Warning to Precious Metal Dealers and Interested PM buyers

Beginning in 2012, I suggest you start buying your PMs in $599 increments.  The Obama administration slid another little surprise by us in their Health Care Law. The passage of the national health care legislation by Congress will have a big impact to the Nation’s coin collectors, silver and gold dealers, or anyone else who buys and sells coins, or silver and gold bullion.

Effective Jan. 1, 2012, the Internal Revenue Service will require that 1099 tax forms will be required for all transactions involving coins and PMs  that are bought or sold in excess of $600. The arbitrary $600 or more number (I believe that is the same number at which a casino’s IRS agent takes their share of your winnings, on the spot), is not a very high level and one that has already started sounding alarm bells. It doesn’t matter in what form payment is made; cash, check, credit card, or PayPal, the $600 threshold still applies.

IRS Form 1099 is used to report independent contractor income, income from dividends, and income from many other sources.  It is kind of a catch-all form to collect taxes on income received but not specified on other forms.


Section 9006 of the Patient Protection and Affordable Care Act (Public Law 111-148) that was signed into law by President Obama this spring, is where you will find the relevant part. Look under “SEC. 9006. EXPANSION OF INFORMATION REPORTING REQUIREMENTS. (a) IN GENERAL. – This is where Section 6041 of the Internal Revenue Code of 1986 is amended to require a 1099 issued for any transaction of coins and bullion in excess of $600.

The old exemption against corporations is also gone. If you buy or sell more than $600 of coins, or whatever, from, to or with a bullion dealer, for example, you have an obligation under the new law to issue 1099s.

On the hopeful side, there is a bill being introduced, H.R. 5141, by Rep. Dan Lungren , that has gathered over 80 members of Congress as co-sponsors to repeal this section of the Obama administration’s Universal Health Care farce . However, the drafters of the initial provision believe there is a $17 billion loophole that the requirement plugs.

Call or write a letter to your representative and urge everyone you know who invests in, purchases, sells, or collects silver or gold coins and bullion, expressing your outrage at this sneaky, underhanded tactic utilized by the Obama administration to pay for a Health Care Law that we did not want in the first place.  Hopefully dealers, collectors, investors, and the public at larges cry of outrage will lead to a ready modification before the law becomes operational in 2012. Potions of this article were taken fro NumisMaster.com and Numismatic News.

The Silverbug Round Will Begin Production Today

After numerous emails and phone calls between me and Jim Little, owner of Quality Silver Bullion we are ready to start production on the 2010 Silverbugs .999 Fine Silver round.  The obverse die cam in a few days ago, but needed to be treated and cleaned.  In the meantime, Jim and I looked at several possibilities for the reverse side.  I have to give Jim props for being very patient with me.  I did not want anything too plain, but I did not want a reverse imprint that detracted from the Silverbugs side. We finally settled on this:

Jim also sent me a photo of the unpolished Obverse (Silverbugs) side.  Remember this is unpolished so it will look much better before minting begins.

They go on sale tomorrow!  So If Jim does not have them up QSB's website, you can call the contact number and order!  This is a great day for Silverbugs, how many groups have their own .999 Fine Silver round?  So I encourage you to buy these, since Jim had the artwork touched up and die made and did not charge us a cent. Plus he had to put up with me for a month or so, and I was like a picky dowager in a shoe store.  I wanted to see every possible combination of obverse and reverse sides.

Also, you do not have to be a Silverbugs member, to purchase these rounds, but I think Silverbug members will get a discount on the premium!  So buy silver NOW!

BTW, look for our coin in one of Jim's YouTube productions soon.

Dealer and Mint Premiums vs Ebay Prices

I was checking in on a friends blog, Gold Wars, and the latest post is titled Why Are There Premiums On Gold and Silver, in it author  Kirsty Hogg stated "Another good thing to do is a quick comparison on Ebay for a similar item. Whatever you are looking for, type it into the Ebay search field and It will come up with the price they are being sold for that day/week".  Don't get me wrong I am not knocking Kirsty's article it is good.  I just had one thing to say about using Ebay as a guide.


I buy and sell silver on Ebay as well as buy from dealers and mints. I do not know if you have noticed but often the prices on Ebay for a particular piece will be higher than if you ordered it from the mint.

I have a few theories why this happens:

1. Bidders get caught up in the momentum. Ebay is addictive, you have been watching and bidding on an item, and you get the mindset that your are going to win that item.

2. Many people on Ebay are both buyers and sellers and  usually have money in our Paypal account. It is so easy just to push a button and pay from Paypal.

3. I think is many start out buying silver on Ebay because they do not know how to shop the online dealers and mints for specials.

4. The last reason I think that some people price their items higher on Ebay is that they make money off of what few items they post, and I think sentimental value plays a large role in what they would accept. 

Dealers and mints sell on a whole other scale and that is why they have premiums, but can often sell silver bullion less than you can buy it on Ebay.  Jim Little, owner of Quality Silver Bullion commented on the Gold Wars article writing "When we buy large silver bars and silver shot, there is already a premium tacked onto it, along with the freight costs." They also have a lot of overhead costs. He went on to explain "From the premiums we charge, we end up being able to keep just a small portion as profit. That is why quantity plays a huge part in the pricing of a bullion round".

Because of the reasons above, I suggest if you are going to buy an item on Ebay.  Decide what is the most you would pay for it before you ever place a bid. You do not need to place the whole amount on the first bid, actually I suggest you put the minimal bid on it and wait until closer to the end of the auction

One thing to keep in mind is if you use Ebay as a pricing guide, you have to look at the final sale price.  Some items may list at a certain price but never sell or you might catch the auction before the end.  Most prices increase dramatically in the last few minutes.

That said I still shop Ebay as well as dealers and mints for the lowest prices.  Be careful on Ebay for fraud, but that is a whole other post.

Why silver premiums?

Premiums on PMs such as silver are supposed to cover mining, refining, and minting costs. A good example of how much mining costs can be can be seen in Silver Standard Resources Q4 report. This mining company reported a (Dec) loss of $0.13 per share. The Pirquitas Mine produced 1.1 M ounces during the year. Since December 1, 2009, the date of achievement of commercial production, the mine produced to year-end 545,600 ounces of silver at a cash production cost of $8.99 per silver ounce. Total cash costs, including transportation, treatment, refining, export taxes and royalties, were $16.57 per silver ounce. During the month, the company sold 460,100 ounces of silver at a realized price of $17.49 per ounce. This kind of loss may not be typical of all silver mining companies but just shows many of the costs of getting the shiny stuff to us. Now, dealers have to make a profit also but some of their tack-ons can be outrageous. A good place to find information on the best dealers and mints (besides here) is the FB group “Silverbugs.” It is not public, so you have to ask an admin to allow you access. We are pretty lenient in our restrictions, but we DO NOT allow any marketing schemes. Check us out!