Silver Stock Report
by Jason Hommel, February 15, 2007
I would like to discuss the various possible tax benefits of owning silver; benefits that may exist world wide.
Silver, which is true wealth, is not inherently taxable!
Incomes, and capital gains, and real estate, are taxed, but not silver. Why is this?
According to my understanding of Biblical law and history, it was only the firstfruits, or increases in a person’s wealth, and only about 10%, that was supposed to be given as tithes to the priests. Therefore, if the priests were to have any income at all, they would be highly motivated to follow God’s laws to set up an economic system that would continually increase the wealth of the people.
But wealth itself is not taxable, partly because it cannot be found. When you buy silver in the U.S., it is not registered with any government agency. They will ask you for your driver’s license, and the coin shop may keep records, but that is all that is required, because the purchase of silver is not a taxable event in the U.S., nor is the sale of silver if sold at a loss.
In many European nations, however, there is a VAT, or value added tax of about 17% on the purchase of silver (but not gold). I believe that is somewhat like a tax on the withdrawl of your money out of a bank, but I digress.
In contrast to silver, real estate must be registered, and insured, and every bit of land can be mapped and located, is thus, is open to taxation, or confiscation through eviction if the levied taxes are not paid. (Some Biblical scholars advocate holding land with a sovereign allodial title to avoid property taxes, but if you do that, then you cannot sell your land, because you cannot get title insurance. And other Biblical scholars say that land really belongs to God, and cannot be “sold forever” in such ways; due to things like the Jubilee, where the land is supposed to be redistributed every 50 years to those who are living.)
Also, in contrast to silver, automobiles are registered annually, and at that time, you pay an annual fee.
With silver and gold, there is no annual registration fee to pay; nor is there an annual “silver tax” on your silver holdings or unrealized gains.
Cash is also not taxed; except through the process of inflation.
Most tax advisors suggest that most people ought to make the maximum IRA contributions. Nearly everyone I know, even people with “no money”, have either a 401k or an IRA. Why?
Most people seem to know about the special tax benefits of an IRA. IRA’s allow your money to grow, and be continually re-invested, and compound, tax free, until you withdraw the money. At the time of withdrawl in retirement, IRA money is taxed at what will be standard income tax rates of the day at that time in the future.
What most people have probably not thought about, is that similar to an IRA, the value of silver can grow, compounded, tax free, for many years. As long as you own your silver, you pay no taxes on it.
But get this, you can buy as much silver as you want! Unlike IRA contributions that are limited, there is no maximum allowable amount of silver that you can buy. Again, you can buy as much silver as you want! Now, think about this. If all the tax advisors say to max out your IRA contributions, why don’t they also tell you to buy as much silver and gold as you can?
Perhaps one reason is their ignorance? Perhaps it is also who they work for? They typically work for big brokerages, and not for coin shops!
Perhaps that also goes to show how few people own silver, which shows why it is such a good contrarian investment.
Unlike physical silver, futures contracts for silver typically have a short expiration date. As such, they cannot be held for extremely long time periods. Futures contracts therefore must be sold rather quickly, and if there is a gain, such gain is taxable.
That’s again, one of the benefits of physical silver.
Futhermore, there is no line on any tax form in any nation that asks you to report how much silver you own, and to pay a certain percentage. You can thus own silver for years and years, and never pay any tax on it.
Incomes are taxed, and capital gains are taxed. But wealth is not taxed.
In the U.S. there are capital gains taxes on dollar gains of silver owned.
Unfortunately, the capital gains on silver and ETF’s are set at the rate of collectibles, and are higher rates than the rates of long term stock investments. Nevertheless, capital gains tax rates tend to change from decade to decade.
Therefore, if you plan to hold your silver for an extremely long time, such as for a generation or more, who knows what the tax rate on capital gains may be? Check with your tax attorney–20-30 years from now.
One thing I do know, is that whatever activities that they tax, are destroyed. In the future, if silver becomes extremely valuable, and valuable to the economy, it may well be the case that there will be tax incentives for selling silver. After all, if the government wants to collect any taxes at all, they must make sure that the people are prosperous.
What really bothers the government about people who own silver is that often the sale of silver is not required to be reported to the government. Therefore, people who sell silver have the ability to not report such capital gains, and easily escape such taxation. But I would certainly never advise people to break the law.
Capital gains on the sale of silver can also be legally avoided if you give away your silver before it is sold. This may be something to consider; especially if you plan on leaving behind an inheritance for your Children’s Children.
Please pay attention to this important Disclaimer:
I believe it is illegal for me to give you any tax advice. Therefore, this presentation is not, and does not contain, tax advice. Tax law is constantly changing in the U.S.A., and tax laws vary around the world. As always, if you have questions about taxes, consult your tax attorney, or several tax attorneys to get several opinions, and since the tax code in the U.S. is over 10,000 pages long, it is impossible for any one person to know the law, and therefore, it is up to you to make sure that you have all of your attorneys show you the laws to which they refer and upon which they are basing their advice.
Remember, the beauty of silver is that it is off the books, off the grid, and nobody can ever really know how much you own.