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Washington state, as part of their frenzy of tax increases, decided that gold and silver bullion will be subject to the sales tax. Poof! There goes any point in

Washington state, as part of their frenzy of tax increases, decided that gold and silver bullion will be subject to the sales tax. Poof! There goes any point in investing in gold and silver. (Collector coins, too.)

otterley 9mo ago
What about GLD (SPDR)? I've been investing in a gold derivative for nearly a year and haven't touched a physical object yet.
- mr_toad 9mo ago
  Bullion has a pretty specific meaning, I doubt shares in gold derivatives could be construed as bullion.
laurencerowe 9mo ago
That's a win for society if the money is instead invested into something productive!
- WalterBright 9mo ago
  I never invested in gold because it is not productive. I don't have any money, either (other than pocket money), because I've invested all of it. Gold is usually invested in as a hedge against inflation. It's not really the gold that goes up and down in value, it's the dollar that goes down and up.
  - pqtyw 9mo ago
    Gold was worth about as much in nominal(!) terms ~2006 as it was in back in 1980 then doubled in a couple of years. Doesn't seem like a very good hedge but rather a very volatile speculatory asset...
  - fjordofnorway 9mo ago
    Given that the gold and the dollar are not productive I think one is betting that society is less productive than inflation when one invests in gold and that one will need to pay a ransom over a long weekend when one holds dollars.
  - pfannkuchen 9mo ago
    This is an oversimplification IMO. There are higher order effects on the price of gold that makes it not directly related to the value of the dollar. I'm pointing this out because I have seen a lot of sentiment recently about how the dollar is crashing, just look at the price of gold. Yes, the dollar is decreasing in value faster than usual, but it also isn't crashing in the way that gold is spiking. This sentiment I think drives speculative gold demand, from standard speculative investing FOMO as well as from emotionally driven inflation fear well beyond what is realistic. The same thing happens to the stock market.
    - taneq 9mo ago
      Wouldn’t gold be spiking in proportion to the market’s predicted future value of the dollar, rather than its current value? If the market’s paying attention you’d expect its gold valuation to lead the actual inflation numbers.
      - pfannkuchen 9mo ago
        It does but that is the first order effect only. You also have people buying gold because number going up means number goes up more. This has a positive feedback loop since the people buying for that reason also makes number go up, which sucks in more people. You also have people bandwagoning hyperinflation type scenarios without a plausible thesis, which results in I think much more hedging in this area than usual. I hadn’t seen hyperinflation as a topic break into the mainstream before. You also have opportunistic savvy speculation that is based on a perception of the perception of the people doing the other ones. And probably more scenarios since there are a lot of interactions possible at higher orders. So like some of the increase in gold price is due to the decrease in dollar value, certainly, but it isn’t all of it, and at the present time I don’t believe it is near to most of it.
        pfannkuchen 9mo ago
        I’m legitimately curious how this of all things was downvoted. Isn’t this like boring mainstream non-controversial economics? (I know about the commenting about downvotes rule but I don’t feel this fits the pattern of what that rule wants to prevent)
- oraphalous 9mo ago
  But it's a loss if it's forced into risky investments that aren't productive.
- jkhdigital 9mo ago
  People choose to hold non-yield-bearing assets when they believe the returns offered by current investment opportunities are not sufficient to justify the risks. It is the miracle of modern capital markets that enables almost anyone to quickly and easily invest their savings in productive assets, but of course capital markets aren’t perfect. The availability of “none of the above” options (like gold) that remove savings from the pool of active investment capital is the essential feedback loop that balances risk and return.
  - AlotOfReading 9mo ago
    Modern capital markets also have non-yield-bearing assets like gold ETFs. The only practical difference is a tiny expense ratio and more liquidity.
SilverElfin 9mo ago
Taxing bullion is absurd - it’s not a product but more like currency or a placeholder of money you already have. What other taxes are they passing when you say “frenzy”?
- jfengel 9mo ago
  Why is it more like a currency than any other object? It's not negotiable currency or legal tender. People buy it and sell it. I don't see any difference between bullion, iron ore, frozen concentrated orange juice, and Pokemon cards. You buy a thing, you pay the sales tax.
  - its_ethan 9mo ago
    Well it's more like a currency than any other object because it has been used historically to either a) be the currency, or b) back the currency. Sure that's not true today in the United States, but like, it's obviously different than frozen concentrated orange juice... can we not at least agree on that pretty tame assumption? Or is this just some semantics race to non-meaning? Iron ore is similar physically, but it's really just a raw input material/ingredient used for heavy industrial manufacturing and production, it's never been intended to be an appreciating asset/hedge against inflation. I'm unfamiliar with whatever tax is being referred to in this specific comment thread, but I'd be curious how something like $SIVR is handled, considering it's backed by actual silver in vaults. That could lead to some unintended consequences if the investment plans of a lot of money suddenly changes how it's being allocated.
    - quickthrowman 9mo ago
      > Iron ore is similar physically, but it's really just a raw input material/ingredient used for heavy industrial manufacturing and production, it's never been intended to be an appreciating asset/hedge against inflation, not any intrinsic property of gold itself. Gold is not intended to be an asset/hedge against inflation either. Market participants believe that gold has value and that it can hedge against inflation. The belief is what gives life to gold being as a hedge against inflation. Gold is not an asset, it’s a commodity, an industrial input, and material for jewelry, and for some reason I fail to understand, people buy and hold it because they believe it is an asset that will appreciate in value, but it’s just an elementary metal that is useful for being easy to work with (jewelry) and because it doesn’t oxidize. It does not generate income, you can’t eat it, and in a post-apocalyptic scenario, it’s useless. I suppose the density of gold would allow some very small, very high mass slingshot balls you could defend yourself against people with?
AlotOfReading 9mo ago
The way you've written it sounds like taxing unmonetized bullion is insane overreach, but is it? They're just treating them the same as any other commodities. I can understand if you're opposed to sales taxes generally, but the only reason to single out bullion for an exception I can see is historic norms. They're also applying a tax to monetized bullion. That's more more like taxing currency exchanges and it's a bit weird since currency exchanges are normally taxed on appreciation.
- nerdsniper 9mo ago
  We do not charge sales tax when you exchange Dollars for Euros. Bullion advocates argue that exchanging dollars for physical gold is a currency exchange rather than a consumption purchase. If you were to turn that bullion into an actual product like jewelry, then it would be taxed. When a firm with tank capacity takes delivery of an oil contract they secured via the CBRE, do they pay sales tax on that? No, because it’s intended for resale. Unmonetized gold bullion is similarly generally intended for resale. Generally no one is “consuming” gold bullion.
  - AlotOfReading 9mo ago
    Currency exchanges are exactly why I differentiated between monetized and unmonetized bullion. I don't see why going to Costco and buying a bar of gold is fundamentally different than buying the same weight of gold jewelry. That jewelry may very well be intended for resale the same way.
    - nerdsniper 9mo ago
      Whereas to me, it's wild that thousands of years of gold bullion trade as a form of currency exchange is supplanted basically overnight and now only "gold but only on paper" would be considered the only form of real gold currency. "Monetized" gold has only existed for 50 years since gold futures started being offered in 1972. But the real "retail era" of "gold but only on paper" started just ~20 years ago with gold ETF's in 2003 (Australia) and 2004 (USA). So in just 20 years, we're now arguing that the norm from the past 3,000 years of gold trade is completely invalidated. That said, you're not completely out of line with the views of the USA federal government. Gold has fascinating history of regulation. There was the 1933 total ban on private ownership when U.S. citizens were given until May 1, 1933, to surrender all gold coins and bullion. That lasted until 1974. Or that gold bullion is not subject to FinCEN Form 105 (currency) but rather CBP Form 6059B (goods).
15155 9mo ago
Buy and keep it elsewhere? Buy futures?
- ortusdux 9mo ago
  The law covers "monetized bullion" - bars and coins -https://dor.wa.gov/education/industry-guides/jewelry-stores/currency-coins-and-precious-metal-bullion https://dor.wa.gov/education/industry-guides/jewelry-stores/...
roenxi 9mo ago
In English-speaking countries, we have a system that prints money and gives it to asset owners. Gold is still an asset, so buying it will still let people participate in that system. Increasing taxes by whatever (I'll assume 10%) is material but it doesn't remove any point, just makes it a bit less attractive. It could easily be a less risky play than investing in US bonds given that they can't pay them back in real terms.
SantalBlush 9mo ago
[flagged]
- dang 9mo ago
  Can you please make your substantive points without snark, flamebait, swipes, or personal attack? Regardless of how wrong someone is or you feel they are, you can make your substantive points without these things. We're trying for something else here. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
  - SantalBlush 9mo ago
    I can certainly do that, and I can see how my comment came across as unnecessarily harsh. I just want to be clear that my issue was with the reasoning, not the position, and not the individual.
    - dang 9mo ago
      Thanks! and yes, it's often the case that those different levels get tangled up in the reader's mind, even if the commenter was clear in their own mind. Basically, intent doesn't communicate itself - it has to be disambiguated. Following the guidelines is the best solution of course :)
thijson 9mo ago
Oregon just south of you has no sales tax

otterley 9mo ago

What about GLD (SPDR)? I've been investing in a gold derivative for nearly a year and haven't touched a physical object yet.

mr_toad 9mo ago
Bullion has a pretty specific meaning, I doubt shares in gold derivatives could be construed as bullion.

laurencerowe 9mo ago

That's a win for society if the money is instead invested into something productive!

WalterBright 9mo ago
I never invested in gold because it is not productive. I don't have any money, either (other than pocket money), because I've invested all of it. Gold is usually invested in as a hedge against inflation. It's not really the gold that goes up and down in value, it's the dollar that goes down and up.
- pqtyw 9mo ago
  Gold was worth about as much in nominal(!) terms ~2006 as it was in back in 1980 then doubled in a couple of years. Doesn't seem like a very good hedge but rather a very volatile speculatory asset...
- fjordofnorway 9mo ago
  Given that the gold and the dollar are not productive I think one is betting that society is less productive than inflation when one invests in gold and that one will need to pay a ransom over a long weekend when one holds dollars.
- pfannkuchen 9mo ago
  This is an oversimplification IMO. There are higher order effects on the price of gold that makes it not directly related to the value of the dollar. I'm pointing this out because I have seen a lot of sentiment recently about how the dollar is crashing, just look at the price of gold. Yes, the dollar is decreasing in value faster than usual, but it also isn't crashing in the way that gold is spiking. This sentiment I think drives speculative gold demand, from standard speculative investing FOMO as well as from emotionally driven inflation fear well beyond what is realistic. The same thing happens to the stock market.
  - taneq 9mo ago
    Wouldn’t gold be spiking in proportion to the market’s predicted future value of the dollar, rather than its current value? If the market’s paying attention you’d expect its gold valuation to lead the actual inflation numbers.
    - pfannkuchen 9mo ago
      It does but that is the first order effect only. You also have people buying gold because number going up means number goes up more. This has a positive feedback loop since the people buying for that reason also makes number go up, which sucks in more people. You also have people bandwagoning hyperinflation type scenarios without a plausible thesis, which results in I think much more hedging in this area than usual. I hadn’t seen hyperinflation as a topic break into the mainstream before. You also have opportunistic savvy speculation that is based on a perception of the perception of the people doing the other ones. And probably more scenarios since there are a lot of interactions possible at higher orders. So like some of the increase in gold price is due to the decrease in dollar value, certainly, but it isn’t all of it, and at the present time I don’t believe it is near to most of it.
      - pfannkuchen 9mo ago
        I’m legitimately curious how this of all things was downvoted. Isn’t this like boring mainstream non-controversial economics? (I know about the commenting about downvotes rule but I don’t feel this fits the pattern of what that rule wants to prevent)
oraphalous 9mo ago
But it's a loss if it's forced into risky investments that aren't productive.
jkhdigital 9mo ago
People choose to hold non-yield-bearing assets when they believe the returns offered by current investment opportunities are not sufficient to justify the risks. It is the miracle of modern capital markets that enables almost anyone to quickly and easily invest their savings in productive assets, but of course capital markets aren’t perfect. The availability of “none of the above” options (like gold) that remove savings from the pool of active investment capital is the essential feedback loop that balances risk and return.
- AlotOfReading 9mo ago
  Modern capital markets also have non-yield-bearing assets like gold ETFs. The only practical difference is a tiny expense ratio and more liquidity.

SilverElfin 9mo ago

Taxing bullion is absurd - it’s not a product but more like currency or a placeholder of money you already have. What other taxes are they passing when you say “frenzy”?

jfengel 9mo ago
Why is it more like a currency than any other object? It's not negotiable currency or legal tender. People buy it and sell it. I don't see any difference between bullion, iron ore, frozen concentrated orange juice, and Pokemon cards. You buy a thing, you pay the sales tax.
- its_ethan 9mo ago
  Well it's more like a currency than any other object because it has been used historically to either a) be the currency, or b) back the currency. Sure that's not true today in the United States, but like, it's obviously different than frozen concentrated orange juice... can we not at least agree on that pretty tame assumption? Or is this just some semantics race to non-meaning? Iron ore is similar physically, but it's really just a raw input material/ingredient used for heavy industrial manufacturing and production, it's never been intended to be an appreciating asset/hedge against inflation. I'm unfamiliar with whatever tax is being referred to in this specific comment thread, but I'd be curious how something like $SIVR is handled, considering it's backed by actual silver in vaults. That could lead to some unintended consequences if the investment plans of a lot of money suddenly changes how it's being allocated.
  - quickthrowman 9mo ago
    > Iron ore is similar physically, but it's really just a raw input material/ingredient used for heavy industrial manufacturing and production, it's never been intended to be an appreciating asset/hedge against inflation, not any intrinsic property of gold itself. Gold is not intended to be an asset/hedge against inflation either. Market participants believe that gold has value and that it can hedge against inflation. The belief is what gives life to gold being as a hedge against inflation. Gold is not an asset, it’s a commodity, an industrial input, and material for jewelry, and for some reason I fail to understand, people buy and hold it because they believe it is an asset that will appreciate in value, but it’s just an elementary metal that is useful for being easy to work with (jewelry) and because it doesn’t oxidize. It does not generate income, you can’t eat it, and in a post-apocalyptic scenario, it’s useless. I suppose the density of gold would allow some very small, very high mass slingshot balls you could defend yourself against people with?

AlotOfReading 9mo ago

The way you've written it sounds like taxing unmonetized bullion is insane overreach, but is it? They're just treating them the same as any other commodities. I can understand if you're opposed to sales taxes generally, but the only reason to single out bullion for an exception I can see is historic norms. They're also applying a tax to monetized bullion. That's more more like taxing currency exchanges and it's a bit weird since currency exchanges are normally taxed on appreciation.

nerdsniper 9mo ago
We do not charge sales tax when you exchange Dollars for Euros. Bullion advocates argue that exchanging dollars for physical gold is a currency exchange rather than a consumption purchase. If you were to turn that bullion into an actual product like jewelry, then it would be taxed. When a firm with tank capacity takes delivery of an oil contract they secured via the CBRE, do they pay sales tax on that? No, because it’s intended for resale. Unmonetized gold bullion is similarly generally intended for resale. Generally no one is “consuming” gold bullion.
- AlotOfReading 9mo ago
  Currency exchanges are exactly why I differentiated between monetized and unmonetized bullion. I don't see why going to Costco and buying a bar of gold is fundamentally different than buying the same weight of gold jewelry. That jewelry may very well be intended for resale the same way.
  - nerdsniper 9mo ago
    Whereas to me, it's wild that thousands of years of gold bullion trade as a form of currency exchange is supplanted basically overnight and now only "gold but only on paper" would be considered the only form of real gold currency. "Monetized" gold has only existed for 50 years since gold futures started being offered in 1972. But the real "retail era" of "gold but only on paper" started just ~20 years ago with gold ETF's in 2003 (Australia) and 2004 (USA). So in just 20 years, we're now arguing that the norm from the past 3,000 years of gold trade is completely invalidated. That said, you're not completely out of line with the views of the USA federal government. Gold has fascinating history of regulation. There was the 1933 total ban on private ownership when U.S. citizens were given until May 1, 1933, to surrender all gold coins and bullion. That lasted until 1974. Or that gold bullion is not subject to FinCEN Form 105 (currency) but rather CBP Form 6059B (goods).

15155 9mo ago

Buy and keep it elsewhere? Buy futures?

ortusdux 9mo ago
The law covers "monetized bullion" - bars and coins -https://dor.wa.gov/education/industry-guides/jewelry-stores/currency-coins-and-precious-metal-bullion https://dor.wa.gov/education/industry-guides/jewelry-stores/...

roenxi 9mo ago

In English-speaking countries, we have a system that prints money and gives it to asset owners. Gold is still an asset, so buying it will still let people participate in that system. Increasing taxes by whatever (I'll assume 10%) is material but it doesn't remove any point, just makes it a bit less attractive. It could easily be a less risky play than investing in US bonds given that they can't pay them back in real terms.

SantalBlush 9mo ago

[flagged]

dang 9mo ago
Can you please make your substantive points without snark, flamebait, swipes, or personal attack? Regardless of how wrong someone is or you feel they are, you can make your substantive points without these things. We're trying for something else here. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and taking the intended spirit of the site more to heart, we'd be grateful.
- SantalBlush 9mo ago
  I can certainly do that, and I can see how my comment came across as unnecessarily harsh. I just want to be clear that my issue was with the reasoning, not the position, and not the individual.
  - dang 9mo ago
    Thanks! and yes, it's often the case that those different levels get tangled up in the reader's mind, even if the commenter was clear in their own mind. Basically, intent doesn't communicate itself - it has to be disambiguated. Following the guidelines is the best solution of course :)

thijson 9mo ago

Oregon just south of you has no sales tax