At Miles Franklin, one of the biggest questions we receive regards the taxation and reporting requirements of Precious Metal transactions.  We do not dispatch tax advice, but are aware of related reporting requirements, many of which are quite liberal.  In our most recent Webinar – the April 25th “Precious Metals Q&A Rap Session” – Miles Franklin’s President, Andy Schectman, discusses such requirements in detail, starting in the first minute.

Precious Metals Q&A Rap Session
Irrespective, I am extremely excited about the prospect of U.S. States accepting government-minted bullion coins as “legal tender,” empowering them to pay off debts or barter private transactions.  Last year, Utah became the first state to make this LAW, yielding potentially VERY lucrative reasons – aside from the countless others I discuss – to purchase PHYSICAL gold and silver Eagles.

Utah now Accepts Gold and Silver – Andy Waldock

Per the article above, describing what is now LAW in Utah:

The bill provides for transactions based on the weight of the metals to determine their value, rather than face value. This allows the use of gold and silver bullion to be used as payment, rather than the limited scope of federally minted precious metal coinage.

In other words, you could conduct private transactions based on coins’ MARKET VALUE, not their FACE VALUE.  Next:

Utah House Bill 157 will now treat precious metal transactions just like currency exchanges. In other words, if you ask for change for a $100, you’ll get the entire $100 back. You’ll be able to cash in your precious metal holdings for fair market prices or, simply use precious metals to make purchases, payments or deposits. The law states that metals don’t have to be accepted but, if they are, it will be by weight of the metal and the market price for it.

Yes, $100 worth of coins can be exchanged for $100, which if I read this correctly, infers NO CAPITAL GAINS TAXES on previous purchases of U.S. gold and silver Eagles – and possibly gold Buffaloes, also minted by the U.S. government.  Again, Miles Franklin does not give tax advice of any kind.  However, the below statement renders that point moot, suggesting the ability to exchange your coins to the Utah state government for cash, free of taxes.

Finally, the kicker, as I’ve read it, is Utah will offer a one-time tax credit to offset capital gains on any metal that is being exchanged for paper. The capital gains and tax reporting nature of getting out of your holdings will work like a currency exchange. This eliminates the physical black market or, shadow market of physical transactions. This will avoid multiple calls while shopping transaction values and eliminate the tricky conversation of tax reporting issues.

In fact, the only comment I’d debate is the writer’s disrespect of Utah, in my experience one of the best managed States in the Union!  Don’t think they don’t understand the value of citizens paying them taxes in gold and silver bullion, as well as exchanging such coins for WORTHLESS fiat dollars.

Who’d have thought that seldom mentioned Utah would be the pioneer of such forward thinking?

Aside from Utah, five other States have submitted similar bills for legislation, including South Carolina – likely the second State to pass such a LAW – Tennessee, Iowa, and Miles Franklin’s home state of Minnesota.  If Minnesota does create such a LAW, it will increase our firm’s flexibility in transacting with clients, heightening the advantage of doing business with us.

States To Use Gold and Silver as Legal Tender

Mind you, the reason this topic has come into play is the fear of Federal Reserve generated HYPERINFLATION.  Thus, if such laws do pass en masse, it likely will due to massive social, political, and economic upheaval, the type that would make the nation a far more dangerous place.  That said, all we can do is take steps to PROTECT OURSELVES, and one such step is to be aware of potentially favorable legislation – and legal jurisdictions – as we head toward the END GAME of the U.S. dollar.