There are no ‘goldbugs’ at PRECIOUSMETALTAX.com; we’re rational people seeking to avoid losses on our hard-earned savings from the destruction of currencies by central bankers. Like us you probably have already figured out compelling reasons to own precious metals. (If you haven’t then check out our recommended list).
There are endless factors to consider when deciding what to buy. Like many important decisions the devil’s in the details. Nevertheless, successful physical gold and silver investing can be boiled down to a handful of key things to focus on.
(1) Know Thyself
Realistically assess your financial position. Beyond the basic strategy applicable to everyone, individual circumstances vary widely. Focus on figuring out what’s best for you and act accordingly. Your country of tax residence matters, a lot. You should at least consider the option of internationalising yourself.
(2) Forget Premiums
And sales taxes. These are simply the price of entry to obtain a tangible piece of wealth. Just don’t pay more than the averages and avoid numismatics. Buy with a laser beam focus on where and how you want to store and eventually sell your metals.
(3) It Depends On…
How much (or little) you pay for storage, and the associated security risks, depends on what items you bought, where you bought them, and where and when you want to sell them. A common dilemma is whether to opt for a safety deposit box or some form of bailment service. When investors compare both options they often favor using bailment for silver and safety deposit box for gold.
If you accumulate coins from you local dealer every month, hide them in empty beer cans in your basement, and plan to leave it all to your kids, you can forget about transportation issues. For everyone else it’s a hugely important consideration. The key issue here is whether you will ever need to internationally transport your metals. What if you emigrate, picked up some coins abroad, or decide to store some bars in a safe deposit box in Singapore, or Panama, or wherever?
(5) Exit Strategy
You have one right? It could be a specific price or ratio target. It could be attaining a certain amount of ounces and then slowly spending them down into retirement. Or enough to buy some real estate. Maybe you’re waiting for US 10-year Treasury yields to rise to 15% or something? In any case, without an exit strategy you are foolishly in love with the trade (i.e. a ‘goldbug’).
(6) Capital Gains tax
The biggest concern (by far) for investors upon disposal of precious metals are Capital Gains taxes (CGT). In addition, precious metal unfriendly countries will almost certainly introduce capital controls and windfall gain taxes on gold and silver when their debt crisis hits. The most effective way to legally avoid CGT is to internationalize yourself by changing tax residency to a low/zero CGT jurisdiction. US citizens cannot avoid the IRS so easily but they can re-locate to a precious metal friendly state.