Buying gold bullion coins ought to be simple and uncomplicated, and usually it is… unless you get yourself tangled up in the myths surrounding the process.
As Mark Twain once said, “It’s not what we don’t know that’s the problem, it’s what we know that ain’t so.” So in the spirit of Twain, let’s lay some bullion-buying myths to rest.
Myth #1: The government can’t confiscate gold coin bullion, even in times of national emergency.
What is it with all these gold confiscation rumors?
As far as we can tell, some vendors deliberately stir up fears of gold confiscation so they can justify higher prices. The claim is that bullion coins are safe from confiscation, because the 1933 Gold Confiscation Act specifically exempted “gold coins having a recognized special value to collectors of rare and unusual coins.”
That would be great if:
a) the 1933 Act still applied; and
b) bullion coins were collectible.
Well, it doesn’t, and they’re not.
Even in the unlikely event that the government decided to call in gold again (see Myth #2), the U.S. Mint deliberately designs bullion coins to limit their collector value. Any numismatic value they have is artificial, dreamed up so vendors can sell their bullion at premium prices.
Myth #2: So you’re saying that the government can confiscate my bullion?
Not under current law. You have to understand, there’s no reason for the government to confiscate gold again. We’re no longer on the gold standard, and haven’t been for decades. The ’33 confiscation was a desperate attempt by FDR to rebuild Federal gold reserves — and it failed miserably.
In any case, the 1933 Act is no longer valid. Congress rescinded it in 1934, and President Ford formally repealed it in 1974. Plus, in 1977, Congress stripped the President of the power to confiscate gold except in time of war.
Today, no vendor has any legal basis to claim that the government can or cannot confiscate any form of gold bullion. Either way, they’re lying to you to justify excessive prices on their gold.
Incidentally: if there was an emergency that required it, the government could easily change the gold confiscation laws. If that happened, they would most likely call in all gold, except perhaps for “rare or unusual coins” with numismatic value. That was the only form exempted last time. But we think the chance of this is extremely low.
Myth #3: Whatever. Coin bullion is still worth paying extra for, because the vendor won’t report it to the IRS.
This myth stems either from a misunderstanding of the law, or from deliberate misrepresentation intended to boost prices. Usually, it’s the latter.
Now, it’s true that a vendor doesn’t have to report your purchase of gold coin bullion to the U.S. government. What vendors don’t tell you is that the Feds don’t require reporting on private precious metal purchases in any form or volume.
Doesn’t matter whether it’s bullion coins, bar bullion, platinum, gold, silver, or even copper. There are no pertinent regulations. They don’t care. Buy away — just don’t fall for this hard-sell tactic and pay too much.
One caveat: if you make a cash purchase of more than $10,000, the transaction will be reported. This is true of any cash purchase, not just precious metal transactions — and it doesn’t apply to personal checks, wire transfers, or electronic funds transfers. Just greenbacks and, occasionally, cashier’s checks.
So don’t let financial reporting worries get in the way of your investment plans. The government won’t stop you from buying lots of gold bullion coins.
And did you know that 93% of new (and even experienced) gold investors make at least one of these mistakes when they invest in gold? Find out how YOU can easily avoid the 7 biggest gold investing mistakes.
Have you fallen for any of these myths? Any other myths you want to share? We welcome your thoughts below…