Precious Metals Have a Secret... And Your Wallet Will Love It

By Brian Zweig

As with any investment, the precious metals market can have its ups and downs—but that doesn’t have to spell bad news for your portfolio. What if there were a way to turn your losses into gains? Would you take advantage of it?

This relatively unheard-of strategy could be the answer to your biggest precious metals losses—and it could put the money right back in your pocket, without even giving up your metals! If you purchased precious metals, numismatic coins, or Perth Mint Certificates at a higher price than today’s levels, this may be the best decision you make for your portfolio all year…

The Precious Metals Tax Swap

Referred to as the “precious metals tax swap,” this strategy is only known by a select few investors and allows you to capture your losses from past precious metals purchases.

There are many benefits to a precious metals tax swap, but these are the most notable:

• You can capture the loss for tax purposes.
• You can offset capital gains one for one.
• If you do not have capital gains to offset, you are permitted to use $3,000 of the total loss per year until you use it all up—for up to 5 years.
• You can minimize your exposure to market fluctuations by dispensing with the 31-day holding period typical with equities.
• In most cases, you can get back the exact same merchandise you sold at the new cost basis.

Unlike other common investments, such as stocks, precious metals are not subject to a holding period for tax swap sales. For stocks, the “wash rules” established by IRS Code Section 1091 prohibit the repurchase of a security you sell for 31 days; however, precious metals are not explicitly mentioned in these rules. In effect, you are able to sell and immediately buy back your precious metals on the same day.

Is a Tax Swap for Me?

So, how do you know if a tax swap is the right move for you? Although we advise talking with your tax attorney, CPA, or advisor first, you can use this simple method to help determine if a tax swap could benefit you…

If the tax loss you are able to capture is 10 times or more than the cost of capturing the loss, this is a no-brainer. If the tax loss you are able to capture is less than 10 times the cost of capturing the loss, you may still very well benefit, but you should work through all the numbers with your advisor to be sure before moving ahead.

Tax Swaps Simplified

A little-known fact among investors is that tax swaps are actually incredibly easy to do—if you work with the right people—and our knowledgeable Preferred Client Relations representatives will walk you through the entire process*! Follow these four steps, and you’re on your way to capturing your loss:

1. Send ASI your precious metals, numismatic coins, or Perth Mint Certificates, regardless of where you purchased them.
2. Sell your metals to ASI, and then immediately buy them back at a 2% spread for bullion, a 3.5% spread for Perth Mint Certificates, and a 4% spread for numismatic coins.
3. We’ll send your same metals or replacement Certificates back to you.
4. Capture your loss on your future tax returns.

Note: Due to IRS requirements, you are required to physically ship your bullion coins and bars, Perth Mint Certificates, or your numismatic coins to us, and we have to physically ship them back to you in order to complete the tax swap.

The Perth Mint Certificate Tax Swap

Like the precious metals tax swap, you also have the option to sell and buy back your Perth Mint Certificates if you bought them at a higher price than their current market value. All you have to do is send us your physical Certificates, and once we receive them, the process is similar to a precious metals tax swap.

After you’ve sold and bought back your Certificates, you’ll pay a $50 Certificate fee for each new Certificate issued. Because we have to work with The Perth Mint to issue you a new Certificate, this process will take a few days to complete. After the swap is completed, we’ll send you back the exact number of ounces you sold.

Moreover, for those who purchased silver with Perth Mint Certificates (whether it be unallocated, allocated, or pool allocated) at higher prices, you can receive FREE storage on unallocated silver if you sell and repurchase unallocated silver to capture your losses and retain your silver holdings.

How to Complete a Tax Swap

In our 35 years of business, ASI has helped hundreds of investors capture losses via tax swaps—and we can help you, too! Tax swaps can be incredibly simple—and profitable—if done right.

If you decide to complete a tax swap, ASI will lay out the process for you entirely. Here’s just one example of how a tax swap works:

1. You purchased five (5) 1-ounce gold American Eagles at $2,031 per coin in August 2011, and you want to complete a tax swap while the spot price of gold is down.
2. You sell your five (5) 1-ounce gold American Eagles to ASI in October 2017 at $1,266 per coin.
3. You then buy back your gold American Eagles at a 2% spread for $1,292 per coin.
4. Your total out-of-pocket expenses for this swap would be $130 plus shipping.
5. Your captured tax loss would be $3,825 total.

Now when it comes time for you to file your taxes, you can report a loss of $3,825 for your tax returns to offset any profits*. Your actual captured tax loss will vary depending on the current spot price and the amount of metals you would like to swap.

No one likes seeing the value of their investment decline, but with tax swaps, it’s possible to literally make the most of your loss! If your precious metals, numismatic coins, or Perth Mint Certificates saw a loss of value in the time since you purchased them, this is a hidden opportunity to revive them—and your wallet! To see if a tax swap is the right move for you, please call us at 800-831-0007 or email us, and we’ll help you turn your losses into gains.

*Asset Strategies International is neither a financial advisor nor a tax advisor. Consult your CPA or tax attorney before making any decisions. Prices quoted in this article are provided as an example only. Please speak with an ASI representative to receive your custom pricing.