What is meant by the “fine,” “fineness” or “purity” of precious metals?
The purity of precious metals is measured in parts per thousand and is called “fineness.” It is defined as the proportion of pure precious metal actually contained in the refined product verses its remaining alloys. A gold bar that is .9999 fine (the highest level of purity) is 99.99% pure gold and is referred to as “four nines” gold.
What makes precious metals “precious?”
Gold, silver, platinum and palladium possess six innate attributes that render them unique in all of nature: beauty, utility, rarity, durability, portability and inherent value. No other elements are known to possess all of these characteristics, and it is for these reasons that gold, silver, platinum and palladium are considered precious.
The key characteristic that has historically distinguished precious metals from their non-precious metal counterparts is higher economic value attributable to scarcity.
What is the difference between “allocated” and “unallocated” gold?
An allocated gold account is an account where the investor owns the gold outright and actual gold is set aside by the financial institution in the investor’s name. The investor’s gold exists, it is immediately identifiable and accessible and the investor has full legal rights to it.
In an unallocated account, the investor has legal right to a certain amount of gold that’s part of the financial institution’s liquid reserves. Unallocated gold is basically a loan from you to the bank. The bank uses gold that you’ve bought as part of its liquid reserve.
Are bullion coins legal tender?
Yes, if they are government issued bullion coins with a face value. The coin’s market value, however, will be reflective of the underlying market price of the precious metal and not the coin’s face value.
Do bullion coins come with a certificate of authenticity?
Yes. A maker’s mark and statement of weight and fineness is stamped directly onto the bullion, whether it is a coin, bar or ingot.
Was it illegal to own gold in the United States at one time?
Yes. From 1933 to 1974, U.S. citizens could not legally own gold bullion without a special license. These restrictions were lifted in 1975, and gold can now be held without any licensing or restriction.
What are the limits on how much gold I can own?
There is no limit to the amount of gold or other precious metal that a U.S. citizen may own.
Do I have to report my gold coin purchases to the government?
Currently we are not aware of any federal, state or local government law requiring you to report how much gold you purchase or own.
Do I have to pay taxes if I sell my bullion coins for a profit?
Bullion is classified by the U.S. Internal Revenue Service as a collectible, and the gain on the sale of a collectible held for more than one year (long-term) will be taxed at the special long-term rate for collectibles, currently 28%. The gain on the sale of a collectible held for a year or less (short-term) is taxed at ordinary income rates.*
What is the best way to store bullion?
Once purchased, you can choose the method of storage for your physical precious metals that best suits your needs. You can either take direct possession (physical delivery) or use a storage facility. Your chosen custodian will charge a fee to deliver your metals, and some states will charge a sales tax on delivered precious metals.
Bullion products come in a variety of sizes and weights, and the size of the product often determines their suitability for certain storage locations. Those looking to take possession of their investment may want to consider purchasing smaller sized bars or bullion coins, which can be stored and transported more easily.
If security is your chief concern, your chosen custodian can help answer most of your questions relating to the storage of your precious metals. Stored metals may be subject to additional fees. Please contact your custodian for more information.
Liquidity is a major attraction of owning physical precious metals. If ready access to your bullion investments is a priority, home storage is certainly an option.
What sizes do gold bars come in?
The troy ounce is the widely recognized standard unit of measurement, and one troy ounce is equal to approximately 1.1 conventional ounces. Standard denominations for retail gold bullion bars are 1, 5, and 10 troy oz. Smaller gold bars (weighing less than 1 troy oz.) are often measured in grams.
How do I sell my precious metals?
Contact your representative to determine if it is a precious metal that they support.
Before sending your coins/bars, make sure they are packed tightly within a box so that there is no slippage that could scratch or damage the metal. The pieces’ exteriors should also be taped as a precautionary measure. If there is any damage to the package, the storage facility will not accept it and it will be returned to you.
Each parcel should include a packing slip with the following information:
- A heading that states “for account of custodian”
- Client name and address
- Representative name and phone number
- Detailed list of package contents
- Reference to total number of shipments (package 1 of 5, 2 of 5, etc.)
Before shipping, provide a duplicate copy of each packing slip to your Representative, who will send a copy to the custodian’s precious metals trading desk prior to shipment.
Send the package by registered mail with insurance and a return receipt. The maximum amount of insurance provided by the U.S. Postal Service is $25,000, so more than one package may be necessary. There are also weight limits, which can be confirmed at the post office.