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A Follow Up To The Physical Gold Arbitrage Trade

Tyler Durden's picture




 

A few days ago, in "Hands down, the cheapest place in the world to buy gold coins" we presented Simon Black's thoughts on an interesting physical gold arbitrage (buy cheap physical in Hong Kong, sell it where it is expensive) which created quite a stir. Today, the "Sovereign Man" provides some additional information, and answers some of the most frequent questions he received in response to his article, with a particular focus on the question of whether taking gold out of Hong Kong or bringing it into the US is considered smuggling. The answers may surprise you...

Google is the Black Hole of Accurate Information

From Simon Black of Sovereign Man

I had a rather interesting meeting last night with a notable Chilean attorney who is the chief legal counsel of one of the country’s largest telecom firms. We talked about the growth of the local economy and the lengths to which the government here is trying to attract foreign investors and entrepreneurs.

We’ve discussed before in our daily conversations what I see as a new trend: governments competing for residents. Some countries– Chile, Latvia, Singapore, Panama, Estonia, etc. understand that their economic future depends on attracting the brightest minds possible.

(note: we covered unique residency options in two of these countries in our most recent edition of Sovereign Man: Confidential)

Other countries go out of their way to repel or even prevent talented foreigners from settling, as if the fundamental freedom to work hard and prosper is somehow derived from irrelevant, invisible lines on a map.

I’ll have much more to say about this next week; for now, I want to move on to our weekly q&a.

Earlier this week, I wrote to you about banks in Hong Kong such as Hang Seng bank which sell Canadian Maple Leaf coins for just 0.5% above spot price, and Chinese Panda coins as 4.9% above spot price.

This article triggered a host of questions that I’d like to address today:

1. “I googled gold prices in Hong Kong and noticed different prices than what you mentioned in your article. Why the discrepancy?”

Google is the black hole of accurate information. The intelligence on the ground always trumps the ether of the Internet, and my partner Tim was actually standing at the bank in Hong Kong speaking to the cashiers.

It’s common to see significant inaccuracies online, especially considering the banks don’t sell their gold over the Internet or the phone… only to walk-in customers. So naturally the most accurate pricing will be at the branch.

2. “Once I buy gold coins in Hong Kong, is there any restriction to taking them out of the country?”

No, there are no restrictions for transporting gold out of Hong Kong as precious metals are not a controlled or prohibited item listed by Hong Kong Customs (rough, uncut diamonds are).

We have transported gold out of Hong Kong numerous times in our carry-on luggage without so much as a glance from security.

3. “Are there restrictions on bringing in gold coins when I return home?”

It depends on where you are flying to and what you purchase. If you are flying to North America, neither the Canadian nor US government considers gold to be a monetary instrument.

Maple Leaf and Eagle coins are technically deemed legal tender in each country, so you would have to raise your hand if the aggregate face value of the coins plus whatever other cash you have on hand exceeds $10,000.

Bear in mind, customs officials in North America have unlimited authority to do whatever they want, even if you are well within the law. As such, it may be advisable to have a receipt for the coin purchase in Hong Kong, as well as evidence for your source of funds (bank statement is sufficient).

If you’re ever in doubt about the regulation, ASK.

4. “Are there any countries that I should avoid for transporting bullion?”

Yes, absolutely. To name a few: Mexico. Thailand. Most of Africa. Russia. Uruguay.

I would also generally avoid Panama as well– the country’s customs regulations value gold based on its market value, not face value… and anyone who brings more than a trivial amount of gold into the country could end up paying an unnecessary import duty.

 

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Fri, 01/21/2011 - 16:32 | 894378 Cheesy Bastard
Cheesy Bastard's picture

Wow.  Face value of the coins needs to exceed 10 G's for reporting requirements, not melt down value.  Interesting.

Fri, 01/21/2011 - 16:36 | 894395 Azannoth
Azannoth's picture

"..customs officials in North America have unlimited authority to do whatever they want, even if you are well within the law", so yes and no, they could detain you for 12 or 24 hours while doing a 'background' check on you

or even confiscate it, untill you prove that it's not illegal

Fri, 01/21/2011 - 16:39 | 894404 faustian bargain
faustian bargain's picture

Just melt it all down into a big trophy, and tell them you won it in a martial arts tournament.

Fri, 01/21/2011 - 16:45 | 894425 Cheesy Bastard
Cheesy Bastard's picture

LOL! 

Fri, 01/21/2011 - 16:57 | 894459 goldmiddelfinger
goldmiddelfinger's picture

That will get you a quick trip to prision where you will no longer get paid for being a Butt Monkey.

Fri, 01/21/2011 - 17:17 | 894529 Hephasteus
Hephasteus's picture

Oh look retarded cop is back.

http://www.youtube.com/watch?v=qlUVGf8B2yc

Fri, 01/21/2011 - 18:06 | 894652 Cheesy Bastard
Cheesy Bastard's picture

LOL.  Knock knock...

Fri, 01/21/2011 - 18:38 | 894726 goldmiddelfinger
goldmiddelfinger's picture

Somewhere there is an ass for you to wipe.

Fri, 01/21/2011 - 20:34 | 894911 Cheesy Bastard
Cheesy Bastard's picture

Look in the mirror, there it is.

Fri, 01/21/2011 - 23:33 | 895213 Calmyourself
Calmyourself's picture

Power tripping are we?  Let me guess fresh out of the academy, big hardon the girls at the donut shop think you look swell in the uniform?

Fri, 01/21/2011 - 16:59 | 894467 Sudden Debt
Sudden Debt's picture

+100

 

What would B.A. do...

Fri, 01/21/2011 - 17:36 | 894580 knukles
knukles's picture

God!  Do I have to think of everything for everybody?

Here's the solution.  Buy the stuff (I would recommend coins, the 1 oz variety should work just fine.) (good pun, fine, eh?) in HK and when on the way home, just before the plane lands, go into the commode and secrete the coins up your rectum.
Now, based upon rudimentary calculations and personal experience, I'd suggest that given one finger is not unlike another, nor a coin amongst other coins being any different, before trying this trick en-route, substantial practice be accomplished at home.  Preferably in the privacy of one's own home, for even my 96 year old mother became somewhat disturbed whilst I was attempting practice during our family holiday repast.

And further consideration should be afforded (pun, LOL get it, afford?) the weight of the coins, for with each coin weighing in at 1 oz, (so best go with the highest quality, .99999 fine) the weight might become somewhat disconcerting particularly ifstanding in line at customs for say 3 1/2 hours with 11 lb. of Pandas up the old bung.  Yes, practice does help make perfect, but I must warn, do not get too greedy, for double digit weight does comprise quite a volume of physical specie.

I might also recommend a reasonable supply of KY and Vicodin for obvious reasons as well as Ativan for the normally skittish, irritable or nervous as having the heee beee geeebies whilst complaining to the lady with the 3 year old screaming triplets person next to you if they've ever had the misery of attempting to sneak gold into the counrty in thier bung can draw unwnated attention.

Oh, and BTW, after practicing the temporary storage of the coinage, it is also good to re-learn walking unencumbered.  (Another pun, unencumbered, LOL)

Moreover, since the guardians of the universe have not yet stooped (another pun, get it, stoop?) so low as to initiate cavity searches on incoming passengers form Hong Kong as a standard operating practice, such might be accomplished multiple times with reasonable anticipation of success.

Good luck and good puckering!

 

Fri, 01/21/2011 - 18:24 | 894693 nmewn
nmewn's picture

Maw inspiring...LOL...perhaps Kevin Jennings can add a new curriculum to classrooms so the up & comers can be safe in retrieving said fist full of dollars.

I counted four ;-)

Fri, 01/21/2011 - 20:25 | 894890 New World Chaos
New World Chaos's picture

This would probably work.  I didn't have to go through a metal detector when entering the US via LAX, and later I requested an "enhanced pat-down" in protest and ended up skipping the metal detector!  They didn't even wand me.  That might have been a breach of protocol, so better test this first.

Fri, 01/21/2011 - 20:41 | 894923 nmewn
nmewn's picture

"They didn't even wand me."

See, that's what I'm talking about...we pay good tax money to be abused on a daily basis...they're completely incompetent!...slackers. 

Fri, 01/21/2011 - 21:26 | 895023 DosZap
DosZap's picture

Knuckles,

Exactly how do you intend to keep said 11#'s lollygagging arould your orfice?.

I would suggest having said orfice pre-loaded, and temoraily sewn shut, and fake a Colo Bag.

At the very worst you could rupture your colon, and bleed out a wealthy man.(oh, and an enema would definitely be in order, several.)(>;

Fri, 01/21/2011 - 21:32 | 895031 Cheesy Bastard
Cheesy Bastard's picture

As a plus, if your kegals are in good shape, and you squeeze them hard enough, you can lay golden eggs.  This can be useful.  See the U.S. army survival manual on laying golden eggs if you don't believe me.

Fri, 01/21/2011 - 21:40 | 895046 Al Gorerhythm
Al Gorerhythm's picture

I shall be handling all 1oz coins with surgical gloves, from this day forward.

Fri, 01/21/2011 - 21:58 | 895074 tinylittleguy
tinylittleguy's picture

ROFLMAO, that was absolutely hilarious. Thank you for that

Fri, 01/21/2011 - 17:47 | 894604 Piranhanoia
Piranhanoia's picture

"Portnoy's Complaint"  will show you how to secrete the said discreteables.

Fri, 01/21/2011 - 17:15 | 894522 Id fight Gandhi
Id fight Gandhi's picture

It would work, but smeling gold is a whole big process. You'd need resources on each country to pull it off.

Plus having actual coins that are universally recognized as gold is way better than some ingot.

Fri, 01/21/2011 - 16:48 | 894408 Cheesy Bastard
Cheesy Bastard's picture

they could detain you for 12 or 24 hours while doing a 'background' check on you

True!  Plus, they can grab your balls.

Fri, 01/21/2011 - 17:14 | 894518 JW n FL
JW n FL's picture

I am single... anything for a date!

Fri, 01/21/2011 - 17:20 | 894537 Sudden Debt
Sudden Debt's picture

There are even guys who pay top dollar for that :)

Fri, 01/21/2011 - 17:27 | 894551 DoChenRollingBearing
DoChenRollingBearing's picture

JW, that was good, LOL.

Fri, 01/21/2011 - 17:43 | 894595 RafterManFMJ
RafterManFMJ's picture

True!  Plus, they can grab your balls.

 

For many that would be a bonus.

Fri, 01/21/2011 - 17:59 | 894637 Cheesy Bastard
Cheesy Bastard's picture

Not my bag. 

Fri, 01/21/2011 - 18:37 | 894723 goldmiddelfinger
goldmiddelfinger's picture

retard alert

Fri, 01/21/2011 - 18:56 | 894753 Hephasteus
Hephasteus's picture

You're supposed to internalize the retardation. Not project it back out. Now swallow goldi.

Fri, 01/21/2011 - 20:31 | 894899 Cheesy Bastard
Cheesy Bastard's picture

Its a given, Goldmiddle finger loves to swallow.

Fri, 01/21/2011 - 20:53 | 894944 Hephasteus
Hephasteus's picture

Nope he's a spitter.

Fri, 01/21/2011 - 20:55 | 894948 Cheesy Bastard
Cheesy Bastard's picture

Yeah, can't do anything right, that one.

Fri, 01/21/2011 - 21:16 | 895002 nmewn
nmewn's picture

Mean people suck...nice people swallow ;-)

Fri, 01/21/2011 - 21:50 | 895060 Cheesy Bastard
Cheesy Bastard's picture

LOL.  Consider that stolen.

Sat, 01/22/2011 - 09:23 | 895571 nmewn
nmewn's picture

Why not?...I stole it from someone else ;-)

I think the phrase came about by all these college twerps running around with "Save the Planet"..."Free Tibet"...bumper stickers on their Subaru's.

One of the bumper stickers was "Mean People Suck"...now I just point at them and laugh when I pull up alongside them in traffic...LOL.

Fri, 01/21/2011 - 18:00 | 894640 Hephasteus
Hephasteus's picture

Grabbing em's easy. Letting em go is the hard part.

Fri, 01/21/2011 - 16:43 | 894415 pacu44
pacu44's picture

or even confiscate it, untill you prove that it's not illegal

 

But like guns confiscated during Katrina, you still may not get them back...

Sat, 01/22/2011 - 10:24 | 895602 JW n FL
JW n FL's picture

why did you let someone take a gun from you to begin with?

you do understand what that makes you, right?

how is it someone else's fault? when you did it???

here watch this and get back to me doofus..

http://www.youtube.com/watch?v=rJDLZRv1otE&feature=

 

Fri, 01/21/2011 - 16:46 | 894423 Idiot Savant
Idiot Savant's picture

I'm sorry, but you're a fucking moron if you try to bring a significant amount of gold into the U.S.. Customs is just as crooked as Wall Street et.al. and will find a reason to keep it. That, or they'll tie it up in court for a few years. Be prepared to spend the money you saved to prove you're not a terrorist and that the gold belongs to you.

Large bullion dealers in the U.S. will give a big discount for bulk purchases. I fail to see how it makes any sense to spend the time, money, and effort making the trek to HK.  

Fri, 01/21/2011 - 17:04 | 894490 Cheesy Bastard
Cheesy Bastard's picture

 Customs is just as crooked as Wall Street et.al. and will find a reason to keep it. That, or they'll tie it up in court for a few years.

I vaguely remember Mel Fisher having numerous lengthy legal battles to keep the treasure he found from the Atocha, which was at the bottom of the sea. 

Fri, 01/21/2011 - 18:40 | 894728 goldmiddelfinger
goldmiddelfinger's picture

Before or after his anti-semitic rants?

Fri, 01/21/2011 - 19:02 | 894762 israhole
israhole's picture

Asked the wuss. Didn't you get the Megaphone alert?  Hasbara is a fail.

Fri, 01/21/2011 - 20:33 | 894908 Cheesy Bastard
Cheesy Bastard's picture

Maybe if he takes the dick out of his mouth he will see the page better.  Fisher, not Gibson.

Sat, 01/22/2011 - 14:24 | 895865 glenlloyd
glenlloyd's picture

the proverbial "prove your innocence" game.

the problem here is seizure. Once they have it, and you do have to give it up to them, then you're screwed.

Fri, 01/21/2011 - 16:43 | 894416 Spitzer
Spitzer's picture

The article is wrong on that. You must declare the metallic value if it exceeds $10,000. You could only bring 7.4 coins in priced at $1350 without declaring. You could not value the coins at the face $50 and bring in 200 coins.

Fri, 01/21/2011 - 16:51 | 894436 DoChenRollingBearing
DoChenRollingBearing's picture

Thank you Spitzer.  Spitzer is correct.  I had to declare my Gold Eagles a while back when I took out of the USA well over $10,000 (metal value) worth.  Filled out a Customs form.  And got a trick question from the "B Teamer" Customs Agent working the weekend at the airport.

If it is over $10,000 in liquid value DECLARE IT.

Fri, 01/21/2011 - 17:00 | 894473 flacon
flacon's picture

I have an experience with silver coins - but not valued at $10k

Two years ago I flew from Newark, NJ to Toronto and back with a carry-on bag full of silver coins (American junk silver). Bag was placed on X-Ray machine and the man behind the counter stopped it - and said "coins?". I said "yep.". Bag cleared and I was on my way.

Fri, 01/21/2011 - 17:07 | 894504 SilverIsKing
SilverIsKing's picture

but silver was only $10/oz at the time.  if you did the same thing now, he might frisk your privates and demand a tip paid in those coins.

Fri, 01/21/2011 - 17:00 | 894474 bingaling
bingaling's picture

I have the impression that it is less than 10k now . The patriot act or another like it reduced the amount to less than 10 . I am almost positive . Also you are stating that if you leave the US you must also declare it now . I am going to do a little more investigating but I am sure I read 5k + cash ,securites , gold or cow dung if it is over 5k in value a declaration must be made . Crazy .

Fri, 01/21/2011 - 17:08 | 894507 SilverIsKing
SilverIsKing's picture

FEDEX

Fri, 01/21/2011 - 17:53 | 894624 Pladizow
Pladizow's picture

Plus independent insurance on the package.

Fri, 01/21/2011 - 18:27 | 894705 DosZap
DosZap's picture

Plad,

Yes sir, and FedEx has a limit on insurance, unless they see what it is, and then the cost would likely make you cream your jeans.

Then,once they have seen it, what are your odds of seeing it again?

Fri, 01/21/2011 - 17:36 | 894581 bingaling
bingaling's picture

The more I read the more confused I get . But I found the answer you can bring in less than 10k undeclared also you and say your wife still can only bring in less than 10k .  A friend on the other hand could . The one thing that seemed like they could bust balls on is if you go through customs and declare nothing they may be able to take coins even though the office of foreign assets has its own laws regarding gold/monetary instruments .

Fri, 01/21/2011 - 17:17 | 894530 schoolsout
schoolsout's picture

not that I don't doubt anyone here, but do people declare their fancy watches that are worth over $10k?

Fri, 01/21/2011 - 17:38 | 894586 bingaling
bingaling's picture

On the customs site I just read that you should carry receipts of expensive items you are traveling with ,or register them beforehand online before you depart overseas.

 

http://www.cbp.gov/linkhandler/cgov/travel/vacation/kbyg/kbyg_regulation...

Fri, 01/21/2011 - 19:18 | 894789 PaperWillBurn
PaperWillBurn's picture

The U.S Treasury prices gold at $42 an ounce. In the U.S it does not matter what the market says something is worth. The U.S Government and banking systems prices things for us.

 

Bring a printout of the Treasuries balance sheet and show it to them if anyone decides to give you any shit.

Fri, 01/21/2011 - 16:50 | 894440 Cheesy Bastard
Cheesy Bastard's picture

I thought that sounded a little too good to be true.

Fri, 01/21/2011 - 18:42 | 894732 goldmiddelfinger
goldmiddelfinger's picture

any fag joke sound good to you

Fri, 01/21/2011 - 20:31 | 894904 Cheesy Bastard
Cheesy Bastard's picture

You are the fag joke.

Sat, 01/22/2011 - 10:26 | 895604 JW n FL
JW n FL's picture

i know you are but what am i?

slumming?

fight like a man, not with girls.

Fri, 01/21/2011 - 20:53 | 894943 Amish Hacker
Amish Hacker's picture

So, for reporting purposes, let's pretend that 200 Eagles aren't worth more than 10,000 FRN's.

Fri, 01/21/2011 - 16:41 | 894406 living on the edge
living on the edge's picture

The governments (especially USA) maintain a position of ambiguity regarding gold and silver to confuse and confound the people. Sort of like the tax code. 

Fri, 01/21/2011 - 17:14 | 894516 DosZap
DosZap's picture

LIVING,

Right on, the reason for the ambiuity, is so your guilty of something,even if your not.

If there are no BLACK & WHITE rules, they can screw you with impunity.

The system is designed that way.

Folks think the IRS regs are the only laws that make you guilty till you prove yourself innocent,not so.

Fri, 01/21/2011 - 17:29 | 894554 living on the edge
living on the edge's picture

This trend will unfortunately continue. These bullshit laws being created are to keep the masses submissive to a corrupt ruling elite.

Fri, 01/21/2011 - 17:30 | 894558 DoChenRollingBearing
DoChenRollingBearing's picture

DosZap,

The old USSR was like that.  They wrote lots of contradictory laws so that EVERYONE was guilty of something.

Hmm...

Fri, 01/21/2011 - 18:32 | 894712 DosZap
DosZap's picture

Do,

Some people would scoff at this statement, but I GUARANTEE you, every American on this site is guilty of a felony.

They just have no clue they are, why, and all without any intentions of doing so.

Fri, 01/21/2011 - 19:55 | 894832 Clycntct
Clycntct's picture

I'll give you 50% cause I miss in this department.

"They just have no clue they are, why, and all without any intentions of doing so."

Sat, 01/22/2011 - 10:29 | 895609 JW n FL
JW n FL's picture

there are higher laws that in fact over ride the lower confusion... but once again the constitution is long dead, all legal like!

Fri, 01/21/2011 - 17:33 | 894571 Rahm
Rahm's picture

Dammed if you do, dammed if you don't....

Fri, 01/21/2011 - 16:44 | 894418 ssp2s
ssp2s's picture

"Google is the black hole of accurate information"

So true

Fri, 01/21/2011 - 16:44 | 894421 Threeggg
Threeggg's picture

Man,

Than BDI is starting to look mighty shitty !

http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Shitty !

Fri, 01/21/2011 - 16:50 | 894438 Cognitive Dissonance
Cognitive Dissonance's picture

Means nothing. Everything is booming and happy days are here again. Carry on serfs.

/sarcasm

Fri, 01/21/2011 - 17:03 | 894482 flacon
flacon's picture

It's going from DRY to BRUT!

Fri, 01/21/2011 - 17:14 | 894519 DoChenRollingBearing
DoChenRollingBearing's picture

LOL...

Fri, 01/21/2011 - 16:45 | 894422 Spalding_Smailes
Spalding_Smailes's picture

With riot's, inflation, the falling dollar, mers, q.e 1,2, 10% unemployment, china, the pig's, floods, rare earth embargo, input cost, fin reg, the muni's, missing gold ......

 

Why is gold at .... 1,341.20 and falling on Jan. 21 2011.

Fri, 01/21/2011 - 16:48 | 894431 Threeggg
Threeggg's picture

Free and unencumbered market forces !

;)

Fri, 01/21/2011 - 16:51 | 894445 Spalding_Smailes
Spalding_Smailes's picture

What if ben jawbones no more Q.E. in the FOMC next week ... Things could get nasty.

Fri, 01/21/2011 - 16:59 | 894468 Spitzer
Spitzer's picture

If 2008 did not change the long term trend for gold then nothing will.

Why would Bernanke jawbone about tightening before QE 2 is even over in June. Plus there is no inflation.

Fri, 01/21/2011 - 17:05 | 894483 Spalding_Smailes
Spalding_Smailes's picture

The fucking miners are getting blowtorched, again .... A total wipeout last 2 weeks, money pouring out of gold etf's ...

 

Did you see GE's numbers .... A bellwether stock with booming numbers across every sector. 

Fri, 01/21/2011 - 17:05 | 894494 traderjoe
traderjoe's picture

How's AIG doing?

Fri, 01/21/2011 - 17:12 | 894512 Spalding_Smailes
Spalding_Smailes's picture

Stopped out at 55. 10% profit. Had 20%.

 

Did you buy TZA yet .... !!! Up again today.

Fri, 01/21/2011 - 17:07 | 894503 flacon
flacon's picture

You wouldn't be so upset if you weren't holding miners. In all the price action, did you loose any shares? No. So quit fretting, you'll be rewarded in due time. 

Fri, 01/21/2011 - 17:14 | 894520 Spitzer
Spitzer's picture

The fucking miners are getting blowtorched, again .... A total wipeout last 2 weeks, money pouring out of gold etf's ...

 

Sure doesn't look like a gold bubble to me. Unlike bullion, the gold miner bear market ended in 2008. We are 2 years into this mining bull market, shakeouts like this are to be expected. And yes, the way the majors trade will annoy the fuck out of anyone.

 

Fri, 01/21/2011 - 17:22 | 894538 traderjoe
traderjoe's picture

Duplicate. 

Fri, 01/21/2011 - 17:24 | 894545 Spalding_Smailes
Spalding_Smailes's picture

What's your call joe ??? I made this " China, commodity call 3 months ago " been slamming gold the entire time also with bubble quotes ect....

Called a 20% plus run in XOM,RIMM,X,AIG,NVDA .....

 

Give me a few, " tips " - trader joe ......

Fri, 01/21/2011 - 17:50 | 894614 Spitzer
Spitzer's picture

Buy Premier gold today PG and Medusa Mining today MLL and Exeter resorces today XRC

Fri, 01/21/2011 - 18:01 | 894627 Spalding_Smailes
Spalding_Smailes's picture

Maybe silver wheaton in a few weeks. They are one of the best.

 

Also a few great stocks for your 401k ( after slowdown priced in )

 

Tata -

Komatsu -( my bud who does tons of work for cat says they are just as good or better ) everything they build is top quality. ) Will do well like cat for a long time ...

They both are cheap'

Fri, 01/21/2011 - 18:36 | 894721 DosZap
DosZap's picture

Komatsu .

Bingo, just as good, if not better, and less expensive, or WERE.

Fri, 01/21/2011 - 18:25 | 894695 traderjoe
traderjoe's picture

My call is that there will be a bank holiday and a virtual economic collapse by year-end 2012, maybe 2011. It may be masked by a regional war or large false flag. Lots of muni bankruptcies and maybe even a state will essentially default. 

My call - hold physical silver, gold, and platinum, be prepared with food and basic necessities, develop your community of friends and family, be at peace and calm with the world and the coming Turning, and enjoy what B9K9 calls the "good times" (the days when oil is cheap and the Ponzi is still spinning). 

After nearly 20 years of watching the markets, I've never seen anything as absurd as the crap shilled on CNBS, the MSM, etc. It's all become clear, in my own mind. But I neither judge nor preach. Everyone must find their own path. Mine is to withdraw from the Ponzi, refuse them my consent, and to help build understanding and awareness for the people that are interested that I come in contact with. 

I've sold off most of my assets, vastly reduced my net cash outlay, and have exited the hamster wheel of debt slavery - where the harder you work the more you payout and therefore the harder you have to work. All to feed the odd consumer-driven economy of Chinese made toys, Hallmark holidays, and personal electronic items that divert from personal relationships. 

But, seriously, whatever floats your boat...

Fri, 01/21/2011 - 18:57 | 894754 Sokhmate
Sokhmate's picture

+3.14159

Sat, 01/22/2011 - 10:00 | 895067 living on the edge
living on the edge's picture

Listen, this is a great plan even if you think all is well. I salute you.

Sat, 01/22/2011 - 06:21 | 895481 Boba Fiat
Boba Fiat's picture

@traderjoe:

 

Best post I have ever read on ZH.  Hands down.  You accurately summed up several years worth of angst, anxiety and hope in just a few paragraphs.

Fri, 01/21/2011 - 18:05 | 894649 Panafrican Funk...
Panafrican Funktron Robot's picture

Really, Spalding?  Another stock/equity/commodity got "blowtorched"?  Dude, time to vary the descriptors.

Regarding miners, their stocks are subject to the same action as the rest of the market.  Did you really think any of this was based on fundamentals, or valuation?  Why would BHP do any better or worse than AAPL or JPM? 

http://www.finviz.com/screener.ashx?v=111&f=ta_perf_1w20u&ft=3

See any common thread to the stocks down 20% or more this week?  I see one.  They're all stocks.  That's it. 

Fri, 01/21/2011 - 19:34 | 894808 tmosley
tmosley's picture

Stop playing with paper.  You WILL get burned.

Fri, 01/21/2011 - 17:08 | 894506 oddjob
oddjob's picture

When the Chinese announce the remonitization of Silver, what the fuck is that cueball gonna jawbone then,other than cock that is.

Fri, 01/21/2011 - 17:13 | 894513 goldmiddelfinger
goldmiddelfinger's picture

That's when he folds on QE and covers his shorts.

In the same way I have no roof over my Rolls front seat. Have you not noticed?

Fri, 01/21/2011 - 17:15 | 894521 oddjob
oddjob's picture

I did,each day i get up i hope it doesnt rain.

Fri, 01/21/2011 - 17:13 | 894515 ffart
ffart's picture

QE was already priced into commodities around august.

Fri, 01/21/2011 - 17:17 | 894523 Spalding_Smailes
Spalding_Smailes's picture

So when does the China slowdown/hard landing get priced in ..... ????

 

And when it starts the charts and past get tossed in the trash .... 

Fri, 01/21/2011 - 17:19 | 894534 ffart
ffart's picture

LEt's break it down into a case by case:

Case 1: China economy slows down -> Dollar dies

Case 2: China economy doesn't slow down -> Dollar dies

Hopefully this has been an informative lesson for you.

Fri, 01/21/2011 - 17:34 | 894574 living on the edge
living on the edge's picture

PS. Dollar dies gold and silver prices go up. (In case they are unable to draw the logical conclusion from your illustrations above).

Fri, 01/21/2011 - 18:13 | 894665 ffart
ffart's picture

I don't know if that's meaningful to bring up. Is it useful to know the nominal price of something priced in a banana-republic currency that noone accepts internationally? In the long run I definitely think prices of capital goods priced in gold will go down. But it's also possible the spot gold price could fall all the way down to $400 regardless of the consequences to the COMEX. In that case people who have leveraged themselves would lose real purchasing power (assuming of course that the coin prices follow spot). Personally I do some forex trading in the silver market but only with money I can afford to lose. Excuse my verbal dribble

Fri, 01/21/2011 - 19:46 | 894734 DosZap
DosZap's picture

.

Fri, 01/21/2011 - 19:52 | 894823 DosZap
DosZap's picture

ffart,

Sounds good but, one thing you left out.

ALL the nations fiat is at all time highs (or near) with PM's.

A few of them are not going to do anything except prosper.

Is it your contention Gold is going to drop there also?

No Way, India paid approx $1045oz, for what 2-400 tns, the ONLY scenario I see where Gold/Pt/Slvr/Pal, dropping back to reasonable levels is if we had a majic wand, and POOF it all went away.With China, and Pac Rims doing so much better LONG term, I see nothing but ^^^^ on their horizon, unless we all crash like dominos.

Zimabawe is one example, and they had the USD to fall back on, and gold panned daily just to eat,,day to day.

They are a hopeless case, always have been

Fri, 01/21/2011 - 23:36 | 895082 living on the edge
living on the edge's picture

ffart,

Gold drops to $400/ounce. I've had a few scotches the last few hours but I swore you posted earlier the dollar dies irregardless of what China does. Oh well, I suppose it's just me.

Fri, 01/21/2011 - 16:54 | 894454 I think I need ...
I think I need to buy a gun's picture

buy the dips and hold the rips.......

Asset price inflation the reinflation trade as maxed out.....everything will now deflate vs gold. If you want to drive in the new economy i suggest you get some

Fri, 01/21/2011 - 16:59 | 894465 Spalding_Smailes
Spalding_Smailes's picture

Or the China slowdown talk becomes a scream ... In that case, every chart and fungo- become powerless to the bludgeoning of uncle ben's monkey hammer.

Fri, 01/21/2011 - 17:03 | 894486 Spitzer
Spitzer's picture

who is going to buy all the US debt then ? if china crashes ?

interest rates will moon shoot in the US

Fri, 01/21/2011 - 17:08 | 894505 Spalding_Smailes
Spalding_Smailes's picture

She's not crashing, you will just hear talk about 5-6% GDP over the next few years. This is just starting to get priced in...  Also, ben has people fighting over his paper and the flight to safety thingy' , wash, rinse, repeat.

Fri, 01/21/2011 - 17:23 | 894541 Spitzer
Spitzer's picture

There is a vicious spiral: the more currency the Fed creates, the more risk-free profits bond speculators will reap, contributing to a further fall of interest rates.  This outcome is the exact opposite of the one predicted by monetarism. The latter predicts that the new money created by the Fed will flow to the commodity market bidding up prices there, to nip depression in the bud. Bernanke & Co. fully expects this to happen. This is not what is happening, however. The new money refuses to flow uphill to the commodity market. It flows downhill to the bond market where the fun is. Why take risks in the commodity market, the speculators ask, when you can gamble risk free in the bond market? So grab the money, buy more bonds and sell an equal amount of bills. As a consequence of bullish bond speculation interest rates fall, prices fall, employment falls, firms fall. The squeeze is on, bankrupting the entire economy.

Full article here http://www.professorfekete.com/articles%5CAEFNoBusinessLikeTheBondBusine...

If you think any good is going to come out of this then you are fucked.

Fri, 01/21/2011 - 17:36 | 894582 DoChenRollingBearing
DoChenRollingBearing's picture

+++

Fekete is the other genius.  I had never heard (before reading him) that when interest rates go down, that it DESTROYS capital, in that it makes older debt harder to pay off.

Fri, 01/21/2011 - 20:51 | 894938 RockyRacoon
Sun, 01/23/2011 - 00:27 | 896725 ConfusedIdiot
ConfusedIdiot's picture

Dr. Fekete is one of our generation's brightest and most giving of men. He neither yearns for nor seeks the praise of others. He is what each of us should aspire to be - a seeker and dispenser of truth.

CI

Tue, 01/25/2011 - 15:00 | 903469 Saxxon
Saxxon's picture

Yes; but except for bonds, what prices are falling?

Sat, 01/22/2011 - 10:31 | 895611 JW n FL
JW n FL's picture
by Spalding_Smailes
on Fri, 01/21/2011 - 16:08
#894505

 

She's not crashing, you will just hear talk about 5-6% GDP over the next few years. This is just starting to get priced in...  Also, ben has people fighting over his paper and the flight to safety thingy' , wash, rinse, repeat.

*************************************************************************************

spot on!

Fact you freaky end of the world bitchez and you all let them... again and again...

Fri, 01/21/2011 - 19:53 | 894830 DosZap
DosZap's picture

Uncle Ben will......just like the 95% he's doing now.

Fri, 01/21/2011 - 16:45 | 894424 What_Me_Worry
What_Me_Worry's picture

Let's see how fast customs deems you to be a threat to national security if you walk up to the counter with 150 or so gold maples.  I think I got hassled once for not claiming the cookies I bought in duty-free.

Fri, 01/21/2011 - 16:51 | 894448 Cognitive Dissonance
Cognitive Dissonance's picture

Dude,

Mary Jane cookies need to be declared, then shared with the inspector if you wish to get them in.

Ahhh, body rush.

Fri, 01/21/2011 - 19:42 | 894817 Strider52
Strider52's picture

Shit, try going thru a metal detector with not one, but TWO titanium hips. The air-raid siren went off. Cannons were pointed, guns drawn, everybody hit the dirt. I got treated like a red-headed stepchild.

Fri, 01/21/2011 - 16:50 | 894437 metastar
metastar's picture

There was an interesting story of a company who was paying employees with gold coins. In terms of face value, the employees were receiving virtually no pay. As such, they were paying next to no taxes.

The case went to court. The court was trying to determine what to do.

I don't know what ever happened to the case. Would be curious to know if anyone has info.

Fri, 01/21/2011 - 16:57 | 894461 DoChenRollingBearing
DoChenRollingBearing's picture

There was a case I read about a couple of years or so ago.  Some company in/near Las Vegas was paying employees in Gold Eagles at legal tender value.  The IRS did not like that and took them to court.

The IRS lost!!!  But, since I have not read ANY other info on that case nor anything on others trying the same, I would have to guess that the IRS won in the end (on appeal, or by legal trickery).

Fri, 01/21/2011 - 17:00 | 894477 Raynja
Raynja's picture

That or the govt and MSM don't want you to know this giant tax loophole ( that would also dramatically increase gold demand)

Fri, 01/21/2011 - 17:06 | 894493 goldmiddelfinger
goldmiddelfinger's picture

Tax loophole? Beginning 2012 you will get a 1099 on sales of PMs.

Fri, 01/21/2011 - 17:29 | 894555 DosZap
DosZap's picture

Goldfinger,

Whan are you going to realize the IRS is/has ALREADY been getting 1099's on PM sales?.

Anyone not paying cash, in under $10k(0r less increments) , is already getting flagged.

The fact you /whoever has not been audited, is another story.

Best have you shit toghether, if you have been selling PM's,to a Dealer of any size, that you have an account with(not a charge account), just a Customer number.

Because they are covering their ass.

Since there is no reporting when purchased, when sold, its (as far as the IRS cares), is 100% pure income to you, with NO Taxes paid in.

You sell $10-50k in Gold/Silver, whatever, and you get a Check for 10,000, or 50k, IRS MAKES you prove its already been taxed, and you must pay MORE if you make a profit, or write it off if you have a loss.

Fri, 01/21/2011 - 17:35 | 894579 ColonelCooper
ColonelCooper's picture

Shitfinger never actually had any silver, therefore never sold any, therefore never has never had any account with a dealer.

Sat, 01/22/2011 - 10:34 | 895612 JW n FL
JW n FL's picture

sell? what the fuck is sell?

like sell ammo?

sell guns?

sell pm's?

why? exactly would someone ever do that? for over $600 per store? per day?

Fri, 01/21/2011 - 20:09 | 894860 lemonobrien
lemonobrien's picture

write down a fake ssn; and in my town/city for large purchases, my dealer, the person I'm selling to, goes to the bank, takes out cash, and hands it too me; i'm talking 100k +

a coin or two is like cash.

Fri, 01/21/2011 - 17:19 | 894535 Cheesy Bastard
Cheesy Bastard's picture

Ok, so lets say the minimum wage is $10 per hour.  That is 1 oz. gold every 5 hours for a $50 coin.  $ 300 per hour or so.  Or 10 oz. silver every hour for a $1 coin.  $300 per hour or so.   Not bad for the employee, especially considering the tax implications. Probably not doable for the employer in most cases.

Fri, 01/21/2011 - 17:40 | 894572 ColonelCooper
ColonelCooper's picture

Deleted

Fri, 01/21/2011 - 17:47 | 894593 Cheesy Bastard
Cheesy Bastard's picture

Also deleted.

Sat, 01/22/2011 - 10:36 | 895613 JW n FL
JW n FL's picture

you have the sight... let the good information go, challenge the strong... not the weak.

from there, we all shall grow!

Fri, 01/21/2011 - 17:43 | 894594 DosZap
DosZap's picture

Mo betta

Fri, 01/21/2011 - 17:05 | 894491 godgunsandgold
godgunsandgold's picture

Who's 'end' did the IRS win in?

Fri, 01/21/2011 - 17:30 | 894526 CD
CD's picture

The nice thing about being the FedGov is the access to unlimited resources and the ability to change the rules of the game if it seems like you're not winning:

http://www.lasvegassun.com/news/2009/aug/14/jury-convicts-business-owner-robert-kahre-tax-frau/

The gentleman and associates in question seem to have been locked up for quite some time (max. sentences were several hundred years). Search for Robert Kahre if interested. Sentencing details:

http://www.lasvegassun.com/news/2009/nov/17/businessman-robert-kahre-sentenced-tax-fraud-schem/

Disheartening as Robo's sentiment sometimes is, he can be very right: you don't fight the Fed.

It would be interesting to read the transcript of the trial:

"But when the lawyer attempted to elaborate on Kahre's view that the nation has debased its paper currency by abandoning its former gold standard, [Judge] Ezra added, "We're not here to convince the jury that the ... (U.S.) monetary system belongs to an international cabal."

http://www.lvrj.com/news/46074037.html 

Fri, 01/21/2011 - 17:23 | 894542 Id fight Gandhi
Id fight Gandhi's picture

We were talking about that story a couple months ago. I thought they got "caught" by the IRS and lost. Do you have a story to show they won?

So the 1099 reg covers PMs? How? Face value is what should matter to them.

So if you pay someone with 1964 half dollars, worth about $10 each in silver, but still considered legal currency but only at .50$, isn't it still a legal cash transaction at .50$? Not $10 melt value?

Fri, 01/21/2011 - 17:49 | 894611 DosZap
DosZap's picture

They did, tax evasion.

I made a $14k+ purchase at my long time dealer, always had bought under $10k cash.

I got stopped real quick, when they found out I did not have an 8300 on file.(Purchase above $10k, in cash).

Trust me, you can get screwed SO BAD, in so many ways trying to be legal, with the BOYEEEZ, and 90% of PM buyers/Sellers are cluelss....this includes anything sold, or bought.

Fri, 01/21/2011 - 19:14 | 894783 Sokhmate
Sokhmate's picture

This is not necessarily a response to your post, but to all.. I just had a stroke of an idea..

What if a person owes taxes at the end of the year, say $7000 (say, in kinder math, the equiv of 5 1oz gold maples), and the said person mails said 7 maples to eyeReSS to pay for said owned taxuses, would the eye accept it?

serious hypothetical question.

Fri, 01/21/2011 - 19:57 | 894836 DosZap
DosZap's picture

I say, NO.

They are legal Tender, worth $50.00 to Sammy.

The rules do not apply to Usn's.

Besides, your think they would ever GET there for the question to be asked.........LOL

Sat, 01/22/2011 - 22:12 | 896551 cranky-old-geezer
cranky-old-geezer's picture

How would you be satisfying minimum wage laws in that setup? 

Say the employee earns $10 per hour.  You pay them 1 silver coin per hour, said coin having current street value of $10.

But face value is 50 cents.  So you're paying them 50 cents per hour based on face value.

Fri, 01/21/2011 - 18:13 | 894666 Common_Cents22
Common_Cents22's picture

How about "gifting" multiple friends 10k a year and they independently gift your kids or whoever 10k?

 

Couldnt this be used for tax free transfers of money as long as each transfer was at arms length and independent/voluntary?

Fri, 01/21/2011 - 20:36 | 894915 traderjoe
traderjoe's picture

That's not allowed. It's pretty hard to demonstrate that your 'friends' independently and voluntarily received your gift and then simply happened to give it to your kids...

Fri, 01/21/2011 - 20:22 | 894885 Silver Bully
Silver Bully's picture

'The IRS lost!!!'

That was the IRS case against Robert Kahre. 2 cases actually. One in 2007, which the IRS lost, and one in 2009 which the IRS won. He was a construction industry millionaire who was paying his employees as contractors, under the claim he was paying them gold coins instead of good ol' federal reserve toilet paper. From the IRS website:

"The defendants told the employees that the income was either not taxable or that they should falsely report their income to the IRS at the face amount of the gold and silver coins. During the course of the scheme, cash wage payments of at least $25 million were paid to Robert Kahre’s employees and cash payments of approximately $95 million were paid to the employees of the other contractors. No federal tax withholdings were made from the paychecks, and the wages were not reported to the IRS. The defendants took steps to hide the correct amount of income paid to the employees by using false invoices, keeping two sets of books, using false names on payroll records, making false statements on mortgage applications, and using nominees to conceal assets.

The dude kept 2 sets of books CLAIMING he was giviing his employees gold and silver, but was simply paying them cash. And he did this with $100 meelyun dole-arse. He and his accomplice sister are each serving 15 years in prison on 57 felony counts of tax evasion. He ain't no role model for gold bugs, no sir.

GATA had an article on him, as well as the IRS:

http://www.irs.gov/compliance/enforcement/article/0,,id=213769,00.html

http://gata.org/node/7696

Fri, 01/21/2011 - 20:56 | 894949 RockyRacoon
RockyRacoon's picture

The business owner was buying back the coins for cash -- circumvention of taxes was determined in that case.   IRS won.  Sorry.

Fri, 01/21/2011 - 21:20 | 895010 tmosley
tmosley's picture

So, if he hadn't bought back the coins, he would have won?  Or did they determine that point?

Sat, 01/22/2011 - 15:38 | 896004 Non Passaran
Non Passaran's picture

IANAL but I fail to see how that would matter. The problem is that he did not acquire the stuff at book but market price.

Fri, 01/21/2011 - 16:58 | 894464 Raynja
Raynja's picture

From what I understand the company beat the irs in court. That's the problem with writing fifty dollars on the back for the govt.

Fri, 01/21/2011 - 16:51 | 894447 Spitzer
Spitzer's picture

What is the big deal about coins ?

I have the Scotia bank 1 oz bars, they are beautiful too, and they are cheaper.

I'm just a single guy that knows how to travel. If there is any opportunity in the gold running business, I would seriously jump on it.

I heard Vietnam was paying over spot for gold, wouldn't that be the best place to run it ?

Fri, 01/21/2011 - 17:52 | 894620 DosZap
DosZap's picture

Spitz,

 You want to take your chances of EVER leaving?,(much less w/your Money, or Gold) not the country to try this.

Fri, 01/21/2011 - 18:46 | 894741 Spitzer
Spitzer's picture

Its a gamble but I think that is the place to get the most for your gold.

Fri, 01/21/2011 - 20:01 | 894841 DosZap
DosZap's picture

Spitz,

Nam', is VERY,very sensitive to Gold.

Just in the last year, have they loosened up and let their fols even own it legally,if not mistaken not a lot either.

WHY do you think the Prems OVER spot were so damned high?, it was illegal.

Do NOT follow this link or you will be banned from the site!