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Thread: Gold Silver Ratio Discussion Group

  1. #111
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    Mar 2009
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    Quote Originally Posted by Stumblebumed View Post
    I'm new to stacking silver and I've read a bit about the gold/silver ratio. I have a question about the most efficient method to exchange silver for gold. Just to keep things simple, let's assume you have a sealed monster box of eagles, the gold/silver ratio at spot is 50 to 1, then ideally you would like to trade the 500 ounces of silver for 10 ounces of gold. However, since you are paying a premium in both directions of the exchange, you're probably going to lose ten to twenty percent in discounts and premiums? I'm just curious about how one would go about exchanging their silver for gold in the most efficient way possible in the real world. I would think that if the silver/gold ratio were somewhere between the 20/1 and 30/1 range that you would have a flood of silver stackers lined up at the bullion dealers to exchange their silver for gold. Any ideas on how to go about this? Thanks for your ideas!
    The most efficient way is a face to face swap with a willing person. Up here in Canada the government wants you to sell your silver, get a receipt for tax purposes, and then use those funds to buy your gold. Then pay your capital gains or take a loss at tax time. What ever. Not sure how US laws work. Maybe the same or perhaps a different twist. Face to face is best...but I'm finding out pretty quickly that those that follow the silver and gold markets are well aware of the G/SRatio's and don't want to do a swap so perhaps forcing me to sell to a coin shop, then a gold purchase. Closest good coin shop is 400 miles away.
    ...be your own Health Care System... grow your own and eat well

  2. #112

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    Quote Originally Posted by digbird View Post
    The most efficient way is a face to face swap with a willing person. Up here in Canada the government wants you to sell your silver, get a receipt for tax purposes, and then use those funds to buy your gold. Then pay your capital gains or take a loss at tax time. What ever. Not sure how US laws work. Maybe the same or perhaps a different twist. Face to face is best...but I'm finding out pretty quickly that those that follow the silver and gold markets are well aware of the G/SRatio's and don't want to do a swap so perhaps forcing me to sell to a coin shop, then a gold purchase. Closest good coin shop is 400 miles away.
    It's basically the same in the US, according to my LCS

  3. #113
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    Quote Originally Posted by SilverPalm View Post
    It's basically the same in the US, according to my LCS
    I thought it might be similar SilverPalm, seems to me I've read that either on here or talking to one of the coin shops in the USA. Yes, the gov. wants a 2 step process as they hate bartering or trading as it leaves them out of the loop.
    ...be your own Health Care System... grow your own and eat well

  4. #114

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    The one thing I still don't understand is the Like Kind Exchange IRS rule:

    "Like-kind exchanges -- when you exchange real property used for business or held as an investment solely for other business or investment property that is the same type or “like-kind” -- have long been permitted under the Internal Revenue Code. Generally, if you make a like-kind exchange, you are not required to recognize a gain or loss under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, you must recognize a gain to the extent of the other property and money received. You can’t recognize a loss.

    Under the Tax Cuts and Jobs Act, Section 1031 now applies only to exchanges of real property and not to exchanges of personal or intangible property. An exchange of real property held primarily for sale still does not qualify as a like-kind exchange. A transition rule in the new law provides that Section 1031 applies to a qualifying exchange of personal or intangible property if the taxpayer disposed of the exchanged property on or before December 31, 2017, or received replacement property on or before that date.

    Thus, effective January 1, 2018, exchanges of machinery, equipment, vehicles, artwork, collectibles, patents and other intellectual property and intangible business assets generally do not qualify for non-recognition of gain or loss as like-kind exchanges. However, certain exchanges of mutual ditch, reservoir or irrigation stock are still eligible for non-recognition of gain or loss as like-kind exchanges."

    Since the constitution states that money is gold or silver, won't an exchange for different types of money qualify? It's not a collectible, it is money and I'm sure as heck holding it as an investment.
    Do your own due diligence

    I stand united with my friends & family in Canada who seek freedom.

  5. #115

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    Quote Originally Posted by LongDonSilver View Post
    The one thing I still don't understand is the Like Kind Exchange IRS rule:

    "Like-kind exchanges -- when you exchange real property used for business or held as an investment solely for other business or investment property that is the same type or “like-kind” -- have long been permitted under the Internal Revenue Code. Generally, if you make a like-kind exchange, you are not required to recognize a gain or loss under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, you must recognize a gain to the extent of the other property and money received. You can’t recognize a loss.

    Under the Tax Cuts and Jobs Act, Section 1031 now applies only to exchanges of real property and not to exchanges of personal or intangible property. An exchange of real property held primarily for sale still does not qualify as a like-kind exchange. A transition rule in the new law provides that Section 1031 applies to a qualifying exchange of personal or intangible property if the taxpayer disposed of the exchanged property on or before December 31, 2017, or received replacement property on or before that date.

    Thus, effective January 1, 2018, exchanges of machinery, equipment, vehicles, artwork, collectibles, patents and other intellectual property and intangible business assets generally do not qualify for non-recognition of gain or loss as like-kind exchanges. However, certain exchanges of mutual ditch, reservoir or irrigation stock are still eligible for non-recognition of gain or loss as like-kind exchanges."

    Since the constitution states that money is gold or silver, won't an exchange for different types of money qualify? It's not a collectible, it is money and I'm sure as heck holding it as an investment.
    IMO, (and I am NOT giving advice here) it just comes down to a definition and that is the following :
    real prop·er·ty
    /rē(ə)l ˈpräpərdē/
    nounLAW
    fixed property, principally land and buildings.
    Definitions from Oxford Languages
    Thomas Jefferson is credited with writing, “When injustice becomes law, resistance becomes duty.” The seceding states in the Civil War period issued a similar declaration using the word “tyranny” as opposed to “injustice.”

  6. #116

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    I would think that the recognition of precious metals as "currency" would enable a non-taxable exchange for fiat. Since a number of states, such as Arizona, Texas, Oklahoma, Wyoming, etc. specifically exclude bullion from taxation, and recognize silver and gold as currency, then why couldn't bullion be used as a currency to purchase any type of property? However, it's been my experience that many transactions sales tax is charged for the purchase of bullion products even in those states that prohibit the taxation, such as on Ebay.

    The larger issue is whether precious metals can be used, especially in those states that recognize precious metals as currency, to purchase real property or any other type of transaction. If so, how would precious metals be valued, via spot price or what? If these state laws spread to more states that recognize bullion as currency, it would enable the increased use of bullion as a direct form of currency and eliminate or reduce the need to sell to brokers at a discount to exchange for fiat. I realize we're not there yet but with the Basel 3 banking requirements coming on line in the coming months that make non-allocated derivative precious metal sales more difficult, bullion will increasingly be recognized as a currency rather than a mere commodity. What am I missing?
    Last edited by Stumblebumed; 06-20-2021 at 10:36 AM.

  7. #117

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    These tax issues are federal (there may be other ones at the state level). The constitution mentions gold in only one place, and it is in a section where powers are denied to states:

    No State shall coin Money; make any Thing but gold and silver Coin a Tender in Payment of Debts (there was a long list of other things, I deleted).

    Paying debts seems to be solely a federal thing now, using federal reserve notes. Even if states allow gold and silver to cover debts, the federal tax rules are not required to exempt gold and silver from taxation. From what I've read about exchanges for bullion, a like kind exchange is selling an eagle for an eagle with the only difference being the date (and some even argue that, saying the dates must be the same but condition can vary). An eagle for a maple is not like kind, even if both are gold (one is 22K, the other is 24K). Even swapping two different 22K coins is not like kind in the eye of the IRS.

  8. #118

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    The explanation of what constitutes debt payment as a federal issue sounds correct to me, otherwise states would create their own currencies. Lots of confusion in the currency world these days Between crypto, fiat, bull**** "doggy" coins, etc., it's hard to know what the hell is going on. Here's another tidbit of information related to the rollout of Basel 3 bank capitalization standards:

    Under Basel III, gold would become a Tier 1 asset or a zero-risk asset, for banks. As mentioned in the Basel III framework, ...at national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%.

    My understanding of a Tier 1 bank asset is that it's considered to have the same weight as cash. The banking status of gold will be elevated from a Tier 3 asset to a Tier 1 asset. This, to me, sounds like gold, as a Tier 1 asset, is equivalent to currency in banking terms. It's my understanding that Basel 3 banking standards will be adopted on a worldwide basis.

  9. #119

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    More info on "Like Kind Exchange"

    white-papers-like-kind-exchange-barter.pdf
    Thomas Jefferson is credited with writing, “When injustice becomes law, resistance becomes duty.” The seceding states in the Civil War period issued a similar declaration using the word “tyranny” as opposed to “injustice.”

  10. #120

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    Basel 3 has been touted as very bullish for gold. I am wondering how many banks will actually purchase gold to hold. It can be considered a very illiquid asset along with serious security costs for a large stash. One cannot simply click a mouse to make a transaction, logistics planning to transport large amounts will prove impossible for many banks to consider. Having a small military force on call 24/7 is not cheap. Add to the constant increasing supply from mining around the world and many banks will decide not to risk physical gold storage. I expect in the end only the largest players (same as largest manipulators) will be able to handle the daily/yearly operations.
    Last edited by and4rik; 06-20-2021 at 05:17 PM.

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