Gold predictions????

[goldshark]

Maybe a detailed explanation of practical as it pertains to refining accounting is in order here.

First off, my accountants were CPA's (certified public accountants) and as such they are held to a level of accountability as well, and they were anything but pliable. Let me go through what was involved with their 4 annual in house audits which they felt were adequate to verify my ongoing "self assessments."

To start every job that came into the refinery had a lot number which was a combination of the day it arrived and the customers 4 character identifier. This was followed with the scrap type, incoming weight, after burn or after melt weight, settlement weight. This paper traveled with the lot until it was ready for assay. The assay number was only linked to this sheet of paper in the office. In the assay lab every lot number contained the sample weight and the results for every metal requested. These assay results were kept in stitch bound numbered notebooks which were in the assay lab until a new book was required and then it moved to the vault. When the assay results were reported, our in house bean counter entered the assay results onto the sheet of paper that started when the lot arrived on site. He added the date we settled the job and the metal prices for the day of settlement. From the data on this sheet a settlement could be calculated.

When the accountants came to do an audit they typically stayed 2 or 3 days. First thing they would do would go to the assay lab and pick out randomly about 6 or 8 assay numbers. Totally random, I had no say in what they picked. They then went to the in house accountant and got the data sheets that pertained to those lots and from there they could calculate the amount of money (or metal) the customer was paid. They also could calculate the number of ounces of metal retained for charges as this was potential income.

To double verify this information for lots sent out to the majors for sale or refining, every lot that made up a larger melt for karat or powder for sweeps indicated the process lots that went into that lot and the larger bar being shipped was melted in house and assayed. And the sweeps lots were blended and sampled as well. All of the numbers in these lots had to add up to the totals the CPA's calculated or they would have questions.

At the end of their audit they would know if the lots they randomly chose added up. Once I remember a lot where one drum of a 6 drum blend was not shipped by omission on our part. But that last missing drum was given a lot number and assayed and entered the paperwork process again. When they randomly picked that lot the note on the paperwork directed them to the follow up paperwork which made things add up.

This is far from me giving them a page full of numbers and telling them to do their thing. We didn't have to do anything special to prepare for an audit as all of the paperwork was on file and it never failed us. Actually not true.... we did have to supply the auditors with coffee and donuts.

They did not.... nor could they, do this process with every job that went through the shop. I knew our paperwork added up and my in house accounting totaled our expenses, metals bought, refinery payments incoming from which we calculated our margins.

The accountants were satisfied that we had a proper paper trail and we never failed an audit. And some of our lots were every refiners favorite account called "house". Those lots were assayed and recorded but the values went straight to the bottom line.

I hope you can see from the above description that the word pliable never entered the accounting process.

Just a quick note to any 25% or more shareholders in an LLC, Inc,. LLLP, or any of a host of business entities. New this year is a mandatory filing called FinCen. It is a registration with the Secretary of State ( US only ). It is designed to combat racketeering, fraud, money laundering, etc.. Needs to be filed by Jan. 1 2025.

 

[4metals]

Just a quick note to any 25% or more shareholders in an LLC, Inc,. LLLP, or any of a host of business entities. New this year is a mandatory filing called FinCen. It is a registration with the Secretary of State ( US only ). It is designed to combat racketeering, fraud, money laundering, etc.. Needs to be filed by Jan. 1 2025

Good to know, but better to be retired. With the current political situation here in the US, I wonder how long that law will last.

 

[haveagojoe]

Not educated enough on the subject to make an informed decision, let alone how to negotiate such derivatives or with whom.
I actually thought all such derivatives had been abolished in relation to the precious metal markets to discourage manipulation by the larger banking houses.
Yes, it was a bit of a hit over the weekend, but not a complete loss.
Retained enough to keep the lights on for another month or two.

All it would take would be to register an account on one of the popular online trading platforms, depost some funds by card, calculate the value of your liability (the expected yield of the source material you purchased) and then place a sell order (short position) to that value. In the UK you can do it tax-free using "spread-betting"- which is just a bet on the changing price, rather than a derivative, since it has no connection to any physical metal.

When you purchase source material you're effectively making a buy order, which as a trade is equivalent to a gamble or bet that the price of the gold it contains will increase. If you make a corresponding sell order online, i.e. a bet that its price will decrease, then whichever way the market moves you will come out even if you sell your refined product at spot price and close your position at the same time. It's basically like insurance against the price dropping while you hold gold in your posession.

Popular platforms include ig.com, spreadex.com, cityindex.com, cmcmarkets.com etc.

If you hold more than an ounce or two at any given time I think it would be worth discussing with your accountant, who will be able to explain and advise in more detail, although really it's not as complicated as it sounds at first.

The only disadvantage would be that while you would be protected from the price going down, you would also lose the opportunity to profit from the price going up. But I would think that in business terms the increased stability and predictability would be worth it.

 

[anachronism]

Those industries are not really related, if I ever process enough in one year to require any reporting, I would die a happy man.
Also, it is one thing to operate behind legal screens and LTD's that can always go bankrupt, but I stand completely vulnerable with no place to hide.
My trade has been honesty and transparency all my life, it makes no difference what industry I happen to be working in.
A bit of a habit, I suppose.
I have discussed the matter with the people who worked putting the legislation in-place to check my account's advice was correct. That took calling in a few favours to arrange.
I have no problem working within the defined advice.
It is frustrating when they move the goal posts between literal meaning and their interpretation.
That is the trap, they specifically will not discuss their interpretation and insist you make your own interpretation.
But their understanding is not the same as anyone in the field would think from the legislation.
Only after you have made a mess of all your accounts and by default made false declarations do they pull you aside and pick you apart.
Next, you will be advising me to buy an EncroChat phone.

In fairness they are related in the sense that they operate under the same tax/P & L/balance sheet structure. Regardless of the type of business and a few quirks (which usually improve a situation rather than make it worse) the same accounting processes apply.

They also all have the same rule which is that claiming for things that shouldn't be claimed for leads to issues with the Inland Revenue. My post was referring to the additional layer of nonsense that comes in addition to this, over the accounting thing. It was also based on the assumption that as you are running a chemical metal recovery/refining business you'd also be operating under the terms of an Environment Agency Permit so therefore you'd relate.

 

[anachronism]

If you hold more than an ounce or two at any given time I think it would be worth discussing with your accountant, who will be able to explain and advise in more detail, although really it's not as complicated as it sounds at first.

Agreed, at this point it's simply stock, and accounted for at cost price on the balance sheet.

 

[cosmetal]

I have $10 trillion in unobtanium! The government will NEVER find out! ;D

They just did!

Your tax bill is in the mail.

Bwaaaaaaaaah . . . . !

Peace and health,
James

P.S. - just kidding, (I hope )

 

[Alondro]

How do you guys "season" your gold (i.e., salt, pepper, cajun, blackened)? I'll choose food and water if The Big One pays us a visit.

As long as The Big One isn't an asteroid impact, I can always forage for foods. Trades for other goods, such as tools, is far better done with precious metals. That's how it was in the ancient times, when I was only 34... ;D

 

[Alondro]

They just did!

Your tax bill is in the mail.

Bwaaaaaaaaah . . . . !

Peace and health,
James

P.S. - just kidding, (I hope )

They found me and beat me with sticks and cacti until I gave them their blood money. :C

 

[4metals]

in the UK for inheritance tax purposes any precious metals in the form of legal UK tender are considered to have a value that is the tender value, rather than the metal value .

For example a 1 oz gold coin is currently minted as a coin with a value of £100, so 100 of these would be deemed to be in your estate at a value of £10,000 rather than the value of the 100 oz of gold.

Just noticed this. That ruling, not sure if something similar exists here in the US, is a giant gift to the wealthy to pass on a huge amount of wealth with minimal tax implications.

 

[Mike Low]

I am aware of this, we have brittania 1 Oz coins, face value of £10, a good friend of mine has been using his pension to buy this way.

 

[Justincase]

I am aware of this, we have brittania 1 Oz coins, face value of £10, a good friend of mine has been using his pension to buy this way.

I have never heard or seen anything that indicate that UK, precious metals in the form of legal tender are considered to have tender value for inheritance tax purposes.
You can pass gold bars and coins onto your children without inheritance tax if you remain alive for seven years after you make the gift.
Gold coins produced by The Royal Mint are exempt from both capital gains and value-added tax.
Investment.
Maybe someone can find the HMRC advice concerning this.

 

[Mike Low]

I'll get some more details asap

 

[4metals]

The face value of Canadian gold maple leafs is $50 Canadian. The face value of Morgan silver dollars is $1. If it can work here in the US it is a great way to pass on wealth and avoid heavy taxes. Time to call my accountant.

 

[Justincase]

The face value of Canadian gold maple leafs is $50 Canadian. The face value of Morgan silver dollars is $1. If it can work here in the US it is a great way to pass on wealth and avoid heavy taxes. Time to call my accountant.

Yes, the sovereign was a British gold coin with a nominal value of one pound sterling (£1).
You would think, if they allowed for such a lucrative tax loophole, they would fetch more than their metal content.
But most do not.
I remember when I was starting buying from jumble sales before people were so well-educated.
The local buyer used to value UK silver coins by their tender value.
Saved on weighing, but missed the difference between 50/50 alloy and 925.
Now I know a little more, I think they must have been cleaning up at the time silver was 9p a gram.

 

[snoman701]

The face value of Canadian gold maple leafs is $50 Canadian. The face value of Morgan silver dollars is $1. If it can work here in the US it is a great way to pass on wealth and avoid heavy taxes. Time to call my accountant.

You may be better calling an estate lawyer. My guess is that you'll want a trust. You put the assets in a trust. You die, the trust continues to exist, so no inheritence tax. No tax until you sell, then capital gains tax.

Though having a safe full of dollars worth $23FV in Ag might be beneficial as well. Although I think that in order to be eligible, it has to be IRA eligible, so it would have to be eagles, which obviously have their own premium.

Curious to hear what you find.

 

[Mike Low]

Don't think it applies to silver, also silver in the UK attracts vat at 20 percent.

 

[Justincase]

Don't think it applies to silver, also silver in the UK attracts vat at 20 percent.

I was not saying it was a part of the fanciful gold valuation.
Just that, it was the only instant in fourth five years I can remember when anyone has valued anything close to a noble metal by its tender value.
Silver is only a semi-noble metal but close enough.
The VAT threshold for 2024 is £90,000 (up from £85,000). The government announced this increase in the Spring Budget, with the new threshold coming in from 1 April 2024.

 

[Mike Low]

Interesting, I was vat registered for over 30 years, glad I'm retired now,
To me silver is my favourite metal

 

[Justincase]

Interesting, I was vat registered for over 30 years, glad I'm retired now,
To me silver is my favourite metal

I will not get started on VAT and the problems between a logical interpretation and the accepted rulings concerning VAT Notice 701/21/ and Notice 701/21A. without suitable alcoholic lubrication.
In fact, it looks like those section of legislation have been republished since I last looked at them and made my enquiry.
So I will have to re-read them.
It turned out that the "Travel Industry" had similar thoughts and went to the trouble of conducting a VAT tribunal to try and argue their case.
They lost, and I have nowhere near the resources of the travel industry to employ the right people to argue my case.

 

[goldshark]

Perhaps a thread on PM's, and their associated tax benefits and rules/laws would be in order. Or do we continue here? Just thinking about the forum format in general.