Suisse Gold

What is particularly terrifying to Swiss bankers is the new tax system being formulated called FATCA [Foreign Account Tax Compliance Act] which came into effect in 2010, but will only be fully in effect in 2014 with IRS agreement.

In this system there are features that will affect financial institutions worldwide.

Here are some of the reasons why Swiss banks are changing their handling of clients: -

• FATCA will impose all sorts of reporting requirements on U.S. taxpayers with foreign financial accounts. This is in ADDITION to form TDF 90-22.1, which is due to the Treasury Department each year by June 30th, and IRS form 1040 schedule B. Transparency will become the order of the day.
• The law requires ALL financial institutions across the world to share personal customer information with the U.S. authorities. Undoubtedly, all allies of the U.S. such as Canada as well as the rest of the developed world will cooperate with them quicker than others. Under certain conditions this could be extended to include gold and other precious metals, easily.
• FATCA has failed to define the terms, “foreign financial institution” and “foreign financial account“. These are defined generally just as a “financial security” is a transferable ownership right over an asset. Likewise a “financial institution” deals in and handles “financial securities”. Foreign nations have their own definitions of “foreign financial institutions” and ‘foreign financial account’s. No doubt these definitions will be accepted by the U.S. authorities.
• The law was passed in 2010 [final implementation 2014], when it became the responsibility of the IRS to interpret Congress’s intent in implementing FATCA. We expect a release of their interpretation of FATCA any time now.

This is Part 3 of Article Swiss Bank Clients Move From ‘Unallocated’ to ‘Allocated’ Gold Accounts

The London Bullion Market Association defines an unallocated account as “an account where specific bars are not set aside and the customer has a general entitlement to the metal. It is the most convenient, cheapest and most commonly used method of holding gold.”

The story of Germany’s gold being repatriated to Germany highlighted that Germany’s gold is ‘unallocated’ in foreign central banks. Most gold owners hold their gold in storage systems where it is ‘unallocated’. The downside is that the owner of ‘unallocated’ gold is an unsecured creditor of the storage company. So if you hold your gold at a bank in this way and it goes bust, you will have to wait and hope you get at least some of your money back.

An ‘allocated‘ gold account is where a customer has his gold physically segregated and is given a detailed list of the weights and assays of his gold. The gold is held in the customer’s name and owned by him still. In this case his gold cannot be taken by the Custodian or bank’s creditors should the bank go bust. The gold would, in that case be moved on the instructions of the beneficial owner.

This is Part 1 of Article Swiss Bank Clients Move From ‘Unallocated’ to ‘Allocated’ Gold Accounts