Storing Nickels
(Copyright 2012 LewRockwell.com)
Are you doing due diligence with nickels? As many LRC readers know, nickels are the only real “money” being distributed by the U.S. Government at this point in time. The value of the metal in a nickel equals the fiat value assigned to it by the state. This cannot be said about the currently produced pennies, dimes, quarters, or half dollars and certainly cannot be said about the paper money or the even more insidious and plentiful computer digit money that we are forced to use. Nickels are uniformly marked, impractical to counterfeit, and easily recognizable for their metallic content (75% copper, 25% nickel).
So, is it really that easy to get real money in exchange for the worthless stuff floating around? Yes, it still is. You walk into a bank, hand the teller a 20-dollar bill, and walk out with 10 rolls of nickels. There is no dealer markup. There is no sales tax. There are no shipping fees. There is no capital gains tax or value added tax. It almost seems impossible in this day and age. It soon will be impossible. We are temporarily in an era with nickels that is analogous to the pre-1965 silver coinage period. Coin composition is slated to change during the 2013 fiscal year. So, what are the issues that would preclude a person from taking advantage of the inevitable increase in the value of nickels when compared to the fiat dollar? Well, there is one small issue and one slightly bigger issue. The small issue is obtaining the nickels and the bigger issue is storage. Both issues can be resolved fairly easily for most people. First, let’s look at the smaller issue.
You don’t want to shoot yourself in the foot when obtaining nickels; not to mention your fellow hard-money brethren who are doing the same thing. Don’t go into a bank and make a grandiose gesture by asking to speak to the branch manager and discussing the bulk acquisition of $1000 or $10,000 worth of nickels. I have read articles where people proudly describe the incredulous looks they get from the bank employees and the follow-up questions administered by the bank staff from such an action. These articles usually include a description of how they schooled the bank employees about how the customer was hoarding nickels as a hedge against inflation. Don’t have this conversation with the bank. You don’t want to be the source of new bank policy restricting the acquisition of coinage. Some banks may charge a percentage for obtaining coins but, most still don’t. With nickels it is still so easy.
You need to have a systematic outlook. What you do is always lay down a 20 dollar bill and ask for 20 dollars in nickels. No more. That’s all. Make this fit into your lunch break at work, your commute, your exercise routine, or your shopping routine. You can go to one, two, or three banks fairly quickly. Don’t get the coins using your debit card or a check. Keep it to a simple hand-to-hand cash transaction. You don’t want multiple computer entries showing up on your bank account at different bank branches 10 minutes apart. It looks like you are doing something. Banks look for patterns and they will ask more questions. You aren’t doing anything wrong but, once again, you don’t want to make waves. You want to be able to continue getting your nickels. Giving out $20 in coins is no big deal to a major bank but, retailers that get coinage regularly usually do have to pay extra for the privilege. Small account holders and even non-account holders are usually given “small” amounts of pre-rolled coinage in exchange for paper currency as a courtesy at no charge. You want to be in the small customer “courtesy” realm on this issue. Being in a slightly bigger town is a plus but, not essential. If you happen to be on a lengthier shopping trip or road trip, you can get $20 worth of nickels ten times fairly quickly at ten different banks. Remember, you don’t want to be responsible for the issuance of new restrictive policies within your local banking world. Banks talk to each other. They go to conferences. If only a few guys in a town of a million people are trying to get large quantities of nickels on each transaction, the word will get out and policies will change.
You won’t believe how quickly you acquire nickels at this rate. You quickly get in and out of the bank since you are not doing account-related transactions. You get 400 nickels each time you hand over a 20-dollar bill. The transaction usually takes less than a minute. If you do this twice every day on your lunch break, you will have nickels coming out of your ears. Don’t try to do it at a quicker rate. You will end up causing problems.
The second issue, which is really the point of this article, is the storage of your nickels. One of the first rules for obtaining and storing metal as a hedge against inflation is to take possession of the metal yourself and to not trust someone else to store it for you. A warehouse receipt can be next to worthless in a hyperinflationary environment and is subject to the same type of mishandling that has been seen in metal futures, ETFs, and other paper forms of metal. Nickels do present a challenge for storage but, the challenge is not insurmountable.
Green military style ammo cans are a very tempting solution. They have one serious drawback. They look valuable. That wall of ammo cans in your basement really looks like a stash of something worth stealing. The larger size (generically called .50 caliber ammo cans) are too heavy when filled with nickels. The smaller size is easier to handle. They weigh about 35 pounds when filled. They hold about 88 rolls. Each roll contains $2 face value of nickels. So, you are preserving about $176 face value of nickels in one ammo can. To get up into multiple thousands of dollars, you will have quite a wall of ammo cans. They get harder and harder to conceal. They won’t fit in a floor safe or that hollow brick like your gold coins do.
So, what’s the answer? After years of experimenting, I have found the perfect solution. Home Depot sells pre-cut 24-inch sections of thick walled 4-inch black ABS pipe. They also sell the 4 inch ABS end caps and ABS cement. This combination makes a perfect long-term burial solution. The ABS cement causes a reaction to occur that is the chemical equivalent of welding the plastic end caps on by chemically softening, melting, and then permanently binding the adjoining surfaces of the two plastic pipe fittings together. PVC pipe also works. The nickels will last for decades in pristine condition underground when stored in these pipes.
I had an occasion to dig up 10 pipes recently containing a total of 560 pounds of nickels that had been buried for three years. The store bar-code stickers hadn’t even come off the pipes yet. The pipes with the caps glued on with the ABS cement still looked brand new. Each of these pipes holds 122 rolls of nickels on average. The pipes weigh about 56 pounds when finished. I have found that drilling a tiny hole with a small drill bit aids with pushing on the final cap since the glue makes the caps airtight and the air pressure makes it hard to push the second cap on. The air relief hole allows the cap to slide on easily before the cement binds the parts together permanently. The small hole can then be filled with ABS cement to make the pipe watertight. To get the nickels out, you will have to cut the pipe open with a saw.
After preparing multiple pipes, dig a trench. It will look like you are installing a water line or a sewage pipe. The 24″ X 4″ inch black pipes look like sections of sewer line. You can rent a trencher to make the process quicker and to reduce prying eyes. I have found that even sensitive metal detectors cannot detect the pipes when they are more than 12 inches deep. To be on the safe side, you can make your trench 18 to 24 inches deep. Even if they are buried less deep, they have the metal detector signature of a buried water pipe and won’t look like an attractive target to unearth.
I will address one more point since I hear this all the time. How do you cash in the nickels for the metal value? You don’t in the short run. This is not a buy and turn over proposition. You don’t have to worry about the legalities of melting coins. People don’t have to melt down pre-1965 silver coins to get the metal value. There will always be a market for the actual metal value in the coin. You don’t have to melt down gold coinage to get the metal value. Some day, when the effects of massive inflation are more evident, you will have your hedge against inflation and you will be able to sell your coins for their metallic value as you need to. In the case of nickels, they won’t have to be assayed. They are marked and it is obvious what they are. Their metallic content is common knowledge. There is no down side with nickels. If nothing else, you have gotten your money out of computer digits and you are holding it in tangible form for the coming banking crisis. It just so happens that you got full value for yours in incorruptible metal form with a picture of one of the less offensive presidents stamped on the side.
Internet tax bill targets all digital downloads
The U.S. Senate is set to vote Monday on a tax bill that would levy new fees on people who download digital products including movies, music, apps, and even WordPress themes.
This chart, compiled by the Download Fairness Coalition, shows which states in 2012 taxed e-books, music, movies, software, and other digital downloads. In California, New York, Illinois, Massachusetts and other green states, those digital downloads are tax-free -- for now.
(Credit: Download Fairness Coalition) Update: The Senate late today passed the bill, sending it to the House.
The U.S. Senate is planning to vote Monday to levy new taxes on mobile app developers, cloud computing services, music and movie downloads, and even people selling collections of WordPress themes.
Senators who are backing the legislation known as S.743 describe it as a way to force out-of-state retailers to collect taxes on physical shipments. Sen. Mike Enzi, R-Wyo., claims his bill will "put local and Main Street retailers on a level playing field with their out-of-state and online counterparts."
What Enzi and his Democratic allies don't like to mention is how the fine print of the bill -- expected to be approved in a vote scheduled for late Monday afternoon -- also imposes a new tax regime aimed at companies producing downloadable software or Web services.
"If I'm making an app and I'm distributing the app for $3, then I've got to collect 18 to 25 cents in sales tax," says Steve DelBianco, executive director of NetChoice, which counts eBay, Facebook, Yahoo, and LivingSocial as members. "The cost of collecting that exceeds the revenue you're actually sending to the state."
In an unusual twist, companies in the tech centers of California, New York, Maryland, Massachusetts, and Illinois, will be the hardest-hit if S.743, also known as the Marketplace Fairness Act, is enacted.
That's because those states treat digital goods as non-taxable, meaning startups, individuals, or companies with offices only in those states don't need to worry about collecting sales tax. But if S.743 becomes law, any business of a reasonable size selling digital goods to the 24 states that have decided to tax them must collect sales taxes and comply with audits from up to 600 taxing jurisdictions.
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Americans for Tax Reform sent a pointed letter to Enzi's office saying: "In terms of digital goods, like apps and music, who is responsible for remitting the sales tax: the vendor, an app store or sales platform, or the creator of the digital good?"
A spokesman for Enzi, whose home state of Wyoming does tax digital goods, did not respond to queries from CNET on Monday.
Pete Sepp, executive vice president at the National Taxpayers Union, says the decision by S.743's authors to levy digital taxes "only fuels growing suspicion among taxpayers that the legislation has little to do with 'simplification' and lots more to do with grabbing additional cash for governments."
Monday's Senate vote on S.743 caps years of lobbying by the National Retail Federation and the Retail Industry Leaders Association, which represent big box stores including including Walmart, Target, AutoZone, Best Buy, Home Depot, OfficeMax, Macy's, and the Container Store. President Barack Obama also supports the bill, his spokesman said last month.
Opposing them is a coalition called True Simplification of Taxation, which includes the American Catalog Mailers Association, the Direct Marketing Association, NetChoice, and the Electronic Retailing Association. Conservative groups have largely opposed the bill, and eBay CEO John Donahoe has rallied his sellers against S.743, saying: "This legislation treats you and big multi-billion dollar online retailers -- such as Amazon -- exactly the same... Those fighting for this change refuse to acknowledge that the burden on businesses like yours is far greater than for a big national retailer."
"At the end of the day, each state will decide for themselves what is or is not taxable," says Jason Brewer, vice president of communications for the Retail Industry Leaders Association, referring to digital downloads. "This bill doesn't push a state in either direction -- it leaves that decision to governors and state legislators that are accountable to the voters."
Senate Majority Whip Richard Durbin (D-IL) (left) touts S.743 during a press conference on Capitol Hill last month. Sen. Mike Enzi (R-WY) is second from the left.
(Credit: Getty Images) A national push toward taxing digital downloads started in 2006, which CNET documented in a special report.
At that time, only 15 states and the District of Columbia taxed downloads of music, movies, e-books and other digital goods. By 2008, the number had climbed to 17 states. As of last year, that number has grown to 24 states, though not all tax all types of digital goods the same way.
"Six years ago, when the trend started to take shape, it was an effort to impose taxes on movies, music, books," says Stephen Kranz, a partner at McDermott Will & Emery who follows this issue. "Over the last few years, the state legislative proposals have gotten broader and broader. Now some states are looking at taxing the whole digital world."
In some cases, tax collectors have creatively reinterpreted their state law to levy digital download fees without the legislature acting. One example: Washington state law taxed computer software, which tax officials then interpreted to include music, movies and e-books, part of a trend that alarmed (PDF) a committee of the bipartisan National Conference of State Legislatures.
S.743 does include an exception for business that make under $1 million a year in revenue. But many small businesses can exceed that, and companies and individual sellers would be subject to audits by dozens of states. Businesses would also have to figure out how to handle the complexity of integrating as many as 46 state government-supplied software packages into Web ordering systems, as well as complying with rules specified by American Samoa, the U.S. Virgin Islands, the Commonwealth of the Northern Mariana Islands, and nearly 600 U.S. government-recognized Indian tribes.
It's unclear what fate S.743 will face in the House of Representatives. Last year, a House committee approved Texas Republican Rep. Lamar Smith's H.R. 1860, a bill that took the opposite approach by limiting the taxation of digital downloads. But that measure never received a floor vote.
The current legal and political landscape was shaped by a 1992 case called Quill v. North Dakota, in which the U.S. Supreme Court ruled: "Congress is now free to decide whether, when, and to what extent the states may burden interstate mail order concerns with a duty to collect use taxes."
Under the Quill ruling, out-of-state retailers generally don't have to collect taxes. One exception to that rule is a legal concept called "nexus," which means a company can be forced to collect sales taxes if it has a sufficient business presence. That's why Amazon.com wasn't required to collect sales taxes in California until recently, and why Apple -- with physical stores or offices in many states -- has long collected tax on nearly all sales.
NetChoice's DelBianco says that if S.743 becomes law, states that aren't home to many companies offering digital downloads will have a strong incentive to tax them -- an easy way to boost state revenues without encountering local opposition.
"You've made it all but irresistable for states to tax more and more goods and services," he says.
http://news.cnet.com/8301-13578_3-57583085-38/internet-tax-bill-targets-all-digital-downloads/?part=rss&tag=feed&subj=News-PoliticsandLaw
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