Still time to buy gold imo. - Page 91 - Economics -- Two Plus Two Poker Forums

How could they not, they aren't the same thing.

The paper gold market helps control the price of gold. There is a reason why almost all of the gold in the world is not for sale at the prevailing "paper prices."

I don't think the reason most gold isn't for sale at market prices is what you think it is. Most houses aren't for sale at market price either. Or a lot of things. The reason has to do with marginal considerations.

07-06-2010 , 09:47 AM

#2252

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

here we go again.

still too busto to buy

07-06-2010 , 10:31 AM

#2253

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

Originally Posted by AlbertoKnox

Please explain to me what you think I think.

Quote:

Originally Posted by AlbertoKnox

Most houses aren't for sale at market price either. Or a lot of things.

and you point it is?

Quote:

Originally Posted by AlbertoKnox

The reason has to do with marginal considerations.

Please teach me about economics, I've never heard of this marginality thing you speak off.

/snark off/

07-06-2010 , 10:39 AM

#2254

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

It is often repeated that our markets are driven by supply and demand. In fact, supply and demand is probably the most closely watched fundamental of the market callers. They look for various signals that demand is rising, or supply is falling. Perhaps they are thinking too hard in a very soft world. Or could it be the other way around?

When we think about supply and demand, it is helpful to think of an ancient barter world, modern paper trading tends to muck it up a bit. So think about a supply of chickens at a Medieval fair. Let's say there are 10 chickens cooped up in a booth, with several buyers bidding for the chickens with their various goods. The first bidder take two chickens for the price of two bushels of apples. He hands over his apples and walks away with the two chickens.

Now, the rest of the bidders are faced with the hard reality that there are only 8 chickens left where once there were 10. This is called "hard trading" and the bidders are able to form "hard opinions" about the real supply and demand in front of them.

Next let's imagine that the first bidder only had to put up 5 apples as margin and then wait until the end of the fair to decide what he wanted to do with his purchase. How would this affect the rest of the bidding? Now the other bidders must make value assessments based on "soft opinions" relying on conjecture like "that first bidder rarely takes delivery of his chickens, he's just in it for the quick apple." This is soft trading.

Soft trading tends to draw in a lot of bidders (traders) who are willing to put down a margin requirement in the hope of making a small profit at the end of the fair. The seller of the chickens may have 30 different buyers for his 10 chickens, each putting down 5 apples (or whatever their good is). At the end of the day, 5 buyers will go home with two chickens each, 10 buyers will receive their 5 apples back plus 3 more apples in profit, 15 buyers will lose their 5 apples, and the seller will end up with 10 bushels plus an extra 45 apples while the "price" of chickens actually falls! This is because the seller, who had only 10 chickens to sell, flooded the market with 60 "paper chickens" driving the price down and at the same time making himself an extra profit.

Why More Buying means Lower Prices! (in paper markets)

In the leveraged market of paper gold, the more buyers that show up, the lower the price will go. Here is how it works. Let us say that we want to play on the front lines of gold price discovery; the futures market. We believe fundamentally that the price of gold must rise, so we become buyers of future gold. But let's say that we only have $5,000 to play with. So we pay our $5,000 margin to gain control of a $100,000 contract for 100 ounces of gold. If gold goes up $50/ounce while we hold this contract for future delivery, we will make $50 x our 100 ounces, or $5,000. A $50 rise in gold only represents a 5% increase, but our profit was 100%! We doubled our $5,000 turning it into $10,000!

Here's the problem. We don't have enough money to pay $95,000 more for the physical gold. And the bullion banks KNOW this. They know that there is a 90% probability that we will not take delivery. So when we placed our bid for 100 ounces of gold, they simply issued a brand new paper contract, not backed by real gold! This is pure paper gold inflation. And the more contracts there are, the lower the value of each contract. The same way supplying more dollars makes the value of each dollar fall. It really is the same thing!

This is how a million new paper gold buyers, or ETF subscribers can actually make the price of gold FALL! All the fresh demand is met immediately with fresh supply, inflation in the paper gold market. This increases the supply that is visible to new bidders, lowering the value of each unit.

Only the buying of physical gold, taking it into your possession, puts upward pressure on the price. All other buying puts net downward pressure!

The last 20 year record of gold prices clearly shows a gradual shift from the total confidence in the paper contract market of the early 90's (contracts were "as good as gold"), to the massive inflation of the paper gold market in the late 90's (falling price), to the gradual shift from paper to physical of the last 8 years (rising price), starting from the top (the "giants") and trickling on down to you and me, J6P.

link

07-06-2010 , 06:21 PM

#2255

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

In case one is wondering why the House Democrats attached a document to the emergency war supplemental bill that "deemed as passed" a non-existent $1.12 trillion budget, which basically allows the ruling party to start spending money for Fiscal Year 2011 without the constraint of an actual budget, here is the answer: on June 30, the US closed the books with just over $13.2 trillion in total debt, an increase of $210 billion in one month, or $2.5 trillion annualized. There is just $1.1 trillion left on the ceiling. As we have long been warning, at the current run rate, the ceiling will be breached in under six months, or just around November 2. More disconcerting is that the monthly debt roll continues to be in the "ridiculous amount" category, hitting a total of $660 billion, of which $583 billion was rolling off Bills (we are not sure what the $19 billion im "GSE investment" was for, but we are fairly sure the words Ponzi and Perpetuation are part of it). Of course, if America knew that according to the Obama non-existent budget the debt ceiling would be breached in 2010, it may not have a favorable reception among those few who are still willing to vote for either party of the bipartite farce that passes for a government.

Stuff that is probably not good news for the dollar's continued functionality as the World's Reserve Currency

07-06-2010 , 07:55 PM

#2256

AlbertoKnox

Pooh-Bah

Join Date: Oct 2007 Posts: 3,676

Okay, sorry for the attitude. Houses is a bad comparison, I'd like to take that back.

So just talking about commodities, you would say that most are for sale at the spot price?

That seems very strange to me. Is it wrong to think that all units which aren't being traded right now are waiting for a higher price?

Are you saying that volume is way lower than you'd expect?

07-06-2010 , 09:46 PM

#2257

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

Originally Posted by tolbiny

Quote:

Remember, there is more physical silver available at today's prices than there is gold. What message does that send to lurking capital about today's prices? Doesn't matter how much is in existence. It would take a much higher price to coax all the rest into the market. What matters is how much (as a percentage of the total) is offered at a given price. 7% of the world's silver is offered at today's price. And that doesn't include CB sales (they don't have any). But only .04% of the gold in the world is offered at today's price. That's a difference of 175 times. A 175 times greater portion of the worlds silver is available in the Comex warehouse at today's low price.

Good stuff.

Good stuff indeed.

07-07-2010 , 02:13 AM

#2258

AlbertoKnox

Pooh-Bah

Join Date: Oct 2007 Posts: 3,676

Okay, that does seem meaningful. It doesn't make sense to me still. Why aren't any of the people who won't part with their gold buying up the little tiny bit that is available? Why is this situation stable at all? Sorry, I might have brain damage.

07-07-2010 , 04:23 AM

#2259

lewdjunglist

grinder

Join Date: Jan 2007 Posts: 544

Thanks for going down on me gold. I was looking to get into you again, but you made my decision easy. Snatched up some silver also.

07-07-2010 , 06:47 AM

#2260

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by J.R.

Good stuff indeed.

1,000,000,000+ oz of investment grade silver bullion

3,000,000,000+ oz of investment grade gold bullion

The natural ratio of silver to gold in the Earth is 12:1, silver is mined roughly 8:1 against gold.

June 16th, the COMEX reported total silver inventories of 119.5 million ounces. June 30, total inventories had fallen to 113.56 million ounces, a 5.94 million ounce (4.97%) decline.

SLV has scaled down inventory also in the midst of a price increase.

http://fofoa.blogspot.com/2009/03/so...50437166472551

I think that post under played the industrial demand... but I always say that.

Good things.

07-07-2010 , 09:38 AM

#2261

BurningSquirrel

Pooh-Bah

Join Date: Jun 2008 Posts: 3,785

some of you people are among the first who say that if our planet is destroyed we will find another. Don't you think the human race will developa way to produce gold artificially in high quantities cheaper that natural gold earlier?

07-07-2010 , 10:55 AM

#2262

Bigdaddydvo

King of the Politics Forum

Join Date: Aug 2004 Posts: 21,329

To the former, who the heck around here is saying that?

To the latter, Saint Albert the Great disagrees.

07-07-2010 , 12:10 PM

#2263

freedom.fries

old hand

Join Date: Nov 2008 Posts: 1,730

I haven't been paying much attention to the market the last month or so. Is gold still trending the same as the USD? Stronger when the stock market is down and vice versa?

07-07-2010 , 12:19 PM

#2264

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

Originally Posted by Mrmusicrecorder

Economic value is not about absolute rarity:

How did the Marginal Revolution solve the diamond/water paradox? by Murray Rothbard

Its about the satisfaction of subective ends

Quote:

Let us say two men want to make a trade. One man offers water, the other diamonds. The water seller has a reservoir of 1,000 gallons of water. Let us say the diamond seller offers a 1-carat diamond for 100 gallons of water. Would the water seller make the trade? Let's say he would. "That disproves the use-value theory of value!" the Smithian cost-of-production value theorist would insist, "Water is more useful than diamonds!" However, the question is not whether water-in-general or diamonds-in-general are more useful. The insight of Menger's marginalism is that it is necessary to compare the discrete quantities: one 1-carat diamond vs. 100 gallons of water.

Let's say the water seller plans on using his current water supply over the course of a month, after which his supply will be replenished from some unknown and unimportant source. Were he to keep the whole 1,000 gallons, he would apply his supply in the following manner:

100 gallons for drinking water for his family and guests
500 gallons for cleaning water
300 gallons for watering the plants on his estate
100 gallons for water sports

According to the law discussed in the previous post, were he to give up 100 gallons for the diamond, he would give up the least important satisfaction supplied by that particular quantity of water. Let's say the fun of playing water sports is the least important satisfaction. And let's say the satisfaction he would gain from the diamond is the pleasure of seeing it ornament his wife's hand. The material question is not even "which is more important 100 gallons of water or a 1-carat diamond", because these are just means to ends of satisfaction. The end of satisfaction imputes value to the means of the good. What most economic historians don't recognize is that it was not Menger's marginalism that was his most important contribution to value theory; it was his subjectivism, the recognition that it is the ends, the satisfactions, which must be compared. What Menger really inaugurated was a Subjectivist Revolution. The truly material question in the hypothetical scenario is "which is more important, the fun of a month of water sports, or the pleasure of seeing a beautiful sparkle on his wife's hand until death parted them?" It is no paradox that most men would choose the latter.

A Mengerian Solution to the Diamond-Water Paradox

a rarity example (yes there is a G intervention, involved but its illustrative nonetheless)

Quote:

Think of how much more rare an ounce of silver is than a $100 bill. There are roughly 8 billion US$100 bills in the world, yet only 1 billion ounces of silver. Yet each bill is currently worth 7 times as much as an ounce of silver. That is a discrepancy of 56 times in comparative rarity. And that only counts physical paper money. This is just an example of how little rarity matters.

link

===============================
===============================

[QUOTE=Mrmusicrecorder;20063526]June 16th, the COMEX reported total silver inventories of 119.5 million ounces. June 30, total inventories had fallen to 113.56 million ounces, a 5.94 million ounce (4.97%) decline.

SLV has scaled down inventory also in the midst of a price increase.

QUOTE]

A trend that has appeared with respect to both metals. For example:

Adrian Douglas: Alarming trend in Comex gold and silver inventory data

Adrian Douglas: How Soon Will COMEX Gold Dealer Inventories Be Exhausted?

=============================
=============================

Quote:

Originally Posted by Mrmusicrecorder

http://fofoa.blogspot.com/2009/03/so...50437166472551

I think that post under played the industrial demand... but I always say that.

Good things.

Perhaps you misunderstood it or possibly missed this part:

Quote:

Allow me to play the devil's advocate (not that FOA is the devil, it's just a saying!) for a few minutes. You mentioned the relative rarity of silver to gold. I can agree that this is true, since most of the silver has been used up by industry while most of the gold ever mined is still with us. Let's agree that there are about 1 billion ounces of silver and 5 billion ounces of gold in the world. Well rarity only comes into play with price when supply and demand are the driving factors. Rarity is a measure of supply.

The silver market being much smaller in dollar terms to the gold market, is more volatile. So the argument goes that an influx of dollars will drive up the price of silver much faster than the price of gold. But the way the market is set up right now is with both metals trading as a commodity, not as a money or a wealth reserve. Commodity markets are driven by supply and demand. But from a weight perspective, there is more silver available on the markets at the current prices. This speaks to a much higher monetary demand for gold than for silver, because much more gold is held tightly as a wealth reserve by the really big money, including Central Banks.

Look at metal available in the Comex warehouse. 3 million ounces of gold available, 70 million ounces of silver available. Go to your coin store. Hundred ounce bars of silver may be available. How many hundred ounce bars of gold does he have? So the fact that there is less silver in the world than gold in terms of weight really doesn't mean a whole lot when it comes to monetary demand which is far greater than industrial demand.

As long as the current system is functioning, and Comex is functioning, it is possible that we could see a great run up in the price of silver on a commodity to commodity basis with gold. This is what happened in the early 80's, and that is the main reason it is expected to happen again. But once the system falls apart, the monetary demand will completely overwhelm the industrial demand. And the big money wants gold. This includes oil producers in the Middle East, China with large stash of savings, Russia, all the Central Banks except for maybe the BOE (thanks Brown!) and the super rich private investors as well. Ask yourself why the ratio has widened over the last year as the system has been collapsing. Last year when gold was in the low 900's, silver was $17 an ounce.

link

07-07-2010 , 12:24 PM

#2265

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Good news guise, from the culture that produced The Art of War:

China Promises Not To Use "Nuclear" Option And Buy Gold, Dump US Assets

Quote:

China's State Administration of Foreign Exchange (SAFE ) is once again making waves, by reminding the world about its trillions in dollar-denominated holdings, and that these could be dumped in a heartbeat. Of course, in tried and true Chinese fashion, it is notifying the world it has no intention of using the "nuclear option" which of course is merely a reminder that the nuclear option not only exists but is certainly at the forefront of any "diplomatic" negotiations with the US. As Reuters reports, "In a series of questions and answers posted on its website, www.safe.gov.cn, SAFE asked rhetorically whether China would use its $2.45 trillion stockpile of reserves, the world's largest, as a "nuclear weapon." Apparently, the primary focus of the Q&A was to allay fears that China may be stockpiling gold in the open market: "SAFE was lukewarm about gold as an investment. "It cannot become a main channel for investing our foreign exchange reserves," the agency said, noting the size of the gold market was limited and prices were volatile. Buying more gold would also not help much in diversifying China's reserves." Of course, with all this occurring in light of recent disclosure that the BIS has been involved in gold swaps to provide liquidity to unknown banks, immediately obviates this statement, since, as we have pointed out previously, the Chinese 7 and 30 Day repo markets are still sufficiently strained, and gold would certainly come in useful to allay fears that domestic banks have something beyond massively underwater residential loans on their balance sheets to fund trillions in liabilities. All the Chinese statement really is, is a warning to the US to avoid following the advice of such permaspenders as Krugman, and now Goldman, and to launch into another round of monetary devaluation via QE. We are skeptical that once Bernanke puts the presses into turbo mode once again, that China will theatricize the same kind of wholesome support for US-based assets.

07-07-2010 , 12:29 PM

#2266

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

IMF - BIS In 380 Tonnes of Gold Swaps; Organized Looting of Sovereign Wealth; No Confidence

Quote:

These swaps have significance because of the speculation that the public sale of gold by the IMF, which was secretive and selective, was not a legitimate sale to raise funds, but a means of bailing out the bullion banks who had taken gold previously on lease and sold it into the public markets, but were unble to return it because of the tightness of supply in the physical bullion market, increasingly disconnected from the NY based paper market.

Several private bullion buyers, including Eric Sprott, are reported to have made firm and well priced offers to buy large tranches of gold from the IMF, only to be curtly turned away as 'ineligible.' The IMF is selling at the prices they determine ex-market to the people to whom they wish to sell. It appears that they may be managing this through BIS.

Just as Gordon Brown sold England's gold at artificially low prices to bail out the bullion banks in NY and the City, so the IMF and its constituent members are selling the public stores of gold, largely from a few developed western nations, to support what essentially appears to be a crony capitalist banking fraud involving the secretive sale of public assets at artificial prices with the gains pocketed by a few state-sponsored banks.

Quote:

"Gold swaps are usually undertaken between monetary authorities. The gold is exchanged for foreign exchange deposits (or other reserve assets) with an agreement that the transaction be unwound at an agreed future date, at an agreed price. The monetary authority acquiring the foreign exchange will pay interest on the foreign exchange received. Gold swaps are typically undertaken when the cash-taking monetary authority has need of foreign exchange but does not wish to sell outright its gold holdings (at least not on their own books - Jesse). In that manner, gold is a leveraging device. Gold swaps sometimes involve transactions where one of the parties is not a monetary authority (usually it is another depository corporation). Gold swaps between monetary authorities do not usually involve the payment of margin."

...

Quote:

Some parties have mistakenly asserted that since a swap is not a lease for accounting purposes, which is quite correct, then the gold could not have been sold. That is just a simplistic misconception. A swap transfers the benefits of the assets from one party to another for a period of time in exchange for interest paid, generally on forex received. Its does not sell the property but it transfers the mineral rights for a time, if you will.

The party that then holds that gold asset can just hold it, or they can utilize it in some way, such as leasing it out for a period of time to another party, like a bullion bank, who can subsequently sell it. These types of 'three way deals' were very commonly seen when Lehman and Bear Stearns started to unravel and they needed to be unwound, and were a key component of the whole issue of hidden counter party risks. Remember that?

So on the books of the first party there are in fact no leases or sales shown, just swaps of varying duration and terms. But the swap has delivered an asset, in this case gold, into the hands of a party who may have no qualms about leasing that asset out to a third party to obtain funds, and that third party is likely to sell it. I would of course agree that this does not PROVE anything. How can it when the books of some of the parties are still opaque, and audits rarely conducted to verify ownership. But after what we have just seen over the last three years in these games of asset merry-go-round, how can anyone just blatantly dismiss that can and likely is happening, where there is an easy profit to be made. Especially considering the past history of transactions between the bullion banks and the central banks.

Personally I would view this report as bullish for the price of gold, since it is past history, and almost certainly an indication of concerns about Comex offtake. In other words, shortages are appearing, and fresh sources of bullion are becoming increasingly difficult to find.

"The news of the day, of course, was the discovery by the Virtual Metals analyst (Matthew Turner) that the BIS engaged in what appears to have been the biggest gold swap in history prior to the end of their FY end on March 31st.
Thebulliondesk.com (first of the wire services to report) says:

Quote:

“In its 2010 annual report, the BIS said that "gold, which the bank held in connection with gold swap operations, under which the bank exchanges currencies for physical gold," stands at 8,160.1 million in special drawing rights, equivalent to 346 tonnes this year, up from nil in 2009.

While the data is relevant to the end of BIS’ 2010 financial year in March, data posted to the International Monetary Fund and carried by Bloomberg show the swap still growing in April, analyst Andy Smith of Bache Commodities noted.

To now, this implies a swap of about 380 tonnes from the end of 2009, he said in a report.”

The new Washington Agreement, which started at the end of last September, allowed signatories to engage in gold derivative transactions for the first time in a decade. Very convenient.

Although none of the major bullion banks (actual or potential CB counterparties) will want to discuss this, the high probability is that much of this gold was actually sold into the market. Very likely this accounts for the contra-seasonal slump of gold in December, which it will be recalled was neither preceded by the usual loss of physical premiums nor accompanied by the usual open interest action.

This in effect means the end of the Washington Agreement restraint on CB gold selling, at a time when several signatories are in bad shape. Most likely this is what caused the selling pressure in gold today, especially after the NY open."

07-07-2010 , 06:39 PM

#2267

KUJustin

veteran

Join Date: Mar 2004 Posts: 3,346

Quote:

Originally Posted by BurningSquirrel

I've posed this before and didn't really get a response. As I understand it, it can already be done it's just prohibitively expensive due to requiring a truly incredible amount of energy. It seems like it's definitely possible that it could someday be cost effective.

07-07-2010 , 10:54 PM

#2268

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by KUJustin

What are the odds on that happening this decade?

Not to discount the possibility of it being more efficient than mining and the implications that will have on the use of gold as an asset... but it doesn't worry me, maybe in my lifetime, definitely not on my horizon for obv. reasons already addressed.

Last edited by Mrmusicrecorder; 07-07-2010 at 11:01 PM.

07-07-2010 , 10:57 PM

#2269

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by J.R.

Economic value is not about absolute rarity:

This is true.

Quote:

Perhaps you misunderstood it or possibly missed this part:

link

No I understood the fofoa post, we have had this discussion before... literally.

Small differences in semantics make big differences in opinion... on occasion.

07-07-2010 , 11:06 PM

#2270

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Gold gains 3.8% (Afghanistan Afghanis) -127% (Venezuela Bolivares Fuertes) on major currencies.

Average debasement against gold is in the double digits.

details

07-08-2010 , 11:09 AM

#2271

Nitrub

Pooh-Bah

Join Date: Mar 2008 Posts: 4,386

u guys expect gold to drop some more or buy now ?

Last edited by Nitrub; 07-08-2010 at 11:23 AM.

07-08-2010 , 11:16 AM

#2272

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Quote:

Originally Posted by KUJustin

What were/are you expecting/hoping for a response to?

07-08-2010 , 11:24 AM

#2273

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Quote:

Originally Posted by Nitrub

u guys expect gold to drop some more or but now ?

I would buy in July.

I went long @ $1195 and expect good gains for gold through September from these levels. You won't see gold under $1100 this year... mark my words.

Warning: please go get a grain of salt...

07-08-2010 , 11:27 AM

#2274

Mrmusicrecorder

veteran

Join Date: Oct 2009 Posts: 3,361

Spending more than $600 on gold... don't forget your tax form.

Quote:

Passage by Congress of the national health care legislation has had an unintended consequence to the nation’s coin collectors, vest-pocket dealers who buy and sell coins, and larger dealers who are frequent buyers of coins that collectors periodically liquidate as they trade up their collections for better coins, or simply sell to take a small profit or loss.

What has happened is that effective Jan. 1, 2012, the whole system of giving and receiving Internal Revenue Service 1099 forms will be turned on its head and all persons (including corporations) who are in business will now have to give 1099 tax reporting forms for coins and other goods that they sell as well as buy.

The responsibility for issuing forms kicks in at $600 for coins or bullion – not a very high level and one that has already started sounding alarm bells. It doesn’t matter in what form payment is made, whether cash, check, credit card, or Yap stone money, the $600 threshold applies.

details

07-08-2010 , 11:27 AM

#2275

J.R.

Econ Forum Czar

Join Date: Sep 2002 Posts: 8,292

Sorry if already posted, didn't see it:

Quote:

A blizzard of paperwork could be about to hit numismatics.

Passage by Congress of the national health care legislation has had an unintended consequence to the nation’s coin collectors, vest-pocket dealers who buy and sell coins, and larger dealers who are frequent buyers of coins that collectors periodically liquidate as they trade up their collections for better coins, or simply sell to take a small profit or loss.

What has happened is that effective Jan. 1, 2012, the whole system of giving and receiving Internal Revenue Service 1099 forms will be turned on its head and all persons (including corporations) who are in business will now have to give 1099 tax reporting forms for coins and other goods that they sell as well as buy.

The responsibility for issuing forms kicks in at $600 for coins or bullion – not a very high level and one that has already started sounding alarm bells. It doesn’t matter in what form payment is made, whether cash, check, credit card, or Yap stone money, the $600 threshold applies.

There’s a bill introduced by Rep. Dan Lungren (H.R. 5141), which has gathered over 80 members of Congress as co-sponsors to repeal this section. Evidently, however, the drafters of the provision think there is a $17 billion loophole that this plugs.

....

Form 1099 is used to report independent contractor income, income from dividends, income from other things – and is one of the reasons why children receive tax bills for work or labor or services performed.

Section 9006 of the Patient Protection and Affordable Care Act (Public Law 111-148, signed into law by President Obama this spring) turns 1099 forms into reporting forms not only for independent contractor’s income – what they have long been used for – but also to show sales, gains and losses on purchases and sales of goods as part of a trade or business.

link

======================

H.R. 5141: Small Business Paperwork Mandate Elimination Act

Quote:

Small Business Paperwork Mandate Elimination Act - Amends the Internal Revenue Code to repeal a provision (added by the Patient Protection and Affordable Care Act [PPACA]) that extends to corporations that are not tax-exempt the requirement to report payments of $600 or more.

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