[Last updated June 2014]
In our Strategies section we recommend that physical precious metal investors should diversify internationally to protect themselves from insolvent national governments. In our view, in countries with highly indebted and deficit-prone governments the taxation of precious metals will go much higher. As well your ability to buy, move or sell will be curtailed.
In this section we distinguish between what we consider to be “precious metal friendly” versus “precious metal un-friendly” countries. Readers are advised that this is just our opinion based purely on our own experiences and research.
First, let’s look at the two bête-noirs for physical precious metal investors; the United Kingdom and the United States.
In this section
Precious metal un-friendly
UK governments have a habit of pulling up the drawbridge on their currency and economy when the going gets rough. In the late 1960s when the London Gold Pool price fixing scheme collapsed, Britons were at one point restricted from taking more than £50 out of the country.
There are reasonably good storage options within the UK and on it’s island dependencies. For example, you can store silver free of value-added tax (VAT) in Guernsey. Also BullionVault and GoldMoney are two UK-based online bailment services well worth considering especially if you want to store or trade silver. As well, UK Border agents have no issues with properly declared gold and silver and in our experiences don’t seem to be on the look-out for precious metals. However the police have a worrying tendency to raid safe deposit boxes looking for criminal and “terrorism” related assets.
UK investors should focus on Capital Gains tax free items including pre-1946 circulated silver coins (pre-1920 even better as these are 0.925 fine). Premiums generally are pretty high in the UK, which is rather surprising since there seems to be plenty of competition and lots of reputable dealers. UK-based investors could do well looking abroad to buy precious metals particularly silver.
Sadly, it is our opinion that the UK economy is fatally over-dependent on property price inflation, propping up insolvent banks, and government spending. Sooner rather than later the UK government will face a funding crisis. One we think will have huge social and economic repercussions. We don’t think physical precious metal investors will fair too well in such an environment.
UK tax filers should take a look at our section on strategies for UK tax residents.
The US is a wonderful place to live. It’s also a convenient place to buy and store precious metals. Premiums and buy-side taxes are low by world standards, the market for all forms of gold and silver is deep and liquid, dealers are many and mostly reputable, and storage options abound.
Unfortunately the credibility of the US dollar as the world’s “gold standard” is being severely stretched by irresponsible Federal government spending and the Federal Reserve seemingly intent on creating unlimited liquidity for its shareholders at all costs. A loss of confidence in the dollar (“hyperinflation”) and a debt crisis of some sort are the inevitable outcomes. This will lead to cries from politicians for much higher taxes on precious metals.
The Orwellian sounding Homeland Security and Custom Border and Protection agents seem, based on our regular visits to the US, to be increasingly intrusive and bureaucratic. These and other agencies will ensure your precious metals stay within the US when the “emergency” taxes and capital and currency controls are put in place in response to the debt crisis.
As we suggest in our section here, we feel US citizens would benefit tremendously from internationalizing both themselves and their physical precious metal investments. Citizens wanting to move their precious metals outside the US should start this process now while there are few restrictions.
A bit of both
Most countries fall into an ambiguous area somewhere between being friendly and un-friendly. This is more by chance or due to historical quirks rather than any deliberate policy. The entire world is off any sort of gold or silver monetary standard and these metals are currently treated as nothing more than curious, albeit valuable, commodities.
In Europe, countries such as France and Spain have festering economic and social problems and governments with an historical tendency to heavily tax whomever is “rich”, be that perceived or actual. Both will levy a 20%+ import value-added tax (VAT) on any silver you bring in. Yet both countries also have rich histories of accepting gold and silver as free-market money. Nevertheless, we wouldn’t store precious metals in either country.
Canada and Australia both sit on vast natural resources and have stable political systems. Unfortunately they are stoking up massive property-related debt bubbles in their major cities. This may result in crises similar to that in the US/UK. Both are known for having very interrogative border guards who can make transporting precious metals difficult for travellers.
Yet these are also countries where gold is mined in great quantities, retail premiums on bullion are low and ideals of free-markets and transparent government are deeply ingrained in the populace. On balance, these two countries probably lean toward the ‘friendly’ end of the spectrum.
Other friendly-ish places include many countries in Asia and South America. Scandinavia is relatively friendly too; Norway and Estonia have zero VAT on silver. Finland is culturally very attuned to precious metal ownership.
Precious metal friendly
Here we attempt to rank the top countries. Again, please keep in mind these are only our opinions.
Of course, Switzerland.
Not without it’s risks but undoubtedly Switzerland is still the best place on the planet to internationalize your precious metals. There are numerous non-bank vaults, several specifically designed to hold precious metals, as well as many Swiss-based full service bailment companies. The Swiss probably invented the idea of full service precious metal bailment in the first place.
Foreigners and citizens alike are allowed unrestricted import (or export) of precious metal as long as it is declared. Switzerland applies a relatively low 8% value-added tax (VAT) onto silver purchased inside Switzerland as well as on silver brought into Switzerland. Swiss VAT is waived if VAT was paid elsewhere within the EU or European Free Trade Association Area (EFTA). Make sure you have receipts that prove you paid VAT elsewhere.
On the downside Switzerland is expensive. Property is expensive and a meal out in Zurich will cost you twice as much as in London. US citizens will have a particularly hard time opening any sort of financial services account. Perhaps the greatest problem with Switzerland is it is such an obvious target for governments wanting their citizens to pay taxes on off-shore held precious metals.
Singapore would probably be at the top of our list of safe havens if it wasn’t for the governments weird policy of racking up debt by selling securities to invest in a national “Provident Fund”. Nevertheless, Singapore’s political and economic stability remains high.
There are no customs restrictions, duties or taxes on the import or export of bullion coins and bars. However, a Goods and Service Tax (GST) exemption permit must be filled out and declared at the Red Channel checkpoints upon arrival in Singapore.
There is no sales tax (GST) and no Capital Gains or similar taxes. Premiums can be reasonable though not as low as Hong Kong. Avoid Singapore Mint as their premiums are ridiculous and they have a lot of gimmicky items. See our Links section for a list of dealers. Certis Cisco is a safe deposit facility in Singapore worth considering.
Singaporeans are big buyers of precious metals and with the Singapore Precious Metal Exchange (SPMX) the country is the second largest precious metals trading hub in Asia after Hong Kong. In addition, global bailment, precious metal refinement and logistics companies have or are planning important facilities here.
Finally, while Singapore’s property prices are very high there is the option of buying across the border in much cheaper Malaysia. In fact we would prefer to reside in Malaysia than Singapore. The border between the two countries is very open with regular train, road, bridge and air links.
Indeed many countries in Central America would qualify as being precious metal friendly. In part this is due to having ineffective governments and poorly enforced customs rules as well as having no (or low) Capital Gains taxes and a cultural affinity for gold and silver coinage.
Panama has the most developed buying, storage and selling infrastructure in the region. Best Safety offer safe deposit boxes as well as local sales and buy-backs of precious metals. IGB are reputable and offer tailored safe deposit and brokerage services. VaultMax Global is a new safe deposit facility located in the Panama Pacifico special business area near Panama city, which has the added benefit of being a duty-free and tax-exempt zone. If importing precious metals into Panama we suggest you find and use a local customs broker to navigate around the 7% import tax.
Additional positive factors are the warm climate, good infrastructure, plus a dynamic and multi-cultural capital city. The existence of several attractive and well-developed American ex-pat communities and proximity to the mainland US are other positive factors particularly for US citizens.
Political stability is an issue as anyone who lived through the Noriega years will attest. Still, we think Panama warrants consideration as an interesting “off the radar” option to internationalize your precious metals. Property prices are fair in Panama City and very reasonable in the ex-pat communities such as Pedasi, David and Boquete.
#4 Hong Kong
Before the take over by China Hong Kong would have been at least #2 on this list. The Chinese government is too much of a wild card in our opinion. Also, the ridiculous price of residential property all but defeats the benefits of buying a local private home which is a key element of internationalizing oneself.
These downsides aside Hong Kong dealers have the lowest bid/ask spreads on retail precious metals and it’s also an excellent place for storage options. You can buy investment grade gold coins in Hong Kong for just a few dollars over spot and can often sell items for more than spot.
The precious metal desks at Hang Seng bank and Bank of China in Central are often the two best places to buy in Hong Kong. Also try the main HSBC branch. For local storage, the aptly named The Storage Limited is a reputable safe deposit facility in the Sheung Wan district of Hong Kong.
Finally, there are no taxes on either buying or the selling of gold and silver coins and bars for personal use. There is no import duty either. Hong Kong is also the number one Asian and a major global hub of precious metal vaulting and bailment services.
Many will be surprised to see a eurozone country mentioned here but Germany has quite a few surprising benefits for physical precious metal investors, particularly for EU citizens.
Firstly, there is zero Capital Gains tax on gold and silver investments in Germany. Value-added tax (VAT) on silver coins was raised from 7% to 19% in 2014, but only grudgingly on foot of pressure from the EU and with a ‘differential tax’ loophole for non-EU silver coins (making effectively zero VAT on those coins).
Secondly, culturally Germans are extremely attuned to the role of gold and silver as money. This is borne out by the common sight of gold and silver coin shops in every town and city across the country. Germans habitually give small bits of gold as gifts to commemorate special occasions such as weddings, anniversaries, graduations, retirements and birthdays. And the hyperinflation of the Weimar period is etched in German consciousness as a leading cause of the calamity of Nazism, war and economic ruin. But perhaps most telling is that in German, the word for money is geld (“gold”).
Thirdly, quality well-located residential property can still be bought in major cities for well below similar in other EU countries and a fraction of that in London, Vancouver or Sydney. For reasons we outline in our section on internationalizing we believe that buying local property is a key approach to availing of Germany’s zero CGT on gold and silver. For storage we suggest popping over the gold-friendly border to Austria and using the services of Das Safe in Vienna.
And finally, we feel that Germany is probably the most economically and politically stable large country within the eurozone. EU residents can move here and avail of the excellent healthcare system and generally high quality of life.