BullionVault vs GoldMoney: BV Wins This Round
For those people already convince that they need to buy gold and store it offshore there is always and continually the question of using BullionVault versus GoldMoney.
Our full reviews and comparisons are elsewhere on the site but here we want to point out one VERY clear advantage to BullionVault over GoldMoney. Storage fees.
No, we aren’t talking about how BullionVault’s storage fees are lower than GoldMoney’s (though they are). We aren’t talking about how with BullionVault you get a monthly statement emailed to you where it clearly shows your monthly storage fee along with any other monthly activity and with GoldMoney you have login to the site (more secure this way, yes) and then tediously printout a pseudo-statement of your own and then convert the charge to currency.
GoldMoney Takes Your Gold (or other Precious Metal)
With BullionVault, your monthly storage fee is taken from free cash available in your account. You see, in terms of (fiat, I know) currency how much your storage is costing you.
GoldMoney, on the other hand, TAKES YOUR GOLD or other precious metal as payment for storage fees!
This has (at least) three problems:
- It’s harder to see how much the storage fee is, unless you are accustomed to thinking in terms of goldgrams (or silvergrams, etc)
- As your precious metals increase in value over time (what we hope for, right?) storage fees go up (in terms of your favorite fiat currency) automatically. While this is great for GoldMoney, it’s not so great for you and I as customers.
- HERE IS THE BIGGIE (for U.S. Citizens): While neither BullionVault or GoldMoney (currently) issue 1099-B’s for sales of precious metals, diligent taxpayers will need to report between 12 and 48 itty-bitty gain/loss transactions on their tax return, after calculating cost basis!
Folks, you know as well as I do that we are not talking big money here. The storage fees notwithstanding, the gain/loss on the metal used to pay the storage fee is likely very small. This is simply a NUISANCE as its affect will be negligible on your tax return.
Some investors and their CPA may even determine (if you are lucky) that it is so insignificant that you can just ignore it as an “immaterial amount”.
But if not, you have from 12 (with just one precious metal purchased and stored at GoldMoney) to 48 or even more! How? Well, 12 months of the year (assuming metal held the full year) times how ever many PM’s you store at GoldMoney times how ever many different facilities you might have that metal.
Admittedly, for most of us it may be just 12 per metal. And I have not SEEN a statement to see how they handle multiple facilities, but there have been different rates at different facilities and you have to have purchased the metal with different transactions resulting in a variety of cost basis determination options.
Result: HEADACHE for sure, and maybe some added expense paid to your tax preparer.
Summary
So your choice is:
BullionVault:
Simply leave a little cash in the account and at the end of the year tally up the 12 storage costs on the conveniently provided statements and plug the number onto your tax return (optional) as an investment expense (subject to 2% limitation). For most people? Just do nothing, the expense won’t matter anyway.
GoldMoney:
Spend a bunch of time running statements, printing them out, calculate a cost basis for the gold they took in lieu of cash for storage fees, enter all of those transactions into your 1040 Schedule D, possibly as a dozen or more transactions and THEN total up the total expense (again, optionally and it may not matter) and enter as an investment expense.
Remember, this article is not intended to compare costs, just the HASSLE involved with GoldMoney and how it’s so much easier buying and storing gold, silver or other precious metals with BullionVault versus GoldMoney.
We still use GoldMoney because of diversification issues (remember, the gold itself is probably at the very same ViaMat facility if in the same city no matter which of the two you choose – though more options are coming online), but to us, tax implications DO MATTER when we consider where and what to invest in.
