A way around FBAR/8938 reporting using LockSmart?

 

I am often asked by US residents whether precious metals are reportable under IRS and FinCEN foreign asset/account reporting obligations:

• Form 8938, Statement of Specified Foreign Financial Assets
• FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)

According to the IRS comparison of these requirements, “precious metals held directly” is not reportable.  So what does “held directly” mean? The IRS’ own Q&A confirms that safe deposit boxes are not reportable but otherwise provides no explanation of the term.

Read more here.

Warehouse Wars: The JPM Awakens

Last week I wrote about the gold warehouses associated with the CME’s kilo futures contract. Today I’ll have look at the Comex New York warehouses but rather than focusing on the eligible/registered debate, which has been done to death, I want to look at the fight between the warehouses for storage customers and the entrance of JP Morgan into this $30 million per annum business in early 2011 (hence my tacky topical title). Read more here.

Hong Kong Gold Warehouse Movements

Back in July I pondered what happened to 110 tonnes of gold in one of the Hong Kong gold warehouses registered by CME for its kilo futures contract. The chart below updates the figures and shows that wherever the gold went, its is gone for good.


Those that get worked up about Comex “leverage” ratios should be interested in the fact that the Hong Kong warehouse report only shows eligible stocks and has never shown any registered, which probably has something to do with the fact that the delivery notice report shows no issues/stops for the kilo contract so far this year. Forget your 300:1 Comex “leverage” – that would put the OI/Registered Stocks ratio as divide by zero error, or in other words, the CME’s Hong Kong contract has infinite leverage!


Read more here.

China accelerates gold reserves accumulation

In July I did a post on How much gold does China really have? which looked at the rate China was accumulating gold reserves based on their occasional announcements of how much gold they had. Extrapolating out their average monthly rate of 8 tonnes gave the chart below, which projected to 2,186 tonnes by the end of 2020. Since then China has begun to report its gold reserves every month and has accumulated 86 tonnes in five months – an average of 17.2 tonnes. That is a lot more than their previous rate and you can get a better idea of the acceleration if I update the chart above with the new reserves figures and then project that rate into the future. Read more here.

Gold and silver coin sale diverge

The Perth Mint’s latest minted coin and bar sales are out, which reflect retail investor interest. In silver we posted our fifth best month in four years, although the September figure probably should be ignored because we were stocking up for months beforehand for the launch of our silver Kangaroo coin and didn’t expect to sell that all in one go. Read more here.

The Beer Economy

Proponents of a Gold Standard look forward to the day when people use gold and silver coins as money but it seems that beer and spirits have a head start. This article sheds light on hundreds of secret Facebook groups in Australia where people barter goods and services for alcohol in various forms, with one group claiming 50,000 members.

Read more here.

Perth Mint to collaborate with Australian Securities Exchange

Today the Perth Mint and Australian Securities Exchange (ASX), one of the world’s top-10 listed exchange groups measured by market capitalisation, announced that they would be collaborating on developing new exchange traded precious metals products.

The first product is mostly likely to be a gold futures contract deliverable in Perth. Given the focus the gold community has on futures markets, and Comex in particular, I’m sure there will be a lot of interest is this Aussie gold contract. As we are in the process of talking to the market about what features they would like, it is not possible to get into contract specifications at this time but I can make some general comments about the approach ASX and Perth Mint will be taking.

Read more here.

Federal Reserve International Finance Discussion Paper #582

The idea that the US Mint has a legal obligation to mint and issue bullion coins in quantities sufficient to meet public demand is one that I have seen mentioned every time the US Mint puts its bullion coins on allocation. While originally true, it is no longer the case.

Read more here


FYI, you'll also like Sec. 5116 authorising the Secretary of the Treasury to sell gold.

Five Metals

Those who frequent the precious metal forum www.silverstackers.com will know the name goldpelican, who is the forum administrator as well as one of the guys behind http://www.goldstackers.com.au/store. Well he has just started a blog called Five Metals and his first post is on a favourite topic of mine - excessive coin premiums. Worth adding to your blog reading list.

The chart below from WSJ via Zero Hedge shows a complete lack of consensus amongst banks as to gold's future direction. That may translate into a sideways market as participants compete on their view.



Thankfully there doesn't seem to be many forecasting prices below $1000.

Steven Saville made a good point about gold futures and arbitrage in this blog post, noting that:

Strangely, many gold ‘experts’ assert that gold is different due to its dominant monetary and store-of-value roles, but then insist on applying a traditional commodity-style method of supply-demand analysis.

Yep, it doesn't make sense to treat gold the same as a commodity like orange juice futures.

Three ways to get paid for your words

From The Irrelevant Investor:

“Three ways to get paid for your words:
1) Lie to people who want to be lied to, and you’ll get rich.
2) Tell the truth to those who want the truth, and you’ll make a living.
3) Tell the truth to those who want to be lied to and you’ll go broke.”

The first category explains why there is so much crap out there. I think I've spent too much time in the past doing the third. I'll leave it up to you to work out which of the gold bloggers/commentators out there fit into which category.