard was accepted by the general population.  To have a new monetary unit, have to have people accept it...  have faith in it.  The entire confiscation was a MIND GAME that played out perfectly...  government didn't have to get heavy with the population (that's good PR)...and the FIAT was accepted as legal tender.  Here's my theory:  Monopoly (and the fiat money) was a HUGE hit ... came about the same time.  Another way to get people to take paper money??????

this time, thinking it's different...  which is scary.

ao's picture
ao
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the Chicago connection

cmartenson wrote:

....Is it wrong for me to distrust things emanating form Illinois more than I do from other states?  

I have to admit to a perception that Illinois is more corrupt and more dishonestly managed than most states.  

Heck, I even have a particular aversion to the Chicago trained economists where I mentally place them into a penalty box out of which they have to earn their way by not saying silly things for a period of years.

From the land of Lincoln to the land of Obama and Rahm Emmanuel ... how far they have fallen.  I have the exact same sentiments.  And regarding the University of Chicago, we only have to look at its founder (the one and only John D. Rockefeller) to discern the direction that economists educated there will take us.  Oh, and the fact that it has produced so many Rhodes Scholars (with connection to the Rothschild money via Cecil Rhodes) is another clue.  Interesting too that Chicago is a gun-free zone yet has one of the highest murder rates in the country.  Nothing there that I'd want to emulate or be subject to.

RJE's picture
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Chris...

...nope, you have it right.

BOB

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sand_puppy
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KathyP, The Golden Endgame

Thank you for this post from Zero Hedge, KathyP.  (This essay may well seem "too extreme" to some.  So don't feel any pressure to read it and most definitely, any pressure to agree with it.)  

This pair of essays lays out a "thought experiment / worst-case-scenario-planning" where a global elite struggle to hold control during a period of descent.  This essay articulates the limits of holding LARGE stashes of gold during a time when the rules are being changed and the plundering of wealth from the worker class by the elite continues.  

Reminds me of Arthur's colorful reminder that "gold will be a honey-pot drawing desperado's" and the Biblical reminder to "lay up one's treasures in heaven."  To consider carefully what we really need and what is important to us.

A couple of places where wealth can be stashed with low risk of confiscation, from both official and unofficial directions.

1.  Not owing money.  Paying off a debt is a tremendous store of wealth and is a fantastic investment by every standard.

2.  Having an income stream that is available for barter and "off the grid."  What skills can we offer our neighbors?

3.  A musical instrument played for one's self, family and neighbors.

4.  A chain-saw, axe and splitting maul.  Living near downed trees.

5.  A pond that collects rain water.

6.  Hand tools for working wood, repairing machines, sewing.

7.  Good health.  It is far easier to preserve and nurture good heath than to provide high-tech damage mitigation after years of disturbed physiology.  (Last night, while working in the ER, I found a bottle of Mountain Dew on the stretcher of a 55 year old man being prepped for emergency heart catheterization due to an acute ST elevation MI.  He lay there sweating and moaning in pain.  It was his second heart attack (MI) and the nurse had to shave his right arm for vascular access due to severe peripheral vascular occlusions in the arteries going into his legs.  I shocked myself (usually very mild mannered and diplomatic) by snatching up the soda bottle and dumping it down the sink and shaking my finger in his face: "You are off Mountain Dew!  You will learn to drink water!"  Atherosclerosis doesn't just happen.  We do it, or don't do it, by the way that we live.  We have a great deal of influence over our physiology and what "diseases" we develop.  But that is WAAAAY off the topic of this post.....

jharting's picture
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CA laws

Thank you for the post about the Illinois law.  I had not anticipated that the Government would try to control precious metals like this but it makes sense. They know that folks are developing a barter under-the-table culture and will try to do anything to collect taxes.  

I live in CA and I have seen the 10K issue.  It also applies to trying to get 10K in cash from a bank at one time.  I tend to believe that the gov auditing goes beyond just money laundering prevention but haven't heard of any specifics.  

SteveW's picture
SteveW
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In CA the limit is $3,000

Need identity for purchases/sales of 3K in Canada. It's part of the banking/money laundering regulations.

A bank I use only for a US account practically refused to accept a 5K deposit recently. Apparently it would have been OK if only I'd had a receipt for the money! So I truthfully said I was in Las Vegas before Christmas, they don't give receipts and answered that not all of it came form Las Vegas. Across the road at the currency exchange and bullion maple store they don't care about the amount only that they record identity.

KathyP's picture
KathyP
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Non-Stuff Wealth

sand_puppy,

I'm glad you took the time to read the Golden Endgame pieces.  Each time I have made a precious metals purchase, I feel the temporary relief that I have at least done something to prepare for an uncertain future, but once that glow has faded, I realize that it is just more stuff, of which I have only temporary possession.  The real wealth, as you've described, is found in the non-tangibles like health and skills, and a few tangibles that, if used skillfully, can satisfy all of the levels of Maslow's Hierarchy of Needs.  Thanks for your thoughtful response.

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