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Jeff Clark, Senior Precious Metals Analyst, GoldSilver
JAN 6, 2017
I vividly remember the first gold coin I ever bought.
A one-ounce American gold Eagle. When I first opened the package, I was instantly struck by its beauty, shine, and refinement. And I loved the weight of it in my hand. I must’ve looked at it a hundred times over the next several days.
What I did next, though, is telling: I stuck it in a safe. And there it sat, in the dark and out of sight.
It was, well, anticlimactic. I loved the coin, but I couldn’t do much with it… couldn’t show it off, couldn’t “play” with it, couldn’t even really keep it out to look at without inviting someone to take it.
But an investment doesn’t have to be that dormant. And that’s one reason I like investment-grade gold jewelry so much—it’s wealth you can wear. You canenjoy it. You don’t have to stick it in a safe or hide it.
There are a number of advantages to gold jewelry, starting with its long history of wearable wealth.
One of the First Forms of Money
We’ve all heard that gold has served as money for thousands of years. But what is less known are the forms that gold took. It wasn’t always in coins.
Before the first gold coins were struck, there was another form of money: pure gold jewelry. It was used as currency, and also as a form of barter, long before coins and bars became widespread.
In fact, the tradition is so tied to our idea of money that modern currencies like the Thai Baht are named for the jewelry that preceded it. In that case, one could even break off detachable gold links to pay for goods and services.
Even in India today, jewelry is the primary form of gold within the country. It’s their preferred form of investment gold. They buy pure gold necklaces and pure gold bracelets instead of coins and bars. For every ounce of gold in coin or bar form bought in India, roughly another three ounces are bought in jewelry form.
Throughout much of history, individual wealth has been denominated in jewelry form.
Further, storing gold at home—even if you had a coin or bar—was not nearly as secure as it can be today. You couldn't leave your wealth in your hut—it just wasn’t safe. As a result, most people wore their wealth for security reasons.
Thus, gold jewelry quickly evolved into one’s “wallet.” People wore jewelry as a way of carrying their wealth. Consumers kept their money draped around their neck or wrist.
There’s another reason I like investment quality gold jewelry…
Sir, What Is This In Your Carry-On Bag?
True story… I once had a tube of silver bullion coins in my carry-on bag when passing through security at an airport. I forgot they were in the bottom of my bag, but being metal they were easily picked up by the scanner. What happened next was a wake-up call for me…
A border agent approached me and asked what was in my bag. Remembering it was there I pulled it out to show them. “It’s just a bunch of silver coins,” I said innocently. I wasn’t trying to sneak anything in, and it certainly didn’t come close to an amount that needed declared.
The border agent nodded, but apparently had to report the contents to a supervisor, who was not standing near her. She abruptly yelled out, in a booming voice, “IT’S JUST A TUBE OF SILVER COINS! THIS GUY HAS A BUNCH OF SILVER COINS ON HIM!”
Her pronouncement was so loud and startling that everyone in the area stopped what they were doing and looked up to see what the commotion was, especially since it was in an airport security area. I glanced around and saw other passengers staring at me—literally dozens of people around me now knew I was carrying silver!
While she let me pass through, her careless act put me unnecessarily at risk. I was watching my back the rest of the trip home, all because of the careless yet legal behavior of a border agent.
You might think this won’t happen to you, but it’s less about this specific act and more about the risk everyone takes attempting to cross a border with gold or silver. What other kinds of reactions could we get? What if the border agent decides to pull you aside? What if they’re not up to snuff on the law and decide to confiscate your metal out of an abundance of caution?
Until recently, US law was vague about what had to be reported when it came to gold at a border crossing. Not any longer…
Got Gold? Report it!
Check out this update from the US Customs and Border Protection from November 2015 (emphasis mine):
What constitutes as "Negotiable Monetary Instruments" for currency reporting requirements? Negotiable monetary instruments that must be reported by travelersor persons sending or receiving them (other than by electronic means by a banking concern) are:
• Coin or currency from the U.S. and/or other countries,including gold coins*
• Travelers Checks
• Checks, promissory notes or money orders that can be cashed by the bearer. This includes checks or money orders made out to someone other than the bearer that are endorsed without restriction(i.e. for deposit only.), and incomplete checks, money orders, promissory notes that are signed but on which the name of the payee has been omitted (the "To" line is left blank)
• Securities or stocks in bearer form
Gold Bullion is not a monetary instrument for purposes of this requirement, but still must be declared upon entry. *There is no duty on gold coins, medals or bullion but these items must be declared to a Customs and Border Protection (CBP) Officer. Please note a FinCEN 105 form must be completed at the time of entry for monetary instruments over $10,000. This includes currency, ie. gold coins, valued over $10,000.
And this page adds this helpful clarification:
If you have doubt whether your gold/gold coin is considered a monetary instrument it is in your best interest to declare the item(s) with a CBP Officer, so you do not give a false declaration.
First, this new language makes clear that it is the value of the gold coins that determine if you are at the $10,000 reporting limit. It doesn’t matter that a one-ounce gold Eagle lists $50 on it… the regulation states it is the coin’s worth that determines the reporting value. That means at $1,200 gold, the maximum number of coins you can carry without reporting is 7. At $2,000 gold, you can’t even carry 5.
And if you’re unclear about whether you should report your gold bullion, the US Customs and Border Protection agency advises that you go ahead and report it anyway.
With this specific language, you have little excuse if you don’t report properly. You could be subject to detainment and penalties, and your gold could be confiscated. And based on my experience, who knows what else could happen?
To be clear, you are legally permitted to cross into the US with gold bullion. But the risk of doing so has risen. And the net result is that you’ve lost your privacy, your confidentiality. And by the way, if you do declare your gold coins, how secure is that info? The US government has demonstrated that it is not immune from data breaches.
The Transportation Solution: Wearable Wealth
There’s no substitute for owning gold bullion at this point in history. But there are more portable options… forms that give you both portability and discretion.
Investment-grade gold jewelry looks like any other necklace or bracelet to a border officer or fellow traveler—but to you, it’s a portable store of wealth. And of course it can be an insurance policy in the event you need money down the road.
In fact, consider all the advantages investment-grade gold jewelry offers…
• Makes traveling and transporting your money simpler and easier, and keeps it always accessible
• Makes giving wealth to your heirs or as a gift more straightforward, even if they don’t understand the value of gold today
• Comes with much lower premiums than most fashion gold jewelry, and most collectible “numismatic” coins
• Is subject to less tax and reporting complexity.
• And in our view, gold jewelry could help you avoid a gold confiscation, if one occurred again.
Of course, most gold jewelry doesn’t qualify as investment grade. Those stores in the mall sell mostly 14-karat gold, at premiums two, three and four times the value of the gold content. Designer jewelry simply is not a practical or efficient way to store wealth; Tiffany’s ain’t gonna buy back your gold necklace at anywhere near what you paid for it.
Investment-grade jewelry, on the other hand, is specifically designed for wearing and traveling with your wealth, and at a reasonable markup.
Which is why GoldSilver is excited about its exclusive and expanded line of investment-grade, pure gold jewelry. All our pieces have the same purity as sovereign coins—22 karat (91.6%, same as an Eagle) and 24 karat (99.9%, same as a Buffalo or Maple Leaf).
22K Byzantine Gold Necklace (22” Length)
2.75 oz gold, same purity as American Gold Eagle (91.6%)
24K Hand Forged Gold Bangle
1 oz pure gold (99.9%)
Each investment-grade jewelry piece is designed to be an elegant gift that can be worn daily. They are true heirlooms any family or friend is sure to love.
It’s the kind of wealth that will last for generations—and comes with the built-in advantage of easy transportation.
If you own gold coins and bars, consider how portable they really are. A little forethought and you might realize they come with some travel restrictions, and probably wouldn’t be safe in a confiscation order. A little bit of portable wealth protection just might be in order.
As Mike Maloney has long said, every serious precious metals investor should consider owning some gold jewelry.
In the worst of circumstances, gold jewelry can be a great form of insurance. In the meantime, you can enjoy it!