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overseas physical vs PM securities

  • Sun, Jan 13, 2019 - 07:53am



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    overseas physical vs PM securities

randyfloyd wrote:

While I am not trying to evade taxes, merely having the government know about any future gold holdings I might hold abroad makes the situation less desireable.  I imagine it could bring undue attention to my taxes (audit?!) and leave the metals open for confiscation should this occur in a crisis.  Crisis situation is the only real reason I would hold overseas gold, so maybe I might as well just own a physically-backed vehicle such as PHYS or BAR or AAAU.  Might as well just store personal holdings in the domestic vault and not deal with questions from the IRS or any international risk.  Please feel free to correct my thinking if you see fit.

(Not financial/tax/legal advice)

1) IRS/FINCEN reporting threshold is $10k for overseas holdings, as I understand it.  While that’s not enough to make you rich, it may be enough for a fresh start somewhere if things go pear-shaped.  If your holdings rise in value and exceed that $10k at any time, you have to disclose.  

2) Physical holdings overseas often would require a foreign court order in the case of US confiscation.  Puts an extra layer of bureaucratic difficulty between a siezure and your PM.  Some vaults have contractual language that they will not sell your holdings to fulfill a foreign confiscation order, even if you tell them to (coercion clause). 

3) Overseas holdings are still subject to all applicable US taxes.  Capital gains/collectibles taxes.  You already mentioned, but I’ll reiterate – pay your taxes. 

4) Bitcoin is not anonymous.  It can be tracked rather easily if the investigator has the tech knowledge and subpoena power.  It adds a layer of privacy only by muddling the trail, not by making it un-followable.  If someone looks hard enough, they will most likely be able to follow it.

5) Securitized PM’s are subject to all kinds of regulatory rules that could easily be changed, either by legislation or bureaucratic fiat.  Not to mention solvency and malfeasance risks.  But they are easy to buy and sell.  There’s been a lot of virtual ink spilled on the shortcomings of securitized PMs, including at this site.  But basically you can’t trust them, or the rules governing them, especially if things get hairy. 

I think there’s definitely a place for both foreign and domestic physical storage to spread some of the above risks.  Perhaps a small foreign holding, with the rest of your physical held domestically.   And perhaps securitized (PHYS, PSLV, etc) PMs for trades in and out, especially in a tax advantaged retirement account.