By Patrick A. Heller
Commentary on Precious Metals Prepared for CoinWeek.com …..
A number of financial advisors who are concerned about the coming financial crises in America have recommended transferring some assets beyond the borders of the United States. For prudent wealth management, it is an option worth consideration.
Unfortunately, there is bad news for Americans who want to transfer funds and investments outside the US. Foreign banks and brokerage firms don’t want custody or management of assets owned by anyone who is either a US citizen or resident! Huge numbers of Americans with existing foreign accounts have already had them summarily closed.
In times past, a number of Americans established overseas accounts in Switzerland and other nations. If the total value exceeded the Internal Revenue Service (IRS) reporting threshold, information about these accounts and assets were supposed to be reported by the taxpayers to the IRS on their personal tax returns.
As you might suspect, some of these foreign assets involved attempts to hide them from the US government, family members, or business associates. In many instances, taxpayers chose not to disclose the existence of such accounts, report the income on such assets, and pay the related income taxes.
The Department of Justice and Internal Revenue Service have long been aware that this occurs. More than 60 years ago the IRS began pressing for so-called “voluntary disclosure” programs where, if banks and brokerages would turn over information about accounts held by Americans, the US government would not make life difficult for the foreign entity. The first two such programs had limited lifespans. Still, they generated 33,000 disclosures and $4.4 billion of tax collections by mid-2012.
The Foreign Account Tax Compliance Act of 2010 (FATCA) has created additional obstacles for Americans seeking to establish bank and brokerage accounts outside of the country. Now, any non-US asset manager or financial institution with accounts held by Americans must register with the US Securities and Exchange Commission (SEC) as an investment advisor, under terms of the US Investment Advisors Act of 1940. Before this legislation, almost no foreign banks or brokerages registered with the SEC.
Registration with the SEC and compliance with SEC regulations is a greater burden than foreign banks or brokerages want to bear. As a result, even long-time, law-abiding Americans have seen their foreign accounts closed. Americans now seeking to set up overseas accounts with foreign-based institutions are almost always turned away.
I’m not sure of the degree to which Americans who want to establish accounts solely to store physical precious metals are affected by the current restrictions. Many large foreign banks have significant US operations and are already registered with the SEC and other US regulatory agencies. Also, several storage facilities in Switzerland and elsewhere are owned wholly or partly by US-based banks and brokerages which already comply with SEC regulations. Americans seeking to use such institutions should realize that such foreign accounts don’t really have any privacy from the US government. The bad news is that these are just about the only “foreign” banks and brokerages that would be willing to open and hold accounts for Americans.
It has been a standard development throughout history that any country’s government that made it difficult for its citizens to move assets beyond the borders of the nation descended into totalitarianism. If it didn’t eventually allow free capital flows, then that government ultimately failed. Just because the nation may be the United States of America does not mean it is exempt from this historical pattern.
Patrick A. Heller was honored with the American Numismatic Association 2012 Harry J. Forman Numismatic Dealer of the Year Award. He owns Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Other commentaries are available at Numismaster ( under “News & Articles) and at CoinInfo. His award-winning radio show “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at http://www.1320wils.com. He is also the financier and executive producer of the forthcoming movie “Alongside Night” (trailer posted at http://www.youtube.com/watch?v=sTZ8vn45Cds).
The noose is tightening for the average citizen. And the US financial folks LOVE it. It corrals all monies to them and allows for no escape routes for the average citizen. The idea is that the FRB Corp. (Not Federal, no Reserve, not a Bank) doesn’t want to allow any citizen to have any options whereby that citizen can escape the downward manipulation of the value of the FRB Corp. Note. A captive audience. No options. Bang; you’re screwed.
Wait a minute! I thought the Patrick Heller / Austrian Fool “hard money” Paulista foolish screed was that the Fed is artificially holding metals’ values down. Now they’re artificially holding down the value of FRN’s?!?!?! Which is it? Please pick one delusional conspiracy theory lane and stay in it.
It would be nice if you could make more comments without the sarcastic labels you love so much, but that is another issue. There is a huge difference between what Mr. Petit said and your charactorization of it.
The Value of the US dollar as steadily gone in one direction, DOWN, since the “FED” came into being. That is not a theory. So it is not unreasonable to conclude that BY Design, the value of US currency will continue on the same path since the FED is continually creating more money (ie debt). The value of the dollar does not need to be “Held down”, that seems to be it natural trajectory.
Many think that this “monitization” is the only way to pay off or sustain the debt, by paying it and the interest back with devalued dollars. But what are we going to do when Interest rates are no longer artificially low and normalize after we have ballooned the national debt to 20-25 Trillon dollars?
Is this delusional? perhaps, but no more so that doing the same things over and over and expecting different results.
I do solemnly swear, there is no demographic or economic segment that compares with coin people when it comes to persecution complexes and conspiracy delusions, unless it’s voting machine critic ideologues. This (Fed policy) is the BEST central bank policy going anywhere in the world right now. Even with the House of Representatives being hell bent on creating a Depression, Bernanke literally saved the world in 2008/09. And he still is saving the world today.
Can I have some of what you’re smoking?
Don’t bogart that troll my friend, I’d like a hit off it too!
Bernanke did not save the world in 2008/09. He only “kicked the can” in the inevitable collapse of this global house of cards. QE to the moon is the mantra now, but it’s also the unescapable trap he finds himself in. Math does not lie, but it certainly can be glossed over.
I’m sure on some planet your logic is sound, the problem is…this is EARTH.
I think you’re trolling, but if that’s not the case, you’re only fooling yourself. There may be “legal separation” of Government and the FED but they are absolutely “in bed together”. I don’t know if “conspiracy” is the right term, but I do know : The guys that dictate monetary systems want more for themselves and less for the rest of us.
Seriously?! Five thousand years (at least) of human evolution and THIS is the best we can do?! A species that cheats, kills and declares war on one another every day over some bits of paper and computer blips (CALL IT “WEALTH”) and have the arrogance to call it “civilization”.
Sounds kind of primitive to me.
So tell me, is it now a requirement to be a “gold bug” in order to be a serious numismatist? Because I am the latter, but not even slightly the former. I am a thoroughly committed Keynesian econmic policy adherantand overwhelmingly proud to be. I think (and I’d prefer to say “know”) that all Austrian School economic thought is just overwhelmingly crazy time stuff.
Where did anyone, say anything, about “serious numismatists” having to be “gold bugs”??????? Are we reading different articles?
Perhaps not, but I read and respond to the commenters’ obvious ideological proclivities as well as the original article.
I just refuse to accept the idea that the solution to ANY economic malady we now suffer includes the ending of what has become known as stimulus. The UK and the Euro zone are trying austerity, and their economies are imploding, and the misery of their people is rapidly expanding. The US and Japan are trying expansion of their monetary aggregates, and their economies are, relatively speaking, kicking butt. Even the BRIC counties are hitting “hard landings”. Now, is the 1950’s expansion all over again? No, of course not. But our (US) economy is AT LEAST, the least ugly sister at the ball, unless it’s now Japan, which after almost 20 years of trying austerity with nothing but stagnation, FINALLY figured it out. You need to do what it takes to raise workers’ incomes. Not the non-working poor, not the bankers, not the bullion investors, not the pensioners trying to make a living off low-risk fixed-rate bonds and CD’s, you have to do what it takes to raise the standard of living of TODAY’S WORKERS, else there will BE no economy to speak of.
It is about time that the rich bastards of the world pay their fair share. Us little guy pays all must stop.
“It is about time that the rich bastards of the world pay their fair share. Us little guy pays all must stop.”
Typical envy and populist demagoguery.
I find it hard to believe that FACTA is constitutional, not that this matters anymore. Are people using foreign accounts to evade US taxes? Yes. However, as the law now stands, simply paying your taxes now isn’t enough anymore. Even if you pay your taxes but fail to report your assets, you can still be subject to substantial penalties.
As to why anyone would pay their taxes now while failing to file the other information reports, well let’s just say that the US government might have other reasons for requiring this reporting. They will not be evident to most until later when the government decides it needs YOUR money and that it is not really yours.