The Wall Street Journal on silver fund investments and taxes:

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The article by Jason Zweig was in this weekends WSJ, on the front page of the business & finance section. The title was cute enough: "Hi Ho, Silver: Some Fund Investors Could End Up Tarnished."

It discusses major silver funds. iShares Silver Trust was said to hold about 1/3 of all the silver bullion on earth, now worth 16.6 billion. 1/4 of its shares changed hands on just Wednesday April 20th.

The Sprott Physical Silver Trust based in Toronto warehouses its silver at the Royal Canadian Mint, and holders of over $600,000 worth of the metal at current value are allowed to redeem their shares in actual physical bars. An advantage of Sprott is that if you purchase the shares while filing IRS document "Form 8621" your profits will be taxed at the ordinary stock rate of 15%. The other funds will have their profits taxed at the commodity rates of 23% or 28%.

The article does not mention the possible enormous tax advantage of owning these funds in a Roth IRA.

It also does not mention anything about taxes on privately held physical silver bullion, such as our forum members here are more likely to possess, although I presume profits are taxed at commodity rates. Can anyone here please describe tax strategies and tax options for physical bullion holdings?

 

 

[Conder101]

iShares Silver Trust was said to hold about 1/3 of all the silver bullion on earth, now worth 16.6 billion.

A bit of an exaggeration. At $46 an oz that would be around 360 million oz. At one time the US Treasury Dept had more than six times that much in their stockpiles. That would meant that at one times the Treasury had more than twice all the silver bullion on the earth, and that wouldn't have included all the silver held by other governments, in jewelery, and in the coinage held by the earths population. That would account for at least four or five times the total silver bullion on the earth. (And that would be before the last sixty years of mine production.)

[Kamillion]

$48.23 !!!!!!!!

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Thanks for pointing out the whopping flaw in the WSJ information. Am emailing the author now to ask where he got that juicy tidbit of data, and will provide to this forum any reply.

 

iShares Silver Trust was said to hold about 1/3 of all the silver bullion on earth, now worth 16.6 billion.

A bit of an exaggeration. At $46 an oz that would be around 360 million oz. At one time the US Treasury Dept had more than six times that much in their stockpiles. That would meant that at one times the Treasury had more than twice all the silver bullion on the earth, and that wouldn't have included all the silver held by other governments, in jewelery, and in the coinage held by the earths population. That would account for at least four or five times the total silver bullion on the earth. (And that would be before the last sixty years of mine production.)

[e1cnr]

it probably depends on what is considered silver bullion

 

 

the 360 million number is close to what I have seen

 

 

the mining production every year is roughly 600 million ounces

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So far I received only this automated non-answer:

 

"Thank you for contacting me. Because of the large numbers of e-mails I receive, I am not able to respond personally to every message (although I do read them all). I will do my best to answer you as soon as possible if I think I can be helpful. Jason Zweig The Wall Street Journal"

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Okay, glad to report that Jason Zweig has promptly replied by email as follows:

 

According to separate research studies by both The Silver Institute and CPM Group, there is between 1 billion and 1.2 billion oz. of silver bullion above ground. The iShares fund holds more than 350 million oz.

 

The vast majority of the annual mining production is promptly taken up by industrial and other commercial uses (as opposed to storage for investment purposes) and thus does not remain in bullion form. The numbers I cited refer only to aboveground silver in the form of bullion.

 

Thanks again & best wishes/jz

 

Jason Zweig

The Wall Street Journal

1211 Avenue of the Americas , 5th floor

New York, NY 10036

http://twitter.com/#!/jasonzweigwsj

 

(my email to him was as follows: Dear Mr Zweig,

Hi! I enjoyed your silver fund piece in this last weekend's WSJ. But one figure bothers me, and someone else pointed out that it is an absurd claim. It can't possibly be that iShares Silver Trust holds about one-third of all the world's silver bullion, where did that tidbit of information come from? Sixty years ago the US government alone had a stockpile with six times as much silver as iShares does now. What about other governments? What about all the silver mine production since then? And what about the enormous amount of silver in fabricated form such as in jewelry and coinage, doesn't that count? Please let me know, I promised to supply others with any reply you provide. Thanks and best wishes)

 

 

 

 

 

[e1cnr]

The numbers I cited refer only to aboveground silver in the form of bullion

 

 

I still am unsure what is considered bullion

 

 

 

are SAEs bullion? rounds? or just bricks?

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A recent essay by Patrick Heller has pointed warnings about holdings in silver funds, titled: Is Your Silver Really Yours?:

 

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