Sprott Money Contact Form

Thank you for contacting Sprott Money.  We will respond to you within 1 business day.



The Sprott Money Team

Sprott Money Ltd.
111 Queen St. East
Suite 501
Toronto, Ontario M5C 1S2

[t] 1.888.861.0775
[f] 416.861.9855

Administrative office only - no walk-in sales.


Please Try Again After Some Time...
Please enter valid captcha
Loading Image

Toll Free: 1-888-861-0775; Local: 416-861-0775

Swipe to the left

Silver, Gold, and (Not Paying) Taxes - Jeff Nielson - Bullion Bulls Canada

By Jeff Nielson 5 years ago 16181 Views 5 comments

In Jeff Nielson's recent article on Bullion Bulls Canada, he explains the tax benefits of owning physical gold and silver instead of paper precious metals.

May 6, 2014

Regular readers are familiar with my position on precious metals and (capital gains) taxation. Those individuals who swap their (soon-to-be-worthless) paper currencies for legal tender gold and silver coins for the purpose of spending their gold and silver currency should not/will not be exposed to any (supposed) capital gains when they spend their gold and silver.

This is based on both the principles of our taxation system, as well as simple common sense. To begin with; if we swap one paper currency for another paper currency in order to spend the new currency (perhaps for business or travel) there is never any “capital gain” (or capital loss) assessed should the value of the new currency appreciate (or depreciate).

The reason for this is simple. When we swap currencies for the purpose of spending the new currency, our reason for acquiring that new currency is not to sell it for the profit (the basis of all capital gains taxation). Thus a currency-trader is always subject to capital gains when those currencies fluctuate in value, because the currency-trader’s purpose in acquiring that new currency was to sell it for a profit (which does fall squarely within the principle of capital gains taxation).

When a vacationer acquires a new currency, it’s for the purpose of going on a trip, not to make a profit. When we acquire our new gold and silver currencies (legal tender coins), it’s for the purpose of protecting our wealth from the banksters’ currency-dilution scam – not to make a profit.

Regular visitors to my site over the past 5 ½ years will have heard (exclusively) one message: we are “playing defense”. Understand that the rise in the (paper) price of gold and/or silver is largely illusory. It is simply a reflection of the deterioration in value of those paper currencies; the ounce of gold (or silver) has not changed, and cannot change.

Recall what readers have often heard from myself and other commentators: gold (and/or silver) preserves its value (our wealth) over time. A holder of a one ounce gold coin in ancient Rome could buy a fine toga, belt, and sandals with that coin (the standard accouterments of that era for a gentleman). In more recent centuries; that same holder of a one-ounce gold coin could buy a fine suit and accessories (the standard accouterments for a gentleman of our era).

Where is the (supposed) capital gain? The gold-holder is not able to buy more and more suits of clothing over time with his one ounce coin – not even over a span of thousands of years. Gold (and silver) preserve wealth, they don’t magically conjure new wealth.

Even if some precious metals novice did acquire legal tender gold and silver coins with the thought that this was some “get rich quick scheme”, the only possible way that such a holder of gold/silver could be exposed to any capital gains taxation would be if the gold/silver appreciated in value (versus other assets), because it was previously undervalued.

However, it is our governments (and the bankers, and the media) who insist again that gold and silver are – if anything – presently overvalued. It is our governments who assign miniscule face-values for their legal tender gold and silver coins, clearly implying the metals are presently overvalued in price. Where, then, is there any place for them to argue that the holders of gold/silver have made or are making “capital gains”?

Indeed, recent representations made by the Royal Canadian Mint (in its official advertising) clearly support my own interpretation of capital gains law with respect to those who acquire legal tender gold or silver coins. This comes at the same time that the Mint is endeavouring to scam investors with a sleazy, sales gimmick with respect to a new “limited edition” silver coin it has issued.

In fact, this new silver coin does not have the (absurd) $5 face-value that has been standard for all of the Royal Canadian Mint’s one-ounce legal tender silver coins. The new silver coin has a $20 face-value. The problem, however, is that the coin contains little more than ¼ ounce of silver. And the RCM wants people to pay $20 (plus shipping and handling) for this ¼-ounce coin – roughly the same price at which “buyers” can obtain a full one-ounce Silver Maple.

But what is the RCM’s sales-pitch for its ¼ ounce scam-coin? “Exchange $20 for $20”.

Not one word in this official advertising from our government Mint about “buying silver”. It’s not even implied. Those who acquire these ¼-ounce coins are (in the eyes of our Mint and government) exchanging one currency for another.

Those who acquire the RCM’s ¼-ounce coins and spend those coins cannot possibly be assessed any “capital gains” in any bona fide transaction. Clearly then, those who acquire the RCM’s other legal tender silver (and gold) coins, and then spend those coins in bona fide transactions also cannot be exposed to any capital gains consequences.

This leaves only one point to clear up for readers interested in not allowing their governments to steal any of the wealth contained in their own gold/silver via (fraudulent) “capital gains”: defining the term “bona fide transaction”. Here the (legal) point which precious metals holders must keep in mind is a simple one.

For the transaction to be “bona fide” (in legally unequivocal terms) the silver/gold holders must be spending their currency, and not simply swapping their “silver” or “gold” for other assets (where capital gains taxation rules are less-clear). Thus if (for example) you coveted a piece of furniture in your neighbour’s home, and wished to purchase it; your question would not be “how much silver do you want for it?”

Rather, the question which must be posed to the potential vendor is “how many silver dollars do you want for that?” At that point, buyer and seller dicker over the appropriate number of silver dollars required for payment, the transaction is concluded, and there is no possible basis for assessing any (mythical) “capital gain” on the buyer’s silver currency.

Such a process can be extended to the purchase of any item, in any amount (with either gold or silver currency), with those transactions being conducted in “silver dollars” or “gold dollars”, as applicable to the particular transaction. Here it’s important to note that there is no imperative on any vendor to price an item for sale at an identical quantity of “gold dollars” and “silver dollars”.

The vendor is perfectly within his legal rights to set different prices for different currencies, just as vendors already do with the various paper currencies. Similarly, there is no requirement that vendors charge the same “silver dollar” (or “gold dollar”) price for any item as their paper-dollar price.

Understand that if we walk into a store and see a set of three prices (a “gold price”, a “silver price”, and a “paper price”) for every item in the store that there is no fraud being perpetrated here by either buyers or sellers. It is our own governments who have chosen to establish different values for “gold dollars”, “silver dollars”, and our (rapidly depreciating) paper dollars – and legally enshrined those different values.

These same governments cannot then (hypocritically) assail buyers or sellers in these transactions with absurd and facile arguments of “tax-evasion” for simply following the examples of our own governments, and assigning different values for “gold dollars” and “silver dollars” versus the bankers’ fraudulent paper currencies.

For two thousand years, no one has been able to make a “capital gain” on gold (or silver). That’s a pretty stout “precedent” upon which gold- and silver-holders can rely in shielding that gold/silver wealth from capital gains thievery.[/ezcol_1third_end]

Source: Bullion Bulls Canada

Dan heft 3 years ago at 12:31 PM
So am I asuming that gold and silver bullion can be used in the same manner as no matter how the silver or gold is made, it is still a legal tender...correct?
ben 3 years ago at 7:20 AM
Only until the government of the day says differently.
rocketscientistimnot@aol.com 2 years ago at 11:04 PM
If I'm not mistaken - it would depend on whether or not it was Legal Tender Bullion Coins or not. Legal Tender Government Minted Bullion coins have a denomination.
where can i buy gold bars 2 years ago at 8:02 AM
You're so talented in writing. God is truly utilizing you in tremendous ways. Thanks so much for info and keep it up.
SJF 1 years ago at 6:31 PM
Fantastic article Jeff. Do you think the Gov't would push back hard on your "legal" purchases with actual money (gold & silver) as opposed to the Fiat currencies we're spending now? Meaning would you be audited, or asked to appear before the CRA?

Back to top