QE Infinity | Moving Gold Overseas | 1031 Gold Exchange
How to safely move gold overseas
Global economic recession. Euro crisis. PIIGS. Talking heads. Austerity Measures. Bankrupt Governments. Too Big to Fail. Global Currency Crisis. Chinese slowdown. Ben Bernake. Quantitative Easing.
Let’s talk about Macroeconomics! We are in trouble. Well, those who don’t prepare are in trouble. The sad citizens of Italy and Greece who had all their eggs in one basket – had most of those eggs STOLEN by their government.
The Chinese economy that can’t sustain growth, which Marc Faber sees as more dangerous than an American slowdown – and I would agree.
The Fed, and central banks’ response will almost infallibly be to print more money in a race to the bottom. As predicted, Ben Bernake has suggested that the fed will continue quantitative easing, even if they don’t call it that. QE infinity… and beyond!
Euro Zone. China. The United States. A financial house of cards that could collapse at any time, and seems to be weakening as the weeks go by… The best response to ALL of these signals of turmoil from a personal finance or investment standpoint?
Very simple. No need to freak out and go buy a tin foil hat… but you do NEED to do two things:
- Buy gold. See the guide to gold
- Get assets out of the country, diversify your sovereign risk. See our guide to investing internationally.
Get your gold out of dodge
I routinely talk about how gold is an inherent storage of value, and all investment portfolios should be comprised at least partially in physical gold. However, just as other investment options, where you keep the investment is almost as important as where the market is. Sovereign nations have been known to seize their citizens’ gold in times of turmoil. It has happened in Germany, and it also happened in the United States. (source)
It is quite possible that governments, creditors, or greedy ex-wives might want to steal your gold. But if you protect your assets, you would already have that gold overseas in a secure vault, and it’s cheaper and easier than you think.
Just how do you move gold overseas?
Moving Gold Overseas
The first option and the simplest, in theory, is to move gold or silver yourself through a commercial airline ticket, and simply going through security and customs.
There are however things to consider in these instances: security, insurance, customs, etc. Also, you may or may not have to file customs forms as you leave, and there may also be a taxable event involved. If you are an American living in the US – the Foreign Trade Division of the Census Bureau controls this process.
The rules surrounding cross-border gold movement are convoluted in many instances. You may also need to pay tax or duty to the new country where you are importing your gold. For instance in Canada, you can import tax free on a federal basis, but could have to pay provincial sales tax, the rules concerning this transfer vary province to province.
Unofficial Tip: oftentimes a gold watch, rings and gold necklace can contain a large amount of gold, and might slip past customs or immigration. Bling Bling. Be careful, some countries consider this reportable… most don’t.
Option 2: Use a professional transport service to ship your gold offshore safely
There are several different options for transport companies who will ship your physical gold on your behalf. They take care of security, customs and duties, insurance, and take possession of your gold, getting it from point A to point B safely and securely. Two such companies are Viamat and Rhenus.
It is somewhat expensive to move just a small amount of gold. Virtually no anonymity. These firms need to collect a lot of due diligence on their clients in order to fulfill border requirements.
Option 3: Use a Tax Deferment, Sell the Gold and Buy Again
When selling your gold, you will most likely trigger a taxable event which needs to be considered. There are certain accounting firms that can perform as a “like kind exchange” under Section 1031 of the Internal Revenue Code Ruling 82-96.
Often used for deferral of capital gains in real estate – a 1031 exchange – is a way that investments can be traded for other like-kind investments and not incur capital gains taxation. The crux is that the exchange is performed by a qualified intermediary and within a certain time period.
Below are a few IRS rulings on exchange gold or silver.
- Gold bullion is NOT like-kind to silver bullion, Rev. Rul. 82-166, 1982-2 C.B. 190
- Gold bullion coins are NOT like-kind to collectible (numismatic-type) gold coins, Rev. Rul. 79-143, 1979-1 C.B. 264
- Gold bullion is like-kind to gold bullion coins. Rev. Rul. 82-96, 1982-1 C.B. 113.
With any 1031 exchange, the same basic rules apply. The main rules include hiring a qualified intermediary to facilitate the exchange. The QI, as they are called, will facilitate the exchange and most importantly, escrow any proceeds from the sale. A key rule is that if new gold is not immediately purchased with the cash from the sale of the relinquished gold, the funds must be held in escrow.
You should adhere to the 45 and 180 day timing rules, whereby the exchanger has 45 days after the sale to determine how much, and what type of gold will be purchased. The other rule is that the intermediary must purchase the replacement gold within 180 days.
Gold 1031 Exchange Step by Step
- Find a qualified Intermediary to complete the exchange
- Identify if the gold qualifies for 1031
- Find a buyer to sell the gold
- Exchange agreement prepared
- Facilitate the exchange with 1031 intermediary who puts funds in escrow
- Identify replacement gold within 45 days
- Purchase replacement within the 180 day window
- No tax! A savings of 28% (capital gains) on profits
Buying gold and moving it overseas in a tax free manner is a great way to hedge against the fiat currency crisis. I wish you the best of luck should you undertake any of the above steps. Feel free to contact me for a personal introduction into any of the aforementioned services. However, please speak with an accountant and conduct your own due diligence and verify all the facts before taking action. These are complicated issues, so if you find anything in contradiction to your knowledge get in touch with us and we’ll look into it. Flag Theory is a network made up of some very smart people – lawyers, tax specialists, CPAs, financial analysts and many other talented people. Our goal is to provide our clients with an actionable resource for internationalization.
Freedom. Privacy. Wealth.