Client who needs to sell gold and silver - best way???

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mngr2rep's picture
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Joined: 2010-09-19

I have a client who has 150,000-200,000 in Gold and Silver.  It's both coins and bars.  He wants to sell it all over the next 12 months.  What are his options?  Does anyone have any experience working with brokers or selling it directly to a place that will just melt it down?  Any insight would be appreciated.  Thanks!

BigFirepower's picture
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Joined: 2010-07-09

I've heard it's taxable as ordinary income, at least in the form of coins, not sure about bars. Any verification and sourcing would be nice to hear about. My clients are not ready to sell, and I have one client that I talked about with this today. Why not sell some coins this year, then next year in January. Immediately take the proceeds to buy ETF gold/silver that is treated as cap gain/loss? Blanchard is a gold dealer, but you're supposed to mail it in? Geesh that sounds crazy, even if it's insured. I'll keep my eyes on this thread.

mngr2rep's picture
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Joined: 2010-09-19

Yes the tax consequences aren't the best - but just so you know - the ETF won't save you on taxes.  Something like GLD will pay the collectible tax rate also - which is actually 28%.  Raw deal.

BigFirepower's picture
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Joined: 2010-07-09

Serious. When I sell SLV or GLD, they are not treated like a stock sale?

mngr2rep's picture
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Joined: 2010-09-19

nope.

BigFirepower's picture
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Joined: 2010-07-09

That is f'd up. Thanks for the enlightenment. Is there an IRS ruling, white paper you know of where I can check more into this?

BondGuy's picture
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Joined: 2006-09-21

Many metal detector people who find silver, gold rings, and other jewelry say ARA is the best deal. They give the highest percentages of spot. I don't know this from personal experience so have your guy check them out first. www.aragold.com/

BondGuy's picture
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Joined: 2006-09-21

One other point - make sure coins have a melt value that exceeds their collector value. Wouldn't wanna see an 1861 Double Eagle going to melt. Not to mention, that certain versions of that coin are worth more than the 200k value of all the gold the client has. Most pre 64 silver has melt value about 20 times face give or take. Still, there are plenty of coins out there, even below MS 60, that are worth more than melt. Carefully, go thru the collection. I just picked up a slabbed cameo Kennedy half. It's a 71, which means it's worth face. Being a cameo proof adds another couple bucks to the value. However, as a graded/slabbed MS 70 cameo it's worth over $50. I paid $10 at a baseball collectibles store that didn't know what they had. I also bought a proof accented hair 64 Kennedy half in MS 70 condition. Red book is $40. I paid $14. Same store.

BigFirepower's picture
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Joined: 2010-07-09

BG, how did you learn about coins, metal? Lifelong hobby? What are your thoughts on the gold and silver markets?

BigFirepower's picture
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Joined: 2010-07-09

Ok, looked it up on Investopedia. Currency, Futures, Metal ETFs get different tax treatment. Metal is considered to be a "collectible" in the eyes of the taxman.

I am legend's picture
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Joined: 2010-03-04

So buy it in an IRA to avoid the strange taxation on GLD/SLV, etc.

BondGuy's picture
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Joined: 2006-09-21

BigFirepower wrote:BG, how did you learn about coins, metal? Lifelong hobby? What are your thoughts on the gold and silver markets?Coins? Not a hobby. just some gen'l knowledge stuff i've picked up along the way. Gold and silver  imo, absent inflation both are overbought. So far i've been wrong on that opinion for over a year.  Which is why i'm Bondguy, not Commodityguy. That said, oil is a buy. If the bigs are right about a Bull 2011, it's on the back of a recovery. Consumption will drive up demand and down supply. But then again, like I said, not Commodityguy.

N.D.'s picture
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Joined: 2009-07-14

You may want to consider becoming dividendguy.

BigFirepower's picture
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Joined: 2010-07-09

BG, Can other losses, short and long, offset gold and or silver gains?Thanks. 

BondGuy's picture
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Joined: 2006-09-21

Big, i'm not taxguy either. Good question!Divdends? Stocks, from a technical POV lookin' good right here. Muni market is still trying to digest the 40oz steak that is massive new issuance. Prices have been driven into the ground with the usual double edged sword effect. Love the opportunity, the splainin' lower prices to bond holders, not so much.

BigFirepower's picture
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Joined: 2010-07-09

Yeah, that bond move was HUGE in a short period of time. The stocks and gold more than made up for it. The good news is, bonds went from being overpriced to at least reasonably priced in just 6 weeks. I've noticed for the lower statement prices, lower bond NAVs, I cannot find any buy side indy bond pricing worth a darn. If stocks follow the pattern of the mid 70s, like they have been, we're going to top out next year about 12500. At, near that point, I'm taking money off the table. So, like usual, I'll be doing the opposite of national inflows/outflows.

N.D.'s picture
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Joined: 2009-07-14

Im not sure if its the whole selling debt thing or just the chance of inflation but i am staying away from bonds for now. I see more value in market linked products i.e. Structured CDs with FDIC and Principle Protected Notes for the fixed income portion of the portfolio and using big dividend paying stocks for income. You can get the equivalent of a 6% + coupon and with inflation protection at the same time. Look at names like T VZ WWE MO AGNC. Tons of them out there. Plus you can write covered calls and get 7-8% or more depending on the clients risk tolerance. Not to mention the availability of using stop orders for additional downside protection.

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