This subject has to be one of the most misunderstood and misrepresented in the trade today so I can’t figure out why you don’t see more about these rules? The reason might be that these mystical directions while holding sway over dealers are a poorly written mess which should have been avoided or at least provided with updating options. But instead this bureaucratic process produces mountains of paper work which may have been relevant years ago but today does not include America’s most popular bullion choices. So over time these rules were asked to do more than intended without further oversight or revision. What we have today is a bottom up application of government thinking without the required rule maker and so disputes might become a nightmare.
And with mistrust of government reaching new highs these famous reporting rules become more important for two new reasons:
First, the majority of Americans are looking for simple privacy and not trying to skirt the currency reporting laws. Gold has always been the most private investment and the use of “no-name” invoices and cash in smaller amounts is popular and legal. The quest for privacy is responsible for books like How to Be Invisible: A Step-By-Step Guide To Protecting Your Assets, Your Identity, And Your Life by J.J. Luna.
Second, the notion of independent storage of precious metals is getting publicity because of banking failures and zealous government oversight. Outside of bank storage was talked about in the early gold movement and even included ideas about out of country storage by pioneers like Harry Brown. Personally I think this is an overreaction because US banking oversight protects assets but some investors are not convinced. A brochure from www.usprivatevaults.com: Are Your Assets Really Secure In A Bank Safe Deposit Box? I have no idea who these folks are but use their advertisement to point out that independent storage would not be built if there was not a market.
When gold was once again made available to Americans in 1975 the modern bullion dealer was reborn. Rare coin dealers at the time did not have much to do with bullion transactions except to facilitate trades for good customers. There were cash reporting requirements already on the books but mostly no one cared about such things even the banks. If you were given cash it was deposited into your business account but most of the time payments were made by check.
But when the Treasury began to get interested in what Middle America was doing with precious metals the “reporting” idea got more attention. Since that time both dealers and the public have come to believe these reporting requirements are an attempt by Uncle Sam to monitor the precious metals because the government saw them as a kind of unregistered security which is easy to buy and sell privately. I believe the truth is more mundane and the government based their first decisions about “reporting” more on what was traded on the nation’s commodity exchanges and less on what was happening in coin stores because they had little interest in the individual investor.
To understand how this thing unfolded and why I believe much of the “reporting” requirement jargon is a red herring let’s look at the two of the most talked about areas:
1. Cash Reporting: If you bring in more than $10,000.00 in cash or cash equivalents to your dealer he will present you with a Federal Form 8300 which will require things like your name, address, and social security number. Form 8300 is the real deal and presents serious legal consequences for both the buyer and the dealer. So please no winking or playing around here as this has been on the government radar screen since the cash trade in drugs entered America’s living room and more recently as terror became a reality in the US. To make sure professionals were listening Uncle Sam prosecuted a few famous coin dealers and sent them to jail. They then published the results in Coin World which scared most national dealers because prior to these prosecutions cash was not a big deal.
Today fines for violating Form 8300 rules could amount to $25,000.00.
When the government talks about cash it is referring to the real green kind. I get regular questions about paying with wires or checks in reference to the $10,000.00 rule which shows the public is going through the learning curve when it comes to “reporting”. You can purchase anything you want for any amount – $10,000.00 or $10 million – and there are no dealer reporting requirements as long as you pay with a check or wire.
Let’s also consider what the government calls cash equivalents. If a consumer makes one purchase and pays with a number of smaller money orders and the sum exceeds $10,000.00 it is a reportable transaction. If on the other hand he makes a purchase and pays with a cashier’s check in excess of $10,000.00 it is not because if the consumer used cash to purchase the cashier’s check the bank has already filled out the form. And what about the customer who purchases $14,000.00 worth of bullion and provides the dealer with $8,000.00 in cash and a cashier’s check for the remaining $6,000.00? The dealer is required to fill out the form or be in violation of the $10,000.00 cash rule. So you can see how tracking down all these rules can be confusing...Finish reading>>