Buying gold from a bank in Canada - Barcharge, etc

[blazespinnaker]

I was looking into buying some gold bars from a bank in Canada. I notice they charge a "Bar Charge" .. I also have to look into storage, of course.

Is this a reasonable way to go? I like the idea of buying from a bank, because I suspect the assaying and everything else would likely be done properly. However, being new to this, I'm not as clear.

What is the standard for buying gold? Particularly in Canada. Is 1% too high of a Bar Charge to pay?

What do people do about storage costs? Insurance?


Also, as gold goes up/down in price do you declare that on your taxes each year? Or I assume only when you finally sell it and claim the capital gains?

I can't remember .. is gold price capital gains (50%) or are you taxed at your full rate? This is a Canadian tax question, I realise that.


I'd be very interested in the details.

Cheers,

Blaze.

[Starving Steve]

Re: Buying gold from a bank in Canada - Barcharge, etc

I was looking into buying some gold bars from a bank in Canada. I notice they charge a "Bar Charge" .. I also have to look into storage, of course.

Is this a reasonable way to go? I like the idea of buying from a bank, because I suspect the assaying and everything else would likely be done properly. However, being new to this, I'm not as clear.

What is the standard for buying gold? Particularly in Canada. Is 1% too high of a Bar Charge to pay?

What do people do about storage costs? Insurance?


Also, as gold goes up/down in price do you declare that on your taxes each year? Or I assume only when you finally sell it and claim the capital gains?

I can't remember .. is gold price capital gains (50%) or are you taxed at your full rate? This is a Canadian tax question, I realise that.


I'd be very interested in the details.

Cheers,

Blaze.

Unless you are buying a 400 oz bar of gold, the best way to buy gold is 1 oz wafers or 1oz coins: Cdn maple leafs or US eagles. You pay more than gold for 1oz ML and eagles, but you get more than the gold price back when you sell them, especially on sleepy gold markets. ( If gold is $2000 per oz, don't expect more than gold for anything. )

As for tax, you pay capital gains (or losses) only when you sell your gold. Selling becomes the taxable event.

The best thing to do with gold is buy it and FORGET ABOUT IT. Those last three words are the key. Otherwise, you become prey to the tax man and the devaluations, the inflations, the broker, the bankers, the assayers, the fabricators, the shippers, and everything/ everyone else that comes with time.

When you buy gold, you bury it. Otherwise, don't waste your time with physical gold; buy paper gold like exchange traded funds. Then you can be in and out, like Micheal Finnagen. ( Remember the song, "Micheal, Micheal, Micheal Finnagen, he went out, and he went in again, out and in, and in and out again, that's what Micheal Finnagen did again." )

[blazespinnaker]

Re: Buying gold from a bank in Canada - Barcharge, etc

What about storage? Insurance? I'm not going to bury it

What type of transaction fees do you find you pay (implied or explicit) with gold coins? If you buy/sell, are we talking 1% off the top? 2%?

Doesn't the gold come with official assaying? If it's sealed and you have the cert that goes with it, why do you need to get it assayed again?

Presumably, the bank will buy the gold back and there would be about a 1% fee both ways, so we're talking 2%.

[Starving Steve]

Re: Buying gold from a bank in Canada - Barcharge, etc

If you buy coins, Cdn maple leaves of US eagles, there are no certificates of authenticity or assaying involved. The coins are well-known banking coins, and they are accepted on-the-spot.

Maples and Eagles trade at just over gold, like about G + $10 per oz. Their bid is also over gold, so you get some of this premium over gold back when you sell on quiet markets. As I said, don't expect anything over gold should gold all of a sudden fly up to $2000US per oz level.

Finally, storage can be important. A safe deposit box at a large bank is one way to solve this problem. There are no completely safe ways to store gold, however. For example, with the safe deposit box solution, your bank could fail, and your box could be looted. Or, your box could be looted even if the bank does not fail. Or, your spouse could get into your safe deposit box which is an issue in divorce. Or, the government could cease your safe deposit box for many reasons such as: taxes, exchange controls, money laundering, investigatory fishing-trips having to do with other matters you might be involved in, whatever. Or, your safe deposit box could even become frozen in a law-suit if you are unfortunate enough to be sued.

The best way to store gold is to bury it on your property. But that has obvious risks such as metal detectors, thieves with guns, air photos, satellite photos, friendly neighbours, big dogs, divorce, etc.

Then, another issue is keeping gold is your health. Who do you tell your secret to, and when? A stroke could wreck the best-laid gold plans, and how do you plan for health risks such as stroke, alzeimer's disease, etc?

There are no easy answers.

[Spartacus]

Re: Buying gold from a bank in Canada - Barcharge, etc

If you are concerned about US government confiscation you should note that the current Canadian government is regularly and happily bending over to pick up the soap.

The most recent clue is that the current government seems (to me at least) to be working harder to (send US deserters who've done no wrong in Canada back to the US) than to (send known criminals back to their country of citizenship).

The current prime sh*t-h**d^H^H^H^H^H^H^H^H minister wanted desperately to send troops to Iraq (damn good thing he was not in power when that decision had to be made).

the last time US citizens could not hold Gold There were US citizens residing in Canada providing a gold holding service - I have doubts that this would be allowed this time.

(I don't think the US will confiscate Gold again, BTW - the amount of goodwill that existed for the Government in the 1930s does not exist now, and the amount voluntarily turned over will be very, very, very small).

The "Bar Charge" in my understanding is the charge for a wholesaler to be doing what's basically a retail operation.

I was looking into buying some gold bars from a bank in Canada. I notice they charge a "Bar Charge" .. I also have to look into storage, of course.

[Spartacus]

Re: Buying gold from a bank in Canada - Barcharge, etc

What type of transaction fees do you find you pay (implied or explicit) with gold coins? If you buy/sell, are we talking 1% off the top? 2%?

Presumably, the bank will buy the gold back and there would be about a 1% fee both ways, so we're talking 2%.

You can't avoid it. There are also charges for taking bullion off the COMEX warehouses, slightly more than 1% when he did it, and there are of course all the charges for buying the futures in the first place (the account I read on the web by a person who did this seems to be gone now - I may not be using the right search terms)

[Rajiv]

Re: Buying gold from a bank in Canada - Barcharge, etc

If you are concerned about US government confiscation you should note that the current Canadian government is regularly and happily bending over to pick up the soap.

See Sapiens latest thread Paradigm Education Group - Reclaiming Our Rights

[Spartacus]

Re: Buying gold from a bank in Canada - Barcharge, etc

I can't remember .. is gold price capital gains (50%) or are you taxed at your full rate? This is a Canadian tax question, I realise that.

technically, it's not a 50% tax on capital gains. 50% of the capital gains are carried over to income ... that is then taxed at the income tax rate

When I bought my Silver position they took information and said they would give me a t5 when I sold, so I assume when I sell I'll get the t5 which is the Canadian tax code's required documentaion for bank account interest, dividends and for capital gains

Income for tax purposes in Canada is documented on form t4

As a US resident, I doubt you would pay Canadian taxes - IIRC you have to reside in Canada for 181 days or more per year to pay Canadian taxes (lots of rich Canadians live in the Bahamas and carefully document how much time they spend in Canada every year - they rigorously manage and document the # of days to avoid a ton of taxes).

[Spartacus]

Another tip

There's no federal sales tax (goods and services tax, or GST) on the coins or bullion.

the provinces charge a provincial sales tax (PST) on coins (even legal tender Silver & Gold coins) but not bullion (my 1000 oz Silver bars were untaxed, and in late 2002 I paid the dealer spread - I forget the exact amount but it was much less than 1%).

I don't know at what weight the bullion becomes non-taxable - it may be that even 1 oz blanks don't have PST added (the rationale I was given was the Maple Leafs have a design so they're excluded from the industrial use exclusion that makes the bullion tax free, so blank coins may also be exempt from the PST)


I don't know the process by which UStaters get this tax rebated. The PST may not even be rebated, I only know for a fact the GST rebated for tourists.

If you don't want to go through that paperwork it's perhaps best to buy in Alberta (no provincial taxes).

OR phone & check with the dealer - if you're paying by credit card from the US & you're not a Canadian resident they may not charge the PST. Pigs may fly too, someday soon.

I was looking into buying some gold bars from a bank in Canada. I notice they charge a "Bar Charge" .. I also have to look into storage, of course.

[Starving Steve]

Re: Buying gold from a bank in Canada - Barcharge, etc

If you are a US resident, there is absolutely no double-taxation. So whatever you pay to Canada, you take a tax credit dollar-for-dollar in the US tax return. Trust govn't to make things complex, but at least the system now does not double tax between Canada and the U.S.

[Starving Steve]

Re: Buying gold from a bank in Canada - Barcharge, etc

If you are small-fry, not buying a large amount of gold, try buying with cash---- called "kish" in the Prairie Provinces. A small coin dealer might be able to help you arrange things just right.

Be sure to declare whatever you buy, on whatever terms, to the US Customs when you re-enter the U.S. Declare, declare, declare! And show the gold to them so that they can't say you were concealing it. Show them the gold before they ask any questions, that helps.

If you are buying over $10,000 US worth of gold, you will need to fill-out currency papers on both sides of the border. DON'T FORGET. They like endless paper-work, so just plan on spending an hour at the border--- it's the war on drugs and the war on terror combined to make your life complex.

One more point, be sure to keep your paperwork in the car with the gold, so that if you are stopped for speeding in the US, the fuzz can't say that the gold was part of a money-laundering scheme or the profits from a drug deal.

Little things are sooooooo important to-day. Don't forget them.

[blazespinnaker]

Re: Buying gold from a bank in Canada - Barcharge, etc

I like the points about about storage. Good points all.

My big concern, however, is assaying. I really am not a bit fan of the gold coins idea, as I think it's probably too easy to fake the purity and get some lower quality (or even just gold around a heavier metal) and worth it in many cases. Counter fitting coins is a lot easier than counter fitting dollars, and there probably is a lot less enforcement because a lot of its done under the radar of government.

At the same time, I do appreciate that gold coins are probably more 'liquid'.

Things to think about. Much appreciated.