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What You Do and Don’t Have to Disclose About Your Overseas Metals Stash
Publisher’s Inner Circle member Stephen C. writes: Owning silver the metal in Switzerland… the highest value was $35,000 US. I did not sell. Thus no profit. I own nothing else anywhere outside of the USA.
Do I have to let the US gov’t know about this when I am doing my taxes? Do I have to do FBAR? Any caveats? And thanks…
Lee responds: I must begin with my usual caveat for questions that pertain to personal tax situations. And that is that I can only offer general information, plus my own informed opinions, in Ask Lee Now. I cannot provide personalized tax advice. If you need help doing your taxes, please consult with a tax professional. (Calling the IRS for help will probably be a waste of your time. Even if you manage to get connected to a live person, any “help” you get from an IRS representative is likely to be incomplete, inaccurate, or both.)
Okay, so with that out of the way, let me address the issue of whether precious metals held overseas need to be reported. The answer is that it depends on how they are held. If you own silver (or gold) through a bank or brokerage account, then your metal may be considered a “financial asset” that is subject to mandatory annual reporting. The basic rule is that any foreign financial accounts with balances of $10,000 or more must be reported. No matter what the underlying assets are.
However, it is possible to own precious metals stored offshore without triggering FBAR or other reporting requirements. For example, in most cases you don’t need to report any gold or silver bullion coins held in an overseas vault or safe-deposit box. If it’s bullion storage, it’s not reportable. If it’s a bullion account, it is.
I caution that the distinction between bullion accounts and bullion storage can be fuzzy. Internet-based bullion programs such as GoldMoney, which offer gold and other precious metals stored in overseas vaults, don’t shield customers from reporting requirements. The IRS considers these types of holdings to be financial accounts subject to FBAR reporting on balances greater than $10,000.
Foreign precious metals storage isn’t reportable. A foreign precious metals account is. I hope this helps!
A Doctor Tells You About What to Ask Your Doctor
David S. writes: I want to add to your letter on evaluating doctors. As you are aware, people mistake charm and a good bedside manner for competence and compassion.
I am a physician, of course, and there is a simple litmus test I use to tell a good one from a bad one-good doctors know their patients-allergies, medications, labs, pertinent medical history and current medical issues. There are plenty of brilliant, but sloppy docs. The easiest way to identify the good and the bad is just to ascertain how well they know their patients. At the end of a visit, just ask a few questions about things you have discussed. You’ll figure it out pretty quickly.
Lee responds: Thank you for sharing your insights. Finding a good doctor can literally be a life saver.
Another simple thing patients can do to screen physicians before they meet them face-to-face is to inquire into their level of experience. Generally speaking, the more experience a doctor has in his field, the better. It’s one of the most reliable indicators of a doctor’s competence. Of course, there are individual exceptions. But a super-brilliant doctor fresh out of medical school is still likely to become more proficient after several years of being in practice.
What About the Australian Dollar?
Chaya K. writes: My father is a subscriber to Independent Living, which I read as well. I have a question for you about the Australian Dollar. I am 19 years old, and working in Australia for the year before going to college. I have noticed that the Australian dollar is on the decline, and my father sent me an article saying that it will only go down. I wanted to know when you think would be the best time to change my money into American dollars. Should I do it now, before it gets really bad, or should I wait and see what happens to the American dollar as well?
Lee responds: The Australian dollar has taken quite a fall in recent months. In February, it fell to nearly six-year lows against the U.S. dollar.
The fortunes of the Australian dollar are inextricably tied to commodity prices. And they have fallen hard since the second half of 2014. Exports of iron ore and other raw materials are a big component of Australia’s economy. And demand from China has been slumping. In another bearish development for the currency, the Reserve Bank of Australia in February cut its benchmark interest rate to an all-time low of 2.25%.
Mind you, 2.25% is still considerably higher than the short-term rates offered in the United States, Japan, and Europe (where rates have absurdly gone negative). So the Aussie dollar does offer some relative value here. Eventually, commodity prices will rebound and so will Australia’s currency. Whether that will happen this year is another question. I wouldn’t try to pick the bottom in the Australian dollar right here, but I wouldn’t rush to exchange into U.S. dollars either.
I tend to take a longer-term perspective. Looking out over the next several years, I’d rather hold Australian than U.S. dollars. A stronger case could be made for holding Australian equities, some of which may actually benefit from a weaker currency since much of their revenues are denominated in foreign currencies.
If/when you’re in a position to make a long-term investment, you could do worse. The Heritage Foundation’s 2015 Index of Economic Freedom ranks Australia 4th in the world for economic freedom – well ahead of the United States’ 12th place ranking. The Land Down Under is a pretty good place to do business.
Best of luck in your work and future studies!
Where Are the Best Energy Investments Now?
Robert M. writes: I received a brochure…about investment opportunities in the natural-gas boom and conversion to real (and cheap) gasoline by breaking down natural gas molecules, then using a quickening catalyst to re-assemble into liquid gasoline. Is this the real reason for the sudden natural gas “boom”? Finally can you recommend for investment any companies involved in the conversion of natural gas to 100% liquid gasoline?
Seth Van Brocklin responds: The boom in North American natural gas production has been driven primarily by advances in fracking technologies. Increases in supply have pressured gas spot prices lower. Low prices for product crimp (and in some cases eliminate) profit margins for producers. The First Trust ISE-Revere Natural Gas (FCG) ETF has taken a significant hit over the past few months amid steeply falling natgas prices.
The upshot is that there are growing investment opportunities in pipelines, tankers, and other players involved in the transport of natgas and liquefied natural gas (LNG). You might want to take a look at some of the publicly traded master limited partnerships that own pipelines and other infrastructure involved in energy transport. For example, Teekay LNG Partners (TGP) or Golar LNG Partners (GMLP). Both stocks are constituents of the Guggenheim Shipping ETF (SEA). If Congress and the White House finally agree to lift restrictions on LNG exports, we could see an extended boom in the related stocks.
How Not to Get Eaten By the Legal Sharks
Clifford P. writes: A few issues back you recommended a legal plan. I have been looking thru back issues and cannot find it.
Lee responds: Our popular manual, Inside Secrets of Today’s Crooked Legal System, contains action plans for defending your wealth and freedom against various legal threats. You can order it online at Independent Living’s Survival Pro Shop (www.survivalproshop.com) or by phone (877- 371-1807). This guide is the first thing you’ll want to reach for in the event of a legal entanglement.
Precious Metals IRA Through an LLC?
Ron S. writes: Have you heard anything about storing precious metals in an IRA through Augusta Precious Metals? It is not quite storing it in your own home but in a safe deposit box at a bank through an LLC. The LLC is how the metals are not intermingled with your other personal investments.
Lee responds: The way precious metals IRAs normally work is that you arrange for third-party secure storage of your coins through an account custodian. The IRS doesn’t allow individuals to take direct possession of coins held in IRAs (though you can take direct possession of the coins when you decide to take IRA distributions).
But some enterprising legal minds have come up with LLC structures that can hold precious metals, make the owner of the metals the sole manager of the LLC, and then have the LLC be purchased as an asset within an IRA. I like to keep things simple and minimize investment costs, so I’m wary of going through these extra layers of legal structure. They give you no additional tax or privacy benefits, at least as far as I can see. If what you want is the most direct control over your precious metals, then I’d suggest simply holding them outside of an IRA.