Geographic Diversification - Q and A Thread

[murphy_p_t]

"In theory on could bring up to 10k across the border, with each Eagle or Maple worth $50."

this is sounds like a risky theory to test out with your own coins, without declaring it at customs. the downside risk seems well in excess of any upside. I'd love to be proved wrong on this, however.

[craigr]

My inclination is if I were to go to the risk of bringing coins into Canada, I'd rather just look into storing gold overseas at a place like Perth Mint or Switzerland for larger sums. Bringing gold through customs like that is taking a big risk. IMO. There is just no way to know what the custom's officers may do or how much time and money it may take to recover assets even if unlawfully seized. I'd be careful.

[MachineGhost]

I can't remember if I posted this elsewhere or not, but back during the gold confiscation days, the way the IRS would make sure it would get all the illegal gold was by posting Special Agents in safety deposit box rooms.  When a customer came in and opened their safety deposit box, the Agent would investigate the contents for any illegal gold to confiscate and promptly do so if found.  Tough shit!

MG

If they're confiscating gold, it really helps if they know you have it.  I'd be much more nervous about assets that supply the IRS with a 1099 statement every year than using some physical gold in your home and safety deposit box that they never know anything about.

I'm not suggesting fraud outright or anything... just that if you try to think of a logical chain of events, in a world of wealth in the form of 1's and 0's, busting into peoples' homes and searching their safes is WAY down the list of "efficient ways to confiscate wealth."

It's much easier to have a high tax rate, strict reporting requirements by financial institutions, a printing press, and legal tender laws.

I know we talk about government being stupid, but when it comes to plucking the hen without us realizing it, they really know what they're doing.

I think one fair question to honestly ask yourself with all this is, "When does the government become so confiscatory or illegitimate that I disobey reporting or tax law."  I'm not saying we're even close to that point, but I think if we're honest with ourselves we won't be following laws into our own financial ruin.  At some point we'll say, "I'm not reporting this to the IRS."  At that point, it'd be good to have physical gold on hand, as any securities purcased via financial institutions have to be reported.

[BearBones]

Bringing gold through customs like that is taking a big risk. IMO. There is just no way to know what the custom's officers may do or how much time and money it may take to recover assets even if unlawfully seized. I'd be careful.

For customs at airport, I would be worried, since metals would be picked up by scanners, generating a lot of potential commotion, even if legal. But not as much for driving. First of all, it is uncommon for autos to be searched, especially when entering Canada. And it would be exceedingly uncommon for a search thorough enough to discover some well hidden some gold coins. Even more important, you are not doing anything illegal. I would worry a bit when carrying a large value of gold or cash ANYWHERE, but you do not have to declare anything less that $10k when crossing the border. Maples are legal tender defined by their face value. See these links and let me know if you have a different conclusion:
http://www.cbsa-asfc.gc.ca/publications ... 2-eng.html
http://en.wikipedia.org/wiki/Canadian_Gold_Maple_Leaf

[craigr]

Bringing gold through customs like that is taking a big risk. IMO. There is just no way to know what the custom's officers may do or how much time and money it may take to recover assets even if unlawfully seized. I'd be careful.

For customs at airport, I would be worried, since metals would be picked up by scanners, generating a lot of potential commotion, even if legal. But not as much for driving. First of all, it is uncommon for autos to be searched, especially when entering Canada. And it would be exceedingly uncommon for a search thorough enough to discover some well hidden some gold coins. Even more important, you are not doing anything illegal. I would worry a bit when carrying a large value of gold or cash ANYWHERE, but you do not have to declare anything less that $10k when crossing the border. Maples are legal tender defined by their face value. See these links and let me know if you have a different conclusion:
http://www.cbsa-asfc.gc.ca/publications ... 2-eng.html
http://en.wikipedia.org/wiki/Canadian_Gold_Maple_Leaf

The car search is true, but I've crossed the border many times and it does happen. It could be random, who knows. Yes it's not illegal, but if you were a customs agent seeing someone bringing in $10s of thousands worth of gold bullion but claiming face value, wouldn't  you be a little inquisitive about what was going on? I would.

I suppose my point really should be that it might be safer to just go into Canada and retrieve money from your bank there if they have a branch. Then go to a bullion dealer directly and do the purchase.

But even then, if you were to go through the trouble I would rather look into other overseas options which are just as involved (maybe even less actually).

[MediumTex]

Bringing gold through customs like that is taking a big risk. IMO. There is just no way to know what the custom's officers may do or how much time and money it may take to recover assets even if unlawfully seized. I'd be careful.

For customs at airport, I would be worried, since metals would be picked up by scanners, generating a lot of potential commotion, even if legal. But not as much for driving. First of all, it is uncommon for autos to be searched, especially when entering Canada. And it would be exceedingly uncommon for a search thorough enough to discover some well hidden some gold coins. Even more important, you are not doing anything illegal. I would worry a bit when carrying a large value of gold or cash ANYWHERE, but you do not have to declare anything less that $10k when crossing the border. Maples are legal tender defined by their face value. See these links and let me know if you have a different conclusion:
http://www.cbsa-asfc.gc.ca/publications ... 2-eng.html
http://en.wikipedia.org/wiki/Canadian_Gold_Maple_Leaf

What about the gold sniffing dogs?

[BearBones]

My inclination is if I were to go to the risk of bringing coins into Canada, I'd rather just look into storing gold overseas at a place like Perth Mint or Switzerland for larger sums.

Part of the reason for geographic diversification is to reduce the risk of confiscation in a state of economic calamity. For Perth Mint, there would be a paper trail leading right to the asset, and you would need to file a FBAR form yearly to IRS for anything over $10k, right? So I do not see that as a whole lot of protection. And for the average investor, how would one get gold into a Swiss vault without a similar paper trail? You would not take it through the airport. Wire money to gold dealer in Switzerland, pick up personally, then find a bank that will store it for you discretely?

I raise these points for academic reasons, particularly if you are writing a book chapter on it. If there is no reasonably safe and effective way to hold gold overseas as there was in the day of HB, is it worth it?

[craigr]

I raise these points for academic reasons, particularly if you are writing a book chapter on it. If there is no reasonably safe and effective way to hold gold overseas as there was in the day of HB, is it worth it?

Yes but please realize under the new rules even gold metal in a safe deposit box over the limits is probably reportable. So even then you'd still be breaking the law if you didn't report.

But your point is valid if you wanted to not report anything. Paper trails lead to many assets and reporting. This is why many banks just don't want to hassle with US persons any more. They don't want to get involved in all the red tape liability.

The reality is probably that if there was an order to repatriate assets and they knew you had it, you could still do some things to prevent it. Tying up the demand in foreign courts is one way. Converting the assets before the action into foreign real estate may be another. Finally if it got that bad, just leave the country with your family if you are able because it's probably going to just get worse.

[BearBones]

I can't remember if I posted this elsewhere or not, but back during the gold confiscation days, the way the IRS would make sure it would get all the illegal gold was by posting Special Agents in safety deposit box rooms.  When a customer came in and opened their

All the more reason to have some gold in a foreign country, if legal and practical and if one believes that this is a potential threat.

[craigr]

Actually I'm not sure the safe deposit seizure stories of 1933 are true.

[craigr]

Actually I'm not sure the safe deposit seizure stories of 1933 are true.

Continuing...

There are plenty of other reasons to diversify geographically such as to protect against natural or manmade disasters, serious banking crises that shut down the financial system for some time, etc.

[MediumTex]

Actually I'm not sure the safe deposit seizure stories of 1933 are true.

I don't think they are.

The myth of a safe deposit box seizures order

According to a folk rumor on the internet, President Roosevelt ordered all the safe deposit boxes in the country seized and searched for gold by an I.R.S. official. A typical example reads:

    By Executive Order Of The President of The United States, March 9, 1933.

    By virtue of the authority vested in me by Section 5 (b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, in which Congress declared that a serious emergency exists, I as President, do declare that the national emergency still exists; that the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people.

    Therefore, pursuant to the above authority, I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possessions of gold and silver be tendered within fourteen days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government.

    All safe deposit boxes in banks or financial institutions have been sealed, pending action in the due course of the law. All sales or purchases or movements of such gold and silver within the borders of the United States and its territories and all foreign exchange transactions or movements of such metals across the border are hereby prohibited.

    Your possession of these proscribed metals and/or your maintenance of a safe deposit box to store them is known by the government from bank and insurance records. Therefore, be advised that your vault box must remain sealed, and may only be opened in the presence of an agent of the Internal Revenue Service.

    By lawful order given this day, the President of the United States.
    Franklin Roosevelt – March 9, 1933

Most of this text does not appear in the actual Executive Order.  In fact, safe deposit boxes held by individuals were not forcibly searched or seized under the order and the few prosecutions that occurred in the 1930s for gold hoarding were executed under different statutes. One of the few such cases occurred in 1936, when a safe deposit box containing over 10,000 troy ounces (310 kg) of gold belonging to Zelik Josefowitz, who was not a U.S. citizen, was seized with a search warrant as part of a tax evasion prosecution. Approximately 500 tonnes of gold were sold to the U.S. Treasury in 1933 at the rate of $20.67 per troy ounce.

LINK

[BearBones]

What about the gold sniffing dogs?

[MediumTex]

What about the gold sniffing dogs?

I pity the fool who tries to get the shiny stuff through my checkpoint.

[AdamA]

I guess we're done with drop bear and yeti?

[l82start]

i heard the Japanese have invented a gold sniffing robot dog now

[murphy_p_t]

"Yes but please realize under the new rules even gold metal in a safe deposit box over the limits is probably reportable. So even then you'd still be breaking the law if you didn't report. "

why would a deposit box, under only your control, or the contents, be reportable? The contents are your property. Currently, foreign property (even land, buildings) are not reportable, to my knowledge. Is there a part in IRS codes that states that its reportable, or a precedent confirming so? This doesn't sound accurate.


In Canada, can a safe deposit box be opened without opening a bank account, which IS reportable for those with > $10k in accounts outside the US?

[MediumTex]

FWIW, here is a discussion of the issue I ran across:

U.S. Reporting Of Gold Offshore

Some readers are confused about IRS reporting of gold certificates. For example some people purchase gold with the Perth Mint and having it stored in Australia.

The question is whether this physical metal held oversees would be considered a “financial account”? for FBAR purposes?

The IRS currently does not require that direct ownership of gold be reported. If gold is held in a foreign safety deposit box, for example, it would not need to be reported.

However, an account relationship exists whenever another person or entity has control of funds or assets on your behalf. For example, in the above example, if the bank had the key to your safety deposit box and could be instructed to remove the gold and sell it for you, there is an account relationship. If a custodian holds gold on your behalf, that relationship is considered an account relationship and should be reported as an account on the FBAR. The value of the account would be the value of the gold.

Allocated metal held with a third party would be debatable as to whether or not it would constitute a financial account.

[craigr]

If you have the key and nobody is allowed access then the box is probably is not reportable. But I'm not a tax attorney so please talk to one.  ;)

But if that entity is transacting metals in the box for segregated storage, etc. then it probably is reportable. And of course any sale with gains is reportable so at that point the jig is up if you are trading the account and get caught. Then there is the issue of all that money wiring around to foreign countries so you can buy the gold. And BTW, the new FATCA laws are going to start forcing non complying banks to automatically add a withholding tax on all wires coming out of the US. So unless you are smuggling out cash, you're going to have to put that money in a reporting institution so again there is that paper trail to explain. And if you send it to a non-complying institution, they are going to lop off a large withholding tax on the entire wire.

So these things are becoming much harder and the noose is tightening on real financial privacy in the US. It's quite bad.

Problem with tax laws is that the system always assumes you are guilty and it's a bad idea to be the test case.

[murphy_p_t]

speaking of that 30% withholding, has anyone encountered local people working in the financial industry aware of this? I was in a local branch of a multinational bank...the manager knew nothing of this...I asked him about it after he was telling me about customers being able to move funds from the US to a Mexican account at their bank.

[craigr]

Actually I'm not sure the safe deposit seizure stories of 1933 are true.

Did the guy handing out the notices to anyone about to open their safe box look anything like this ?

LOL.

In my mind, most politicians look like that.

[BearBones]

Then there is the issue of all that money wiring around to foreign countries so you can buy the gold. And BTW, the new FATCA laws are going to start forcing non complying banks to automatically add a withholding tax on all wires coming out of the US. So unless you are smuggling out cash, you're going to have to put that money in a reporting institution so again there is that paper trail to explain. And if you send it to a non-complying institution, they are going to lop off a large withholding tax on the entire wire.

On a related note, is there a way to buy gold in one's own country or overseas without a paper trail? I wonder what the least visible and least documented method is for purchase of bullion, especially if one does not use cash itself. If this has not been discussed, perhaps it is worth a thread under the gold discussions.

[BearBones]

In Canada, can a safe deposit box be opened without opening a bank account, which IS reportable for those with > $10k in accounts outside the US?

I bet so, but I have not checked. However, as I posted earlier, it may be better to have an account so that the SDB can be paid for directly and so that there is less concern about the box being deemed abandoned if you do not visit occasionally. And it might be better if the total accounts at the institution were less than $10k so that you do not have to file FBAR.

[MachineGhost]

That will teach me not to rely on fearful hearsay!

MG

Actually I'm not sure the safe deposit seizure stories of 1933 are true.

I don't think they are.

The myth of a safe deposit box seizures order

According to a folk rumor on the internet, President Roosevelt ordered all the safe deposit boxes in the country seized and searched for gold by an I.R.S. official. A typical example reads:

    By Executive Order Of The President of The United States, March 9, 1933.

    By virtue of the authority vested in me by Section 5 (b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, in which Congress declared that a serious emergency exists, I as President, do declare that the national emergency still exists; that the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice, and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people.

    Therefore, pursuant to the above authority, I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possessions of gold and silver be tendered within fourteen days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government.

    All safe deposit boxes in banks or financial institutions have been sealed, pending action in the due course of the law. All sales or purchases or movements of such gold and silver within the borders of the United States and its territories and all foreign exchange transactions or movements of such metals across the border are hereby prohibited.

    Your possession of these proscribed metals and/or your maintenance of a safe deposit box to store them is known by the government from bank and insurance records. Therefore, be advised that your vault box must remain sealed, and may only be opened in the presence of an agent of the Internal Revenue Service.

    By lawful order given this day, the President of the United States.
    Franklin Roosevelt – March 9, 1933

Most of this text does not appear in the actual Executive Order.  In fact, safe deposit boxes held by individuals were not forcibly searched or seized under the order and the few prosecutions that occurred in the 1930s for gold hoarding were executed under different statutes. One of the few such cases occurred in 1936, when a safe deposit box containing over 10,000 troy ounces (310 kg) of gold belonging to Zelik Josefowitz, who was not a U.S. citizen, was seized with a search warrant as part of a tax evasion prosecution. Approximately 500 tonnes of gold were sold to the U.S. Treasury in 1933 at the rate of $20.67 per troy ounce.

LINK

[vnatale]

On the subject of geographic diversification, if you don't have a passport you should get one.

It's an easy thing to do and just involves some forms, a fee and some waiting. 

As an extreme provincial I've never had a passport.

I'm assuming, though, many reading this do have one.

How easy is it to do?

If I were to start this process on Monday where does one start?

What are the total hours one has to invest in getting one? What is the time frame from when you start the process to when you actually get one?

Finally, what are the costs involved? Does it have to be periodically renewed?