Gyroscopic Investing

Hello, everyone,

You are all extremely knowledgeable and I am grateful to have found such a place as this. I have been reading this site (and Harry Browne's book, and the blog, and, and, and...), actually, for more than a year but I have yet to pull the trigger on jumping into the PP. I have worked through every piece of the PP plan and how it would be best be implemented for my family... except for the gold part, which is what has kept me from starting.

I hear you all when you say that physical gold - coins in hand - is far preferable to electronic, and I agree with you. That said, however, please trust me when I say that my husband and I cannot buy gold coins. We do not live in the United States, will not be living in the United States, will be moving internationally too frequently and cannot take coins with us through airports, may be living in countries where I wouldn't take my wedding ring let alone gold coins, will be away from the United States far too long and/or sporadically to keep coins in a safety deposit box, etc. It just... isn't happening. I would go on and on about how it isn't happening, but it would bore everyone to death. Suffice it will to say: can't do it.

Thus I am left chewing my nails over which electronic form of gold to choose, since I know that electronic gold is better than no gold at all. It would all be in a taxable account. I read about GTU and how some of you feel it's wonderful (and it sounds wonderful - very trustworthy, has been around forever, very transparent), but I worry because it just doesn't seem to keep good track of the fluctuation of gold prices, which is why we're all buying gold to begin with. Perhaps that is just me; I will admit to not being very savvy. I read about IAU and GLD and how some feel this ETF or that ETF is owned or managed by untrustworthy sources, etc., and I just... haven't been able to choose.

Because this would be for a taxable account, I worry about tax time and how I have to file forms for this or that or declare this or that gold fund and I worry I won't be able to figure out how to deal with the tax issues. I'm rather a perfectionist, and if I cannot find the PERFECT SOLUTION, I cannot take the jump. Please help, if you don't mind - I am literally frozen in a universe of gold indecision, and since I've been frozen in the universe of indecision for a year now (with our money in a money market account which, I know, I know, is hideous in and of itself) I'm reaching out to all of you brilliant minds.

Thank you!

I sympathize with the analysis paralysis. It often hits me too, and what I find helpful is to just dip your toe in. Start small! You don't need to dump your entire life savings into a PP; maybe put a small fraction of your available funds into PRPFX or PERM, and if you're satisfied with the performance, you can try out a DIY PP. By way of example, I started my first taxable PP with just $4,000! I actually swapped out the IAU for GTU and the TLT for EDV in the first week as a result of reading more over here. The important thing was that I started small, and was able to work out the issues I found while it wasn't dealing with huge sums, which might have spooked me into indecision.

Personally, I'm a big fan if GTU in a taxable account. Lowering your long-term capital gains tax rate down to 15% is a huge deal. I don't think one more yearly tax form to file is really that much of a hassle considering that you're already doing your taxes and dealing with annoying forms already, and several of the tax softwares out of there apparently can file it for you. And in the long run, GTU is probably going to stay within a percentage point or two of the spot price of gold.

MomTo2Boys wrote: Because this would be for a taxable account, I worry about tax time and how I have to file forms for this or that or declare this or that gold fund and I worry I won't be able to figure out how to deal with the tax issues. I'm rather a perfectionist, and if I cannot find the PERFECT SOLUTION, I cannot take the jump. Please help, if you don't mind - I am literally frozen in a universe of gold indecision, and since I've been frozen in the universe of indecision for a year now (with our money in a money market account which, I know, I know, is hideous in and of itself) I'm reaching out to all of you brilliant minds.

I think you will find the Hard Assets Alliance to be what you're looking for.  Physical gold coins with the convenience of electronic purchasing/selling as well as being able to move it to different vaults around the world.  Since it is based in the U.S. theres no pesky reporting or taxation issues and you can take personal delivery of your gold coins anytime, anywhere in the world.

Be aware it is relatively new, though backed by credible institutions, so don't go hog wild.  Get your feet wet first.  It is free to open an account until the end of the month.

Another possibility is goldmoney.com.  Their storage fees are less than the expense ratio of GLD or IAU, but you pay a premium when you buy that's likely more than the brokerage fee for buying GLD or IAU.  For a very long term investment, I suspect they work out to be cheaper than GLD/IAU (although none of GLD, IAU, or goldmoney.com have very long, or stress tested, histories to compare).

If you are worried about reporting, then don't store metal overseas (and this coming from someone from the Perth Mint!)

The reporting rules around foreign financial accounts is confusing, see https://nestmann.com/irs-clarifies-offs ... les-again/ for some background on FBAR and FATCA reporting requirements.

In that respect, you need to be careful with online systems like BullionVault, GoldMoney and Hard Assets Alliance if you choose an offshore storage location. Note the comment "pesky reporting or taxation issues" I think referes to FBAR and FATCA, not that you don't have to pay tax on gains on metal in HAA.

I don't think it matters from a tax reporting/accounting point of view whether you buy gold via an ETF, mutual fund, physical in a vault - you are going to have to pay tax on capital gains either way.

Coin dealer APMEX has an associated storage business called CITADEL where you just buy from them and they put it into an account in your name. Other dealers have similar arrangement but make sure it is not just stored in the dealer's business but with a third party.

I do think you're limiting yourself with concerns about the reporting. Just get advice and report all the gold on the relevant forms and you're covered. While not a recommendation, BullionVault, GoldMoney and Hard Assets Alliance all look OK to me.

Of course I would say if you are super paranoid then a Perth Mint Depository Allocated account is best, as gold held with us is Government Guaranteed and also fully insured, plus we are totally not online so no chance of anyone hacking your account.

You can also check out Everbank. They are a US domiciled bank that does allocated gold metal accounts. However they are under US tax rules so reporting issues will not be a problem and you get actual allocated metal as well if that is a big concern for you.

https://www.everbank.com/personal/precious-metals.aspx

For whatever it is worth I just split between different gold ETFs and call it a day.  This carries its own risks but I really can't think of anything better that doesn't involve owning a fortified bunker. 

I begrudge no one for putting more effort into it than that but I strive for the greatest security to effort ratio possible since the level of assurance I desire in life is unattainable anyhow.

Best solution is usually rhe simplest one.

The good news is that the problem you are describing is relatively easy to solve and there are multiple good solutions.

I don't see why a safe deposit box in the U.S. wouldn't work just fine for part of your gold.  So what if you're going to be out of the country for a while?  You can prepay your box rental or just have the bank draft your account for the rental once a year.  It's not a big deal.

For another part of your gold holdings, one of the gold ETFs or closed end funds work great.  You could split your "paper" gold between IAU and GTU and have a lot of safety and diversification there as well.

Let's say you had $50,000 for a gold allocation.  You might put $30,000 into gold coins stored in a safe deposit box, and then buy $10,000 of GTU and $10,000 of IAU.  When it came time to rebalance, if you were selling you might sell out of your GTU holdings for the best tax treatment.

Over time, GTU will track the price of gold.  Just don't buy it when the premium to NAV is over about 3.5% and you will be fine.

MangoMan wrote:

Pointedstick wrote:
Personally, I'm a big fan if GTU in a taxable account. Lowering your long-term capital gains tax rate down to 15% is a huge deal. I don't think one more yearly tax form to file is really that much of a hassle considering that you're already doing your taxes and dealing with annoying forms already, and several of the tax softwares out of there apparently can file it for you.

TurboTax 2011 did not include / support Form 8621. This would preclude electronic filing of the rest of the return. Can someone please clarify what the goal of this form is anyway? How is it ideally filled out to get max capital gain benefit?

I've heard that TaxAct can file it. The benefit is that if you file that form every year you own GTU, if you sell any for a long-term capital gain, the tax rate on the gain is 15% instead of 28%.

Do you have to file any US fed tax forms if you just buy/hold GLD?

Also I'll just add that owning a gold ETF is much better than owning no gold exposure at all. Don't let the perfect be the enemy of the good:

https://web.archive.org/web/20160324133 ... n-a-leash/

Does anyone in the forum actually use Goldmoney, Perth Mint, Hard Assets Alliance or Bullion Vault?

If so, I would like to ask what is your experience, what are the key points to consider, and the pros and cons you have found.

escafandro wrote: Does anyone in the forum actually use Goldmoney, Perth Mint, Hard Assets Alliance or Bullion Vault?

If so, I would like to ask what is your experience, what are the key points to consider, and the pros and cons you have found.

It's been covered in here before but the legal situation with GoldMoney and Bullion Vault is way too murky.  The downside to Perth Mint is the ridiculous storage and purchasing fees, plus you can only buy and sell via local dealers that may not be open or not be overwhelmed during a crisis on amounts under $50K.

I think a lot of people in here have forgotten the purpose of the gold allocation in the HBPP is not just as part of an overall portfolio to withstand different economic regimes; it is specifically for crisis insurance where gold is being used as money in the underground economy when the government screws up its own currency and imposes anti-hoarding, capital controls, transaction restrictions, etc...  So holding up to several indirect layers of "paper gold" that cannot be used as medium of exchange serves purely convenience and maybe inertia denial about our rapidly decreasing Rule of Law.  The SEC just washed its hands of prosecuting Goldman Sachs for its role in the subprime debacle.

Look at the increasing cash and gold transaction restrictions occuring in the Eurozone right now.  It is far too late to wish you had direct ownership of gold coins in the peripheral countries.  With France's latest restictions on gold transaction, the gold-cash market there has collapsed and Belgium (across the border) has taken up the slack.

For non-taxable acct (eg. Roth), is GTU a good choice still? 

dcllee wrote: For non-taxable acct (eg. Roth), is GTU a good choice still? 

Sure, though IAU is also a good choice.

The key with GTU is to understand how the premium to NAV issue works and only buy the fund after you are comfortable with how the premium is likely to behave over time.

With all of these gold funds, it's just important to know what you are buying. 

escafandro wrote: Does anyone in the forum actually use Goldmoney, Perth Mint, Hard Assets Alliance or Bullion Vault?

If so, I would like to ask what is your experience, what are the key points to consider, and the pros and cons you have found.

I have used Goldmoney for a number of years.  I like it and have had no problems whatsover.  I file a yearly Treasury report on it in accordance with the law. 

Having said that, I wouldn't suggest it for the major portion of your gold exposure.  IMO, foreign bullion depositories should only play a minor role in a PP.

I would second craigr's advice for a person in your situation: check out Everbank. You can start with allocated or unallocated gold, or unallocated and then later switch your account to allocated. You can buy small amounts (1 oz increments) and open your account with a small minimum (I think it is 5 oz). You can ask to take delivery of your allocated metal and they will send it to you by USPS. They offer a limited number of options if you want to take delivery, but one of them is Krugerrands. A mildly annoying part about dealing with them is that they set the price based on the next London AM fixing, but if you are a long time horizon person that should not make too much difference.

You can also open bank accounts denominated in a number of different currencies, which might be useful for your lifestyle.

MachineGhost wrote: I think a lot of people in here have forgotten the purpose of the gold allocation in the HBPP is not just as part of an overall portfolio to withstand different economic regimes; it is specifically for crisis insurance where gold is being used as money in the underground economy when the government screws up its own currency and imposes anti-hoarding, capital controls, transaction restrictions, etc... 

Believe me if I could buy gold coins in my country and store them in a safe box, I would do that without a doubt.
But living in a small peripheral country is almost impossible to achieve that goal (either for lack of sellers or huge spreads between buying and selling).
So I'm looking for alternatives as close as possible.

Does anyone know a reliable dealer who provide international shipping?

you can try www.thesilvermountain.nl.  Their site says woldwide shipping.  I had good experience with them on two occasions, shipping to Italy.

escafandro wrote: But living in a small peripheral country is almost impossible to achieve that goal (either for lack of sellers or huge spreads between buying and selling).
So I'm looking for alternatives as close as possible.

You have probably already told us, escafandro, which country you live in, but I do not remember. Where on this friendly planet are you located?

smurff wrote: Where on this friendly planet are you located?

Uruguay. Friendly country indeed.
Or as Homer say: http://www.youtube.com/watch?v=tRrsjxyea4Q

escafandro wrote:

smurff wrote: Where on this friendly planet are you located?

Uruguay. Friendly country indeed.
Or as Homer say: http://www.youtube.com/watch?v=tRrsjxyea4Q

I really wish there was a like feature on here. Great clip hah.

escafandro wrote: Does anyone know a reliable dealer who provide international shipping?

CA PP wrote: you can try www.thesilvermountain.nl.  Their site says woldwide shipping.  I had good experience with them on two occasions, shipping to Italy.

From what I can see they only ship within Europe and in euro transactions.

Any other suggestion?

Sorry, I have no other experience. You can contact them to confirm, their site says they ship worldwide.