Gold is notoriously difficult to trace. According to the World Gold Council, an average of 2,500—3,000 tons of gold are produced annually and sent to refineries, where they are transformed into gold ingots. Gold can be traced to a particular source mine using an analysis that identifies impurities. However, if gold has been refined, these trace elements and impurities can be removed through the refining process, making it nearly impossible to trace the gold back to its original source.
Investing in physical gold and silver IRA is a great way to diversify your portfolio and protect your wealth from inflation. When it is necessary to report a purchase of gold, the dealer will be the one to report it. Form 8300 requires information about the gold purchaser, including name, social security number, address, and license number. If part of the form is left blank, the dealer must still send the form to the IRS. For example, Johnson Matthey gold bars contain the distinctive Johnson Matthey logo in the form of crossed hammers next to the initials JM, followed by “JOHNSON MATTHEY ASSAYERS & REFINERS”, the fineness of the gold (test), the weight in Troy ounces and then a six-digit serial number if available (source).
Although these bars tend to look less elegant and shiny, many buyers of gold bars prefer this type because it makes the bars look more natural and reflects the long and impressive history of gold. While the U.S. currency has been backed by a government decree instead of gold since 1971, gold is still a sound investment. Some add identifiers to the gold they produce to guarantee their buyers that it is obtained ethically, responsibly and legally.
Most people own gold through funds such as Sprott Physical Gold Trust (PHYS) or Central Fund of Canada (CEF). Once gold enters the process in which it is molded into objects other than gold ingots, such as jewelry or watches, gold has undergone so many changes and mixtures that it is practically impossible to trace it. Once you hold a real gold coin in your hand and feel its weight and density, you realize that gold is simply difficult to imitate. The amount of gold purchased, how it is purchased, the time frame within which it is purchased, and other legal points will determine the reporting requirements for gold purchases.
Over the past decade, approximately two-thirds of all investments in gold were made through the purchase of gold coins or ingots. Among the currencies that are subject to notification are 1-ounce maple leaf-shaped gold coins, 1-ounce gold Kruggerand coins, 1-ounce Mexican ounce gold coins, and any U.S. coin made up of 90% silver. If you buy large gold bars, when the time comes to sell them, you'll liquidate a very large and valuable asset all at once, since you can't break a gold ingot.
In another example, someone walks into a local gold coin store and uses cash (paper money) to pay for gold coins. These pieces include, among others, gold coins in fractional denominations; Eagle coins in American gold and silver; the U.S. currency created after the creation of the IRS list of reportable items and any piece in foreign currency that is not explicitly mentioned in the previous section. Gold bars, gold bars or gold ingots are essentially a mass of refined gold formed in the shape of a flat bar, brick or card.
In addition, large criminal organizations often fraudulently stamp serial numbers and logos on gold ingots to launder illegal or contraband gold.