Back in 1999, Alan Greenspan told the United States Congress, “Gold is always accepted and is the ultimate means of payment and is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold.”

It’s rather a long sentence, but well worth re-reading. Especially if you are concerned about protecting your assets against inflation, devaluation or dollar collapse.

After all, traditional asset protection strategies involve making sure your ex spouse or creditors don’t get at your assets. That’s all very well as far as it goes – but by gradually devaluing fiat currencies like the dollar, the government is taking your money through the ultimate stealth tax. Because your assets can’t just be counted in dollars or pounds or euros. They should be counted in what you can buy with tose dollars, pounds and euros!

Now, getting back to Alan Greenspan’s words, here’s a thought. Water’s boiling point is 99.974 °C or 211.95 °F.   Gold’s boiling point is 2,856 °C or 5,173 °F.  Silver’s boiling point is 2,162 °C or 3,924 °F.  Gold is also extremely resistant to corrosion and can sit at the bottom of the corrosive ocean for centuries and still retain its luster. (That’s why it’s fun to go diving underwater for sunken treasure ships!)

In other words, physical gold like coins and bullion bars cannot evaporate when used as a currency in ordinary daily transactions, nor when hoarded safely in vaults.  At all times and in all circumstances gold remains money.

Obligations – or accounts receivable – can, however, mysteriously evaporate. We’ve seen that happen so many times recently. Starting with securitized sub-prime mortgages, then with giant ponzi schemes, not to mention iniquitous civil asset forfeiture orders against bank accounts.

Bear this in mind when you consider how to invest in gold. Do you want “accounts receivable” denominated in gold like gold ETFs or other methods of holding gold in brokerage accounts? Or do you want real, physical gold and silver bullion investments? Over to you.

Interested in Offshore Gold Bullion Investments? Learn more about How to Buy and Hold Gold Bullion Securely Offshore by visiting The Q Wealth Report

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I’ve been kept very busy in recent weeks by a flood of new clients looking for real offshore asset protection.

By that I mean people are finally catching on to the fact that it’s all very well to protect your assets against the tax man or ex-spouse, but a real clear and present danger is that your assets are swept away from you through the back door through inflation and devaluation. If you’re not careful, you’ll be so distracted by things like pig flu that you won’t even notice the government has stolen your money!

And no offshore bank account can protect against this, because offshore bank accounts are denominated in fiat money too.

What I mean is this. You might well start with $1,000,000 in your account and finish the year with $1,000,000 in your account. Since everybody else has been suffering huge losses, you might think you have done well to “protect” your assets. Yet, if that $1,000,000 buys you less than it did a year ago, you have lost out.

In my personal opinion, all major currencies are all set to crash, and it is just a matter of how far and how fast. In the UK, the government literally gave the Bank of England a licence to print money in secret, removing the oversight that has been in place since 1844. As for the Euro, a recent article in The Daily Telegraph points out that, according to Merrill Lynch, the rich “are so alarmed by the state of the financial system and signs of political instability around the world that they are now insisting on the purchase of gold bars, shunning derivatives or ‘paper’ proxies.” One of the reasons quoted for this is the insecurity in Greece and the impending collapse of the euro.

And of course, it’s worth pointing out again the reason for buying physical gold bullion, as in gold bars, gold coins and gold nuggets. Although convenient, in times of crisis holding an exchange traded fund is not the same as holding real gold. What happens, for example, if your broker or the fund manager goes under? Title to the actual gold is not in your name. You cannot lay your hands on it. With physical gold bullion, you can.

Yes it is scaremongering indeed – something I’ve been doing proudly for years, and it does vindicate my position somewhat that my advice, ideas that might have seen way out even when I started blogging here in last year, is now being rehashed by The Daily Telegraph. (Refer, for example, to my article How and Why You Should Buy Physical Gold Offshore posted at lowtax.net before the recession hit really hard…)

Following up on that advice on how to invest in gold bullion offshore as part of a diversified portfolio, buying gold bullion has become quite difficult lately. Demand has shot up, as have premiums. I’ve been looking in to offshore safe deposit box options, and have also found an unusual way to buy physical gold bullion direct from an offshore company that owns the hard mining assets, bypassing the usual cartel.

All is revealed in The Gold Report: How to Buy and Store Physical Gold Offshore, available free of charge to readers of The Q Wealth Report. If you haven’t yet got your copy, sign up today!

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Although we are a very much an international business, we naturally have more than a few readers who are US taxpayers in one way or another, and are liable to file IRS tax returns. And by definition most of our readers are already involved in offshore or international banking. A question that frequently pops up, therefore, is “Do I have to Report Gold Stored Offshore to the IRS on the FBAR (Foreign Bank Account Reporting) form?”

This question is also relevant to non-US residents as similar reporting requirements exist in other countries – although you should be sure to check local reporting requirements very carefully in the country where you normally file tax returns, as reporting requirements do differ significantly.

The so-called IRS  FBAR requirements actually refer to the requirements of a Foreign Bank and Financial Account Reporting form. The actual form number you will be working with is TD F 90-22.1. Under current U.S. law, any person living in the U.S. must file this form if he or she has a financial interest or signature authority in a foreign financial account that has an aggregate value of over $10,000 at any time during the course of a year. This not only includes U.S. citizens but also all residents, domestic partnerships, domestic corporations or domestic estates.

The question has been raised and answered many times before, but was addressed recently by Mark Nestmann of the Sovereign Society, in an article entitled Are Precious Metals Stored Offshore Reportable Financial Accounts? As Nestmann says, tax authorities “construe the term “financial account” very broadly. The definition unquestionably includes bank, securities, and other accounts that hold financial instruments. However, it does not include individual bonds or stock certificates.”

The question, therefore, is whether physical gold bullion that you hold in an offshore vault (or anywhere else offshore for that matter) is reportable. The IRS gives no clear guidelines on the matter, and you probably wouldn’t want to call your local IRS office and ask them directly. Better to check with a suitably qualified tax attorney who is working on your side!

Nestmann’s conclusion is that “If you hold the metals in a safety deposit box or private vault, without opening a bank or other financial account, you don’t appear to have any reporting obligation.”  At many offshore banks you must open an account in order to rent a safety deposit box, but you could always keep the balance of this account under the $10,000 FBAR reporting requirement. There are also a number of non-bank safe deposit facilities available in Austria, Switzerland and the Caribbean.

More information on how to buy gold bullion offshore, as well as where to store it (including specific names and addresses of little known storage and vault facilities) may be found in The Gold Report by Peter Macfarlane. There are also some important warnings about places you should NOT store gold bullion and other precious metals, including anywhere in the United Kingdom.

If you are interested in buying and storing gold bullion offshore, The Gold Report is for you. The good news is that it’s available free for immediate download to members of Q Wealth Report  in the members’ section. If you are not a Q Wealth member and don’t want to sign up, you can now also purchase Peter Macfarlane’s Gold Report as an e-book at the Expat Wealth bookstore.

Note:  sampling the quality of Peter Macfarlane’s articles costs you nothing. Simply enter your e-mail address on the box to your right to receive a free 6-part course entitled “Secrets of the Super Rich” in your e-mail inbox. No spam guaranteed!

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Jon Herring recently asked on Investors’ Daily Edge how it is that gold – “the world’s greatest inflation hedge” – is roughly the same price today that it was in 1980, after 30 years of inflation?

There is a simple answer: manipulation of the markets by the Gold Cartel . That will be nothing new to readers of this blog or The Q Wealth Report. What’s interesting about Jon’s article is his take on conspiracy theories. Things that you might only have wanted to whisper to trusted friends a few years ago have become facts accepted by the mainstream today…

It used to be that you didn’t speak about market manipulation in polite company. Everyone knows those conspiracies don’t exist. Who could do such a thing? We now know those sentiments are woefully naïve. There is now a deep and wide body of evidence that points to willful and ongoing, official and unofficial suppression of gold prices. Much of this evidence has been compiled and documented by the good folks at the Gold Anti-Trust Action Committee

Jon continues explaining not just why but how the cartel manipulates the gold price.

What our readers have long known, however, is that the quoted spot gold price is increasingly diverging from reality. There is one price for ‘virtual’ or ‘electronic’ gold – and a completely different spot price if you actually want to take delivery, touch and hold the bullion itself in the form of bars, coins or ingots (which, as a savvy investor, you should.) In fact, it has become increasingly difficult to buy gold bullion at all. Though fortunately, help is at hand… if you want to read my Q Wealth piece about How to Buy Gold Bullion Offshore.

One of my best discoveries in recent years has been a little-known way that you can purchase gold outside the cartel and completely offshore. Fortunately gold is impossible to forge or fake – its purity can be tested very easily and of course it can be weighed quite easily too. So if you have the right contacts you can buy gold direct from small, artisanal producers and be sure you are not being scammed. That way you don’t have to deal with snooty Swiss bankers with huge minimum handling fees for gold purchases. All this is explained (including contact information) in my special report named appropriately enough The Gold Report, which is available free, provided you are a member of The Q Wealth Report. If you are not yet a member, well a Q Wealth Report Subscription at $87 won’t exactly break the bank and will entitle you to a host of other benefits that you’ll find listed at that site.

Investing in Gold and Silver Coins – by which I don’t mean bullion coins but rare collectors coins – is another interesting angle – a way to diversify your portfolio and thereby spread risk. We have long referred interested readers without charge to our ‘Coyne Chap’ – who was one of North America’s most respected coin dealers, until he took early retirement and moved offshore. He’s a fascinating and knowledgeable person, and welcomes like-minded visitors at his home in South East Asia… so if youare living or traveling in that region and are a Q Wealth subscriber don’t hesitate to make contact with the offices in London to request a referral.

Anyway to get back to the original point, if I haven’t made myself clear by now, it’s that you should buy gold bullion because although it’s manipulated by the means mentioned above and by many other underhand methods covered in Jon’s article such as IMF and Central Bank gold leasing, it is much harder for the cartel to manipulate the real physical stuff you can carry around in your suitcase!

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The more I think about it, the more it makes sense. The traditional banking and bullion dealing channels – I refer to them as the cartel – are playing all sorts of games with gold. They are manipulating the price, short selling gold, issuing derivatives of derivatives, and generally putting obstacles in the way of people like you and me who just want to invest in a precious base metal that has been a safe haven store of value for centuries.

That’s why I was so interested when a small gold production company, based offshore, came to me with a proposal. Instead of selling the gold they produce through traditional channels – the gold cartel – they are prepared to sell to small investors who commit to buy at least $10,000 worth of gold.

There’s nothing high tech about gold. It’s a physical thing that is impossible to fake. Simple chemical tests can prove the purity of gold. So the notion that you can’t buy it direct, cutting out the middleman, like any other commodity is ridiculous. You can.

Here are three things I like about the idea of buying gold direct from the producer:

The interesting thing here is a chance to buy physical gold offshore direct from the producer. There are three things I like about this opportunity:

• There is no direct exposure to banks or financial markets. You simply make a buy-sell contract to buy physical gold direct from the company that owns the actual mines and they will ship the gold to you worldwide.
• This method of purchase is open to much smaller investors. Rather than having to buy a whole bar, you can buy gold ingots with an investment of $10,000 or possibly even less if they see you are serious about building up your savings over time.
• The seller is an offshore corporation and the entire transaction can be done offshore.

If you are interested in learning more about buying gold bullion offshore direct from the producer, it’s just one of three completely different methods for purchasing physical gold bullion offshore privately, confidentially and anonymously that are explained in The Gold Report. The report also explains how you can safely store your offshore wealth in the form of a gold bullion in a secure offshore safe deposit box – in countries like Austria, Switzerland or even in the Caribbean.

The Gold Report will shortly be available here for $59.95. But if you would like to get yours FREE RIGHT NOW you just need to be a subscriber to The Q Wealth Report, then you can download it in the Q Wealth Members’ Area. Your personal copy is there waiting for you right now in pdf format. Besides The Gold Report, as a Q Wealth member you will also gain instant access to my Practical Ofshore Banking Guide 2009 together with a wealth of other material on offshore wealth management, asset protection, freedom, wealth and privacy!

So… what are you waiting for? Are you waiting for the government to devalue your savings out of existence? If you are ready to move offshore, and you haven’t yet done so, start right now!

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Gnomes on the ground in Zurich and Geneva are expressing shock and dismay about what is going on in the world of Swiss banking. Meantime, I’ve had several e-mails and calls in from people asking for quick solutions because UBS is closing their accounts and they don’t know what to do with their money!

The first thing to do is remain cool, calm and collected. Things are probably not as bad as they seem. Don’t do anything hasty, because decisions made under pressure may not be the best. It is possibly to calmly move your account over to other European private banks, and my firm is already helping a few people with that.

“We are committed to moving forward with the summons enforcement process. This action sends a strong signal to taxpayers hiding their money offshore. The IRS will be aggressive in pursuing people who shirk their obligations under the tax law. These people owe it to their fellow citizens to pay their fair share of taxes,” said IRS Commissioner Doug Shulman, in a Department of Justice Press Release. That is exactly what is going on here. Releases to the media intended to send strong signals to get Americans running scared.

The same press release also quotes John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. as saying: “At a time when millions of Americans are losing their jobs, their homes and their health care, it is appalling that more than 50,000 of the wealthiest among us have actively sought to evade their civic and legal duty to pay taxes.” Hmmm… sorry but that doesn’t quite add up. Funny isn’t it how they don’t draw the attention to the billions of dollars being wasted in Iraq, for example. That might be less of an incentive to pay taxes. Neither do they mention that the strategy for bailing out the American economy involves pumping still more billions of dollars into the pockets of bankers and insurance executives. Anyway, time to get down again from my soapbox and start talking practical solutions.

As I said in my article Is Offshore or Swiss Banking Dead?, “The why and the how of offshore banking for security and asset protection is alive and well. In fact, for American and European Union citizens, banking offshore is more important than ever.” In that linked article I went on to explain my reasoning, in case you are interested…

Anyway, here are the practical solutions for UBS and other affected account holders at Swiss banks, that bear repearing (because although we are hearing a lot about UBS, no doubt other Swiss banks are panicking about their American account holders too) I mentioned above that affected account holders should be taking “urgent steps to put things right.” What are those steps?

The fact is there are plenty of ways you can achieve the goals you are seeking, serious asset protection, and full compliance with all applicable laws and regulations still without handing your hard earned dollars over to the government for them to pour down the drain in bailouts and wars. Those are topics we frequently write about in The Q Wealth Report, and you will find some starting points in my Practical Offshore Banking Guide 2009 which is available right now for free download in the Members’ Section. The Practical Offshore Banking Guide includes some offshore banking notes especially for US citizens and residents, and another section especially for European Union residents and citizens.

Q Wealth Report is your resource for offshore asset protection, banking privacy, and wealth creation information. A subscription costs just $87 per year, and if you don’t feel  our service is worth a lot more than that once you have signed up, you are covered by our full no-quibble money back guarantee! Plus, as soon as you sign up you gain instant access to our members section to download a series of free reports including the Practical Offshore Banking Guide 2009 and of course The Gold Report.Thinking of which, the best advice for affected UBS and other Swiss Bank Account holders might just be to ask UBS to deliver them physical gold bullion which can then be shipped out of Switzerland. A good destination might still be Vienna, Austria, where it is possible still to open an anonymous safe deposit facility completely legally, just like in the old days… all details are in The Gold Report, which is also known as How to Buy and Hide Gold Bullion Offshore

P.S. No of course I’m not going to put the juicy how-to information here on a free blog for all to see. If you want the real facts on offshore banking and asset protection, check the links above.

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When is gold not gold? When it’s GLD!

More and more questions are being asked about  GLD, the world’s largest Gold exchange Traded Fund by far. For months I have been advising clients NOT to buy gold through GLD. If you are buying gold you should buy the physical metal whch actually clunks and clanks when you move it around.

The problem is, of course, that people think by buying GLD through their offshore brokerage accounts, they are buying gold. “Given that the stated amount of gold in the GLD Trust has grown to over 850 tonnes, it appears that a lot of investors believe that investing in GLD is the same thing as buying physical gold bullion,” says Dave Kranzler at gold website Le Metropole Cafe.

Nothing, however, could be further from the truth. According to GLD’s own prospectus, published when GLD was launched back in 2004, “This ETF is intended to track the performance of the price of gold.”

In a recent article entitled Ten Reasons to Avoid the Gold ETF, Financial Foghorn says:

Note that it doesn’t say it will own gold, or anything so prosaic. This Exchange Traded Fund that promises easy gold ownership for America is only going to track it. You know, like your cat tracking a crow in the back yard. And if GLD or your cat never quite gets there, well, it was an interesting exercise.

A careful reading of the first sentence should tell you that this is a document written by lawyers, and it is intended to be read by other lawyers who might be thinking of suing the guys represented by the first group of lawyers. The opening sentence is nothing if not defensible.

That is just the first of the ten reasons FF gives for not investing in GLD. You can read the rest of the article at the link above, and while you are at it you might also like to check out another good article, entitled Another Problem with the GLD ETF.

As I’ve said, ETFs may be a nice way of speculating. My own personal investment vehicle used to own substantial holdings in GLD through our Panamanian bank account, and in dollar terms we did very nicely on it thank you! But we liquidated all holdings as soon as it became clear that digits in the banking system are just not a replacement for real gold.

What then, is the solution? Well I actually have not one but three solutions for those who are interested in buying gold offshore. Three unique solutions, quite apart from the more obvious ones like buying physical gold bullion from your local bank or bullion dealer. Three unique solutions for buying gold completely offshore, in many cases anonymously, at least with the privacy and asset protection afforded by an offshore company. One of these methods I find particularly interesting – it’s a way you can securely buy golddirect from the mine, so as to speak, completely bypassing the banking cartel that would like you to believe that GLD is the same as GOLD!

You’ll be even happier to know that a report detailing these three solutions is yours FREE just for being a member of The Q Wealth Report, publishers of The Gold Report. It’s available right now for download in the Members’ Section at Q Wealth Report. If you’re not yet a member, this is an excellent opportunity to obtain not just my GOLD report, but lots of other useful information pertaining to offshore banking, wealth creation, asset protection and – perhaps most important of all – your personal financial privacy.

How and Where Can You Safely Store Your Gold Bullion?

In The Gold Report you will also learn how and where you can safely store your physical gold bullion once you have bought it. Besides a discussion of the pros and cons of storing your gold onshore in places like the USA and the UK, I also cover accessible and private storage methods in Austria, Switzerland and the Caribbean. And the storage method I recommend in Switzerland is NOT in a bank. Some of these storage methods are surprisingly cheap too!

All this is yours free as a member of Q Wealth. If you are not already a member, Join Q Wealth Today!

Want to read more? I’ve recently published an article at Q Wealth about How to Buy and Hide Gold Bullion Offshore.

Sphere: Related Content

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After my posting last night in which I announced (with little fanfare) my new Gold Report, a number of people have contacted me with further questions around my subject of ‘How to Buy and Hide Gold Bullion Offshore.’ I even received one enquiry from a journalist comparing my strategies to the Pirates of the Caribbean! Of course – the said journalist had not even read the report. Furthermore, because the main bulk of that posting was about putting gold bullion into IRAs and 401ks which are exclusively for Americans, it seems some people missed out on the fact that The Gold Report is extremely relevant to anyone, not just US taxpayers.

The Gold Report is primarily about asset protection – keeping what is yours safe and secure. That is the main reason I recommend physical gold bullion is to protect yourself from the risk of systemic collapse of the financial system. I’m not saying it’s going to happen – but some people might argue it’s already happened. Personally, I just believe in spreading risk around and avoiding excessive exposure to specific companies, banks or even countries. So the main reason I recommend you buy gold offshore is simple: in times of trouble, international diversification is a way of mitigating risk. Risks including, for example, the introduction of exchange controls or of ownership restrictions on gold bullion.

Fortunately, buying gold bullion internationally is a great asset protection strategy too. It doesn’t trigger any reporting requirements (at least not for citizens of OECD countries). You can have as much gold stashed abroad as you wish and you are under no legal obligation to tell a soul nor to report it on your tax returns. There is no chance for greedy lawyers to unearth your gold holdings either, if they are outside the financial system – so holding physical metals is a great way to enhance your freedom, your wealth, and your privacy.

But there is a further hidden factor in the game: The Gold and Banking Cartel. Just because retail bankers often discourage individuals from investing in gold bullion, doesn’t mean that “the bankers” have forgotten the advantages of gold. Gold is central to today’s financial system. And bankers are busy manipulating the gold price all the time.

They have developed some very sophisticated tools for doing this – and the biggest tool they have is what I call “virtual gold” – in other words, convincing people that they own gold when really they don’t. By reducing gold holdings to electrons trading on stock markets, or complex derivatives that people don’t really understand, they can manipulate the gold price just as any other stock price can be manipulated. Some people now see ETFs like GLD as the real gold price. Big mistake. An ETF is a stock, which tries to track the price of gold – but for a whole host of factors I can’t go into here for lack of space, it doesn’t always track the real gold price. Or worse still, it manipulates the real free-market gold price.

The good thing is that real gold bullion can still be held outside the control of the ‘cartel.’  Today, gold pricing is almost like black market currency trading. There is an official price for ‘spot gold’ and a completely different price if you actually want to buy the stuff, hold it and touch it. The Gold Report  focuses on how to acquire REAL physical gold bullion – and some interesting ways you can focus on price arbitrage between the ‘official’ price and the real ‘free market’ price. In other words, you can play the banking cartel at their own game! You can profit from the banking cartel’s manipulation of the gold price by cutting them out altogether. This involves buying gold direct from producers – a realistic option that not many of the gold writers have explored or even mentioned. All is explained in The Gold Report. You will learn exactly how, where, why, and who to contact.

Plus, you will learn about all the secure places to store gold – including some little known facilities and services in places like Austria, Switzerland and the Caribbean. You’ll discover why keeping gold in banks, even Swiss banks, is NOT a good idea. And compelling evidence that keeping your gold in the UK is not a good idea.

The Gold Report will shortly be available here for $59.95. But if you would like to get yours FREE RIGHT NOW you just need to be a subscriber to The Q Wealth Report, then you can download it in the Q Wealth Members’ Area. Your personal copy is there waiting for you right now in pdf format. Besides The Gold Report, as a Q Wealth member you will also gain instant access to my Practical Ofshore Banking Guide 2009 together with a wealth of other material on offshore wealth management, asset protection, freedom, wealth and privacy! So… what are you waiting for? Are you waiting for the government to devalue your savings out of existence? If you are ready to move offshore, and you haven’t yet done so, start right now!

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In the week in which the gold holdings of the Barclays iShares Gold Trust and the World Gold Council across the globe grew larger than the gold holdings of Switzerland, my new and long awaited 11,000 word report The Gold Report looks at the outlook for Gold during 2009 and beyond.

Many of my regular readers here are Americans and I know they are concerned about how the savings products they established as nice little nest-eggs for their retirement are now under threat, no longer the conservative safe havens they were designed to be. In 2008, employees lost on average 14%, or about $10,000, of their retirement money. (according to the article below)  Those with more than $200,000 are even worse off – they lost more than a quarter of their savings!

Just as I was putting the finishing touches this morning to my new The Gold Report about Gold and Precious Metals Investments Offshore (by the way, the report is downloadable free of charge for Q Wealth Members, right now) a new guest blog posting came in from Casey Research specifically covering how Americans can legally put physical gold bullion into their IRAs and 401ks. Here is the post in its entirety, with thanks to the editors of BIG GOLD.

Update: See also the posting about How to use an LLC in your IRA to hold gold bullion offshore

Should You Put Physical Gold Bullion into Your IRA? That’s the question asked by the editors of BIG GOLD, in this guest posting.

Within the last year, 401(k)s and IRAs have ceased to be a safe haven for Americans’ nest eggs. In 2008, employees lost on average 14%, or about $10,000, of their retirement money. Those with more than $200,000 are even worse off – they lost more than a quarter of their savings. No wonder that more and more people are asking whether they can, or should, use an Individual Retirement Account (IRA) to hold physical gold. Our answer to the first part of the question is yes, indeed you can. The tax rules governing IRAs leave room for gold. But our answer to the second part is equivocal.

Background

In 1986, as the U.S. Mint began issuing gold coins for the first time since 1933, a tax rule against holding “collectibles” in an IRA was relaxed to allow gold and silver Eagles. Later, in 1997, the Tax Payer Relief Act opened the IRA door for a broad spectrum of precious metals (gold, silver, platinum, and palladium), whether in the form of bullion or coin. The easier rules now apply to all types of IRAs, including traditional, Roth, Simplified Employee Pension (SEP) and Simplified Incentive Match Plans for Employees (SIMPLE).

The only stipulation is that all bars and all coins other than Eagles must be .995 fine. Thus Canadian Maple Leafs and Austrian Philharmonics qualify, but the South African Krugerrand, minted with an alloy, does not. Numismatic coins are also impermissible for an IRA.

Mechanics

The procedure for putting gold into an IRA is somewhat more complicated than with paper assets, but the requirements aren’t onerous.

To begin with, you have to find an IRA custodian that handles investments in metals, and they are few. Don’t look to your discount broker or a fund family like Vanguard; they won’t touch the stuff. Instead, you’ll need a specialist like the two original gold IRA custodial companies, American Church Trust (acquired by GoldStar Trust in 2007) and Sterling Trust. These are the most respected names in the business. An Internet search will turn up others, and if you do your due diligence on them, you might find one that works for you.

But remember that it’s especially important to choose a custodian with a solid reputation, because your gold will be stored at a location twice removed from you. A firm such as GoldStar or Sterling would be merely your IRA’s legal custodian; for vaulting your IRA gold, it will employ a certified depository, likely either HSBC Bank USA (which is also a COMEX gold depository) or Delaware Depository Services.

So chances are you’ll have to open a separate IRA for physical gold, which will be a matter of doing a little paperwork and paying some fees. Then you put money into your account and tell the custodian what to buy. (Dropping in coins you already own is against the rules – a “prohibited transaction.”) And if you want to mix in some paper – for example, to consolidate your gold, ETF, and mining stock holdings into one account – that’s fine, too.

The custodian will charge either a fixed annual fee or a percentage of the IRA’s value, with a ceiling. And the depository will charge its own fee for safekeeping. There also may be a transaction fee each time you add to your IRA. In all, you can expect the basic cost to run between $160 and $340 per year, depending on the fee structure of the custodian you choose.

You can make the same tax-deductible contribution each year to a gold IRA as with any other IRA. The current limit is $5,000, or a “catch-up” limit of $6,000 for those 50 and over. Custodians generally set their minimum initial investment at that $5,000 mark but will accept smaller subsequent contributions.

When the time comes to withdraw from your gold IRA, you can choose to so in cash or bullion. If you take cash, the custodian sells the gold and distributes the proceeds, with the money then taxed at your ordinary income rate, just as with any other asset held in an IRA. If you take physical gold from your IRA account, it’s called an “in-kind
distribution.” For tax purposes, your withdrawal will be assessed at the “fair market value” for gold on that day. This will not be the spot price but a judgment made by an independent assessment company thay your custodian contracts with for that purpose.

Who Should Consider It

That takes care of the how-to. The trickier part is whether it’s a good idea. For most readers, the answer is likely no. Here’s why.

The idea behind a traditional IRA is twofold. First, reduce present taxes by taking a deduction upfront for your yearly contribution of $5K or $6K. Second, defer taxes on the investment income and gains that build up inside the IRA until after retirement.

Physical gold, of course, doesn’t generate income. So you might be wasting part of your IRA’s tax-saving power by filling it with gold instead of investments that earn interest, dividends, or trading profits.

Does that mean it never makes sense to have physical gold in an IRA? No. There are some situations when an IRA may be the right place to hold part or all of your investment in physical gold.

No-income portfolio. If you’ve decided that the outlook for bonds and dividend-paying stocks is so bleak that you don’t want any at all, then putting gold into your IRA won’t crowd out any income-earning investments.

Strategic switching. Perhaps you plan at some point, when you judge that the gold bull market probably has run its course, to liquidate part of your gold. Whatever gold you have in an IRA then could be sold and reinvested, with no loss to current tax, in something else.

IRA Only. If your IRA is the only investment vehicle you have, and you want gold, then using funds within the IRA to buy gold may be the only way for you to hold it.

Transfers and Rollovers

In researching this, we chatted with Glen Kirsch of Asset Strategies International, who has been dealing with gold and gold-related investments for more than thirty years. We asked Glen what would be the benefit of a gold IRA. His experience accords with our analysis of when putting gold in an IRA makes sense.

He said he rarely if ever sees people open a gold IRA just to deposit that five grand a year. What he does see is individuals making the flight to quality with their accumulated retirement assets. Say, someone with most of his wealth in a pension fund limited by a menu of poor investments is searching for a way out. If the individual is generally suspicious of paper investments, a gold IRA will look attractive.

Making the move is simple if the pension fund is already an IRA. You’re free to transfer funds from an IRA that’s invested in stocks or anything else directly into a gold IRA.

Or if the pension fund is run by your employer, when you leave (quit, retire, or get fired), you can roll your interest in the pension fund over into an IRA, without tax consequences, and use the money to buy gold.

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It is no accident that gold is currently trading at around $980 again. Physical gold is a hedge for troubled times – in an economic crisis, the gold price is bound to go up dramatically and so are, by extension, stocks of major gold producers and near-producers. If you want to preserve, and multiply your assets, BIG GOLD is the go-to advisory for all things gold-related. Click here to learn more.

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A televised address last week by French President Nicolas Sarkozy relaunched attacks on the two tax haven principalities bordering France: Andorra and Monaco, as well as the Grand Duchy of Luxembourg. Paris this week dispatched an envoy Christian Fremont to Andorra to put further pressure on the Andorran government, who have otherwise been distracted this week by record snowfalls, reports our man in Andorra.

Andorra is the only European country with bank secrecy written into its constitution, and has been blacklisted as “uncooperative” by other European authorities in the past, along with Liechtenstein, another mountainous tax haven principality.

Sarkozy announced that there would be no bonuses in 2009 at French banks that had received state aid but said he was “more shocked by the system of pay” for traders, whom he accused of speculation, than he was for bankers. “That’s what you have to forbid.” At the same time he said France would “review its relations” with neighboring financial havens such as Luxembourg, Andorra and Monaco. The Sarkozy announced that he and German Chancellor Angela Merkel would be attending a summit in London in early April at which the matter would be discussed further.

Andorran leader Albert Pintat, however, reaffirmed his government’s commitment to co-operation and to working with other European states.

Tiny Andorra has never promoted itself as a tax haven but has established a substantial if low profile/discreet financial services and offshore banking industry over the last twenty or so years. Andorra is one of the few countries that still offered numbered accounts, although they are not anonymous and may not be used for conducting international bank transfers.

Andorran banks have, however, been quietly establishing contingency plans and planning international diversification and expansion ever since Andorra signed up for the European Union Savings Tax Directive. The largest Andorran Bank Credit Andorra for example last year received a full bank license for its new bank Credit Andorra (Panama) S.A. based in the Punta Pacifica district of Panama City, Panama. Other Andorran banks have established presence in tax-friendly jurisdictions such as the Bahamas and Uruguay, as well as in higher tax jurisdictions such as Mexico, Germany and Switzerland.

Want to know more about banking in Andorra, Liechtenstein etc? Further information on banking in Andorra and Switzerland, including direct contact addresses for opening accounts at Andorran bank head offices or their international private banking subsidiaries, may be found in Peter Macfarlane’s Practical Offshore Banking Guide 2009, available free for download to members of The Q Wealth Report. The Q Wealth Report is a privately-published newsletter and membership club covering international living and investing, wealth management, asset protection and prosperity. Q Wealth has also announced a forthcoming new service to purchase physical gold bullion – at a discount!

Changes like this do demonstrate how important it is to keep up with the latest news and how it may impact your own private offshore banking arrangements. Peter Macfarlane will be giving a presentation on offshore banking at the “Meet the Men” offshore banking and wealth creation event in Bantry, Ireland, this March.

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