What You Need to Know Before You Buy Numismatics

Our new customers usually ask, "Will the government seize gold again like it did in 1933? Shouldn't I buy numismatic coins to protect myself from seizure? Aren't numismatic coins exempt from reporting to the government?" The correct answers are (1) No, (2) No, and (3) No. But numismatic coins do cost a lot more per ounce than bullion coins, and they carry a much higher commission.

SHOULDN'T I BUY NUMISMATIC COINS TO AVOID A GOVERNMENT GOLD SEIZURE?

The sales pitches for their alleged safety rests on shaky assumptions about human nature and ignorance of the law. "Numismatic" coins were not exempted from the 1933 gold seizure, only "gold coins having a recognised special value to collectors of rare and unusual coins." [Exec. Ord. of 4/5/1933, ß 2(b)]. Any tyrant worth his whip could drive an 18-wheeler through a definition that vague.

NO CONSISTENCY

Numismatic dealers argue that because the government exempted "numismatics" then, they must exempt them now. But what obliges a tyrant to be consistent? No, if they played by the rules they wouldn't be stealing your gold. If the government chose to seize gold and silver again, nothing obliges it to follow 1933's path. Why would the lawless respect this particular law?

NO LAW OR REGULATION

Numismatic dealers may tell you that "the law defines a `numismatic' coin as one with a premium of 15% or more over its gold value." That's also not true. No such law or regulation exists. A regulation was proposed in the Federal Register, Vol 49, No. 3, 1/5/1984, but never adopted.

By statute, the only coins defined as "numismatic" are American Eagle gold and silver coins minted since 1985 and other currently minted commemorative coins. No statute or regulation defines U.S. $20 gold pieces (or any other U.S. gold or silver coin) minted before 1935 as "numismatic."

Dealers may tell you that "U.S. $20 gold pieces are exempt from reporting when you buy or sell them," but this means nothing. Everything is exempt from reporting when you buy it, unless you pay more than $10,000 in cash. Even then it's not your gold or silver purchase that must be reported, only the cash transaction.

NO EXEMPTION

Contrary to the scare stories, very few things are reportable when you sell. Under 26 CFR 1.6045-1 and Rev.Proc. 92-103, dealers need only report customer sales of 25 or more (but not fewer) Krugerrands, Maple Leaves, or Mexican Onzas, five bag lots ($5,000 face value} of US 90% silver coin, kilo gold bars, 100 oz. gold bars, 1,000 oz. silver bars, or 50 oz. or 100 oz. of platinum. If you sell lots smaller than these, the dealer reports nothing.

NO SENSE

Millions of people refused to hand over their gold in 1933. How many would comply today? If your family's survival depends on owning a little gold and silver what will you tell the government agent? Will you fork over your gold and watch your family starve? Or will you reply, "Gold? What gold? Oh, yeah, I was talking to a fellow in the Burger King a few years ago when my wife was sick and I needed money. I sold him the gold, and even remember his name. Sold it at a loss, by the way."

Finally, gold and silver today don't represent the huge pool of wealth they represented in 1933. Why risk wide-spread disobedience to steal such a tiny plum? If the government wants to steal a big pool of wealth, they'll snatch your pension funds and IRAs, not your gold.