I was watching "The Italian Job" over the weekend that basically featured criminals stealing gold from criminals, in the form of Kilo bars to the tune of $50 million dollars. The question that arised here is how easy is it for criminals, or even non-criminals to get large amounts of cash for their kilo bars? At the current spot price of gold, a kilo is over $50,000 (http://www.apmex.com/Category/1160/Kilo_Gold_BarsOnly.aspx). If you went, say, to the Diamond district in NYC, are there dealers who would be willing to buy a kilo bar for cash without paperwork, at a discount? How should the government work to circumvent such transactions? Thanks for anyone on the know on this subject.
Actually, I did a quick check on this and it looks like about a 2/1 ratio: http://www.fivecentnickel.com/2006/02/07/how-much-does-a-million-dollars-weigh/ I would rather have some easily divisible gold coins than a kilo bar. In some parts of the world, such as India, that is the preferred form.
True, but it also takes up a whole lot less space. Maybe 3.0"x1.6"x0.7". Compare that to 5000 $100 bills.
This is a dirty little secret of bullion, the fact it is used to smuggle funds and launder money. The attributes that make it attractive to investors also lends itself to such black market uses as well. This is why sometimes I don't always assume any control over bullion HAS to be governments not wanting us to own it. Sometimes it is, but its at least plausible sometimes these laws are aimed at black market operations. Chris
Thanks for the responses here. I will try to answer my own question. The mystery to me is where does the cash come from in the amounts necessary to buy a kilo or more of gold? I have had trouble getting more than a few thousands from a bank from my own account. I have known people who have also had trouble getting that amount. $10k or more usually triggers some concern with the banks and the government and 8300 forms must supposedly be filled out if you deposit over $10K into an account or if you buy coins or precious metals in cash. Connecticut just had a law go into effect targetted at pawn shops, coin dealers, etc., with new regulations. If I were dealing in large amounts of cash I suppose I would know all the tricks involved here. Who usually deals in large amounts of cash? Banks, grocery stores, drug dealers and the black markets in general--basically transactions where you don't want to leave a paper trail that could be a problem later, and business entities in other countries, the dollar is still the de facto currency in many countries of the world. Remember the pallets of $!00 bills distributed in Iraq to pay off contractors, billions and billions? They won't be required to fill out 8300 forms, nor will those who get those $100 bills. As usual the crooks know how this game works; the rest of us never see the magnitude of cash they are used to dealing in.
I only keep enough in my bank account to pay a month's worth of bills. I would just visit the ATM and do the max withdrawl every now and then over the last couple years. This way I don't have to worry about whether or not they want to give me my own hard earned money when I need it, whether they are on holiday or not, whether they feel it's necessary to do a background check, whether they even have the money, etc. It's not like a 3% return is even going to keep up with inflation. I'm a lot more concerned with a bank stealing my money than anybody else, and I'd rather be the one in control. When I did my large silver purchases in the past I would just spend the extra $25 per additional wire transfer to break it up into denominations small enough not to get flagged. I don't see any need to get a kilo bar since it's not liquid enough for what I want, but anybody utilizing these methods wouldn't have any trouble as long as they planned ahead.
There are definitely dealers in the jewelry district in NYC that keep millions in cash on hand. I have a friend who owns a jewelry factory in a building on west 47th street. These folks keep a lot of cash on hand... but you have to know someone... or know someone who does before you even get in the door. You just cant walk in and slap a bunch of kilo bars down.
Hmm I do suppose for that amount of money it would take a significant amount of time to plan ahead for =) or else a lot of trips to the ATM!
People that launder money, or gold in this instance, do so with people already in the loop. With Matt's NYC jewelry district example, these people would have an in man so as not to raise eyebrows and draw attention. In most cases though these people are trading cash for gold. It's not for investment reasons as much as it's for it's untraceable nature. Guy
These laws do not apply if you use a check. If you are looking to withdraw $57K in cash, that can be pre-arranged with your bank assuming you have the funds. If you are making deposits like this, then the most simple way to handle it is to simply open accounts at more than one bank and split it up. What I am doing with the cash is none of the bank's business. Of course, if someone is involved in illicit activities, then I assume they don't use the banking system at all. With this kind of money it's easy enough to buy a good business safe and conduct busines out of it. BTW, this also applies to about 15+% of the US population anyway. That is 15% of adults in the USA simply don't use banks. They take their paycheck down to the grocery store, use it to buy groceries and take the remainder in cash. After that it is cash and carry. All of the major grocery stores provide this service and mostly free of charge too.
It's not that hard to move large amounts of cash around you just have to be careful about it. Postal Money orders are key. They NEVER expire.
The postal money orders have maximums of $1000. Postal Money Order Limit Though money order is a great and safe service, there are certain negative aspects to this service. Cases of fraud and money laundering have been detected in the money order service. Robbery and certain unethical practices have led to a considerable number of problems and controversies in the past. This has promoted all money order services to levy a money order limit on the amount that can be conveyed. As of 2008, the United States Postal Services maintain limits for the amount. In case of a domestic postal money order, the maximum amount is $1000 and in case of international money order the amount is $700. http://www.buzzle.com/articles/money-order-limit.html The problem with using a quasi-government agency's money order is that the employees are paid to be suspicious even if you are an honest John. They get kick-backs for turning in people; the postal inspectors are tough and wield a lot of power. In any financial decision I make, I want a fully defensible legal position; with the amount of trouble and money necessary to defend yourself if on the government's watch list, "person of interest" list, etc., it simply is not worth it. What I don't understand is why there are not smarter regulations on the big cash boys, such as the Diamond District, and other similar cash districts in the big cities.
Some interesting thoughts in this thread. Just adding my 2 cents; how much would you pay for a kilo bar of gold from a total stranger? There are ways to test gold content, but it seems like a heavily plated tungsten bar would be hard to spot & painful to get caught holding.
This is the major issue with bullion bars versus official mint issued gold coinage. Not only do you have to determine if it is solid gold, but there is also no purity guarantees either on bars of gold. You have to have an assay done for both.
I seem to recall a movie or story where the crooks were trying to figure out a way to move the loot from a big bank heist out of the country. They came up with the idea to buy a very rare block of stamps and simply mail it to themselves...genius! (I'm rather sure they put the stamps "inside" the envelope.
