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SOVEREIGN MAN

One very strange use for silver coins

Silver coins

October 4, 2012
Santiago, Chile

“Corruptissima republica plurimae leges. [The more numerous the laws, the more corrupt the state.]“ -Tacitus, the Annals ca. AD 69

The nature of what is ‘legal’ has become a truly bizarre concept these days. Developed nations of the west have hundreds of thousands of pages of rules, codes, regulations, laws, decrees, executive orders, etc., many of which are contradictory, archaic, and incomprehensible.

Across these ‘free’ nations, the law is selectively enforced, selectively applied, and completely set aside whenever it pleases the state. As such, even the most harmless of activities (operating a lemonade stand, collecting rainwater, etc.) can be cast as illegal… while the direct theft of people’s wealth through taxes and manipulation of the currency is considered legal.

There is no morality anymore in the law. And even still, whatever few activities may still be considered ‘legal’ are subject to consequences if the enforcers simply decide they don’t like it.

I have a good friend you might like to hear from on the subject; his name is Jake Lawless (an assumed pen name for reasons which will become obvious), and he is a bit of a master when it comes to skirting the line between what’s legal, and what they just don’t like.

In Jake’s words:

I’m a beneficiary of mortgage brokers who believed that housing prices would rise forever. The US real estate crash, plus high gas prices, forced a lot of people to sell their luxury vehicles… and the sudden glut caused prices to fall dramatically.

I didn’t think much about the market for pre-owned luxury cars until one day an engine fire from a cracked turbo manifold in my truck left me stranded. After a day’s search, I found a beautiful car for sale in Nevada, and the asking price was a fraction of the pre-crash peak.

I then contacted the dealer, wired a $500 deposit, and bought a ticket to Las Vegas… all after explaining that I wanted to purchase the vehicle with pre-1965 US quarters.

You may know that, before 1965, many US coins had a very high silver content. As such, they had intrinsic value… real worth, completely independent of “faith” or “because we decree it thus.”

I put roughly 4,000 of these quarters (~$1000 of face value) in a carry-on bag and headed to the airport. The quick math is this– 4,000 pre-1965 quarters contains 715 ounces of silver. At the time, silver was about $35/ounce, so 715 ounces was worth $25,000. In other words, every single quarter had a silver content worth about $6.25.

At the airport, I played my part in security theatre, dutifully removing my shoes after heaving my luggage onto the conveyor. There was a flurry of activity on other side of the x-ray machine. A crack TSA operative stormed up, indignant. “WHOA sir…I have to inspect your luggage.”

Mind you, there is no law against transporting 54 pounds (24.5 kg) of quarters onto an airplane, but that didn’t seem to matter. He just didn’t like it. The TSA guy opened my luggage to find a ziptied cloth bag labelled “$1000″.

“What’s this all about?”

“That’s a bag of quarters. I’m on my way to Vegas,” I said, showing my boarding pass. “I have a system for playing the slots.”

“Wow… will you go through all these?”

“Heck, no. I plan on coming back with even more. I told you, I’ve got a system. I can’t lose!”

“Can I cut the zip tie off and have a look?”

“I’d rather you didn’t, unless you have another zip tie…I don’t want 4000 quarters rolling all over the plane.”

TSA guy demurred. “Oh, ok. Well, good luck. Hope you win big!”

Upon arrival to Las Vegas, the dealer picked me up and drove us directly to a coin shop. I gave him the coins, around $1,000 in face value, and he handed them to the clerk who promptly issued a check for roughly $25,000 made out to the dealer.

It was a legitimate swap– $1,500 worth of legal tender changed hands (my $500 original deposit plus another roughly $1,000 in face value of the pre-1965 quarters), plus value-for-value was bartered between two grown adults.

I drove away with a bill of sale for $1,500, which I then submitted to my state DMV authorities as a basis for them charging me a vehicle tax. Frankly, I think this is highway robbery. Why my state has its hand out every time two individuals conduct a private transaction is beyond me.

But what can anyone do about it? Lobby the state legislature? Rock the vote? Protest… and hope we don’t get arrested, beaten, or shot by those sworn to protect and to serve? Give someone at the DMV a stern lecture about economic freedom?

Trying to change this system is a waste of resources. It’s a race that everyone will lose. Besides, you could spend your whole life lobbying to change one law, and by the time you succeed, they’ll have already passed another 10,000 new, even dumber laws.

Fact is, no one can do anything about this. Just like nobody can prevent Ben Bernanke from dropping money from helicopters. We can’t stop the price rises from monetary inflation, we can’t stop out of control spending (and theft) at all levels of government.

What we CAN do is take sensible steps to protect what’s ours… and then use their own stupid rules against them. It’s a much easier way to win.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • Rock

    I always enjoy your newsletter, but this one really hit it out of the

    park. I would really like to see more like this one. Thank you for all

    the great info.

  • Miguel D’Anconia

    Absolutely brilliant!!!!!

  • Deviant Lycan

    Couldn’t you do the same thing with Silver Eagles? They are stamped as one dollar and a one ounce gold coin is stamped as $50.

    • http://www.amazon.com/dp/B006JPC6ZM Krakondack

      Those coins have a “tilde” in front of the nominal amount, indicating “approximately”. That’s a loophole they might cite if they had to. Those old quarters have an undisputable face value.

      • anon

        Good to know sir. I did not know that at all!

      • bubba

        no they don’t!

      • http://www.amazon.com/dp/B006JPC6ZM Krakondack

        I can assure you AGEs do. I’m holding one right now.

      • http://www.facebook.com/matt.tanous Matthew Tanous

        The Platinum coin doesn’t have the tilde. Just a straight “$100″. See for yourself: http://www.usmint.gov/mint_programs/american_eagles/index.cfm?action=american_proof

      • http://www.amazon.com/dp/B006JPC6ZM Krakondack

        Interesting. I’m only used to gold and silver coins, which all do. But I don’t get why those do and platinum doesn’t.

    • Ron

      you pay more for each coin (about $2.75 per eagle right now). Junk silver is the cheapest silver to own.

  • TIM

    Awesome article!

  • http://www.facebook.com/rkentesqva Richard Kent

    Sorry. There is a term for this, “tax fraud.” For good reason.
    Read and heed:
    http://www.michigansilverback.com/2009/06/endangered-specie-when-gold-money-isn_762.html
    This guy used $50 gold pieces (in fact, 1/2 oz coins nominally denominated “$50″) to pay his employees as a tax dodge. It didn’t work; he got 15 years hard Federal prison time and another woman got five months. http://www.lvrj.com/news/las-vegas-woman-gets-prison-time-for-role-in-tax-evasion-scam-102938379.html

    • Luxomni

      There is one minor difference Silver eagles and Gold Double Eagles are tokens. The silver quarters are quarters – they are still face-value legal-tender currency. A seller can give a discount for any reason, say for example he wants Pennsylvania quarters for his collection or he just likes the look of the buyer.
      OTOH, the Federal Government has argued (and won in court) that they should only have to reimburse someone for a (ill-gotten gains) confiscation reversal of gold coins at face value. That is what the judge meant by “having it both ways”.

      • http://www.facebook.com/rkentesqva Richard Kent

        Good point, Luxomni. Are you willing to risk 15 years in the federal slammer to defend yourself doing this? If so, knock yourself out.

      • Luxomni

        A quarter is a quarter. Legal tender cares not what it is made of. Take a silver quarter to the bank. They will give you two dimes and a nickel for it without batting an eye. If someone else finds it more valuable, that it in the eye of the beholder. People already buy certain state quarters for far more than 25¢.

      • http://profile.yahoo.com/Z6W2EXSSTWMESVANHOIZF4FGMM Phever

        And you can also play it that way with the bank.

        If you buy a roll of quarters and it happens to have 4 silver quarters within that $10 roll, the bank does not expect you to give them any more than the $10 on the wrapper . . .

      • Jeff Anderson

        Because might makes right? You are a tool of your overlords. Most of us don’t risk it because the state holds the monopoly on force in society. Doesn’t make it anything resembling moral, though, does it?

    • Jeff Anderson

      Tax is theft, a mala in se true crime. Tax avoidance, or even evasion is mala prohibitum, or made up crime. One is really wrong, while the other is only wrong because they say it is. So, in this case, we can’t even say two wrongs make a right, because only the theft is truly wrong.

    • David Kachel

      Isn’t it amazing how many morons can be convinced by government gibberish that attempting to avoid having your property stolen is somehow fraudulent!
      Say, idiot, I bet you think that if you kill someone while they are in the act of attempting to kill you, you are a murderer! And if your wife jumps on your bones, I bet you are a rapist too! I know for sure you think that if I want my freedom back I must be a racist!

      • Jeff Anderson

        Hear, hear!
        I try not to go too hard on them, because they simply need to learn to apply principles consistently. They need to recognize that you cannot conflate Legal with good, right, or moral. Likewise illegal does not equate to bad, wrong, or immoral. Legality is a suit tailor made for the tax feeder. It veils the immorality and impropriety of the state, while subjecting the taxed to arbitrary standards set by the state. The king has protective robes and armor while the commoners are left naked, or at best, with threadbare garments.

    • Ron

      The article in Nevada that I saw the guy won in court-jury trial, no lawyer. Same one? Also, I don’t pay capitol gains on selling my G&S coins under the coinage act. Not fraud.

  • UncagedGaming

    This is really cool. I agree with you 100%

  • Dan

    Does the dealer pay income tax on $1,500 or $25,500?

    • Seth Murray

      No. The dealer had no “income” in the exchange. He received $25k worth of silver, and paid out approximately the same amount.

      • Jeff Anderson

        I think the reference is to the sale of the car. He is asking if the selling price was $1500, or $25500? In which case, the bill of sale was for $1500. The dealer, just happened to make a related sale of silver at the same moment. He will probably show a loss on the car, and realize a tax advantage, but could be liable in the eyes of the state for tax on the sale of silver.

    • http://profile.yahoo.com/Z6W2EXSSTWMESVANHOIZF4FGMM Phever

      What the dealer pays in income tax partially depends on what his cost basis is in the vehicle he sold. It would not make sense for him to pay the income tax based on $25,500 on a vehicle he bought for $14,500. His only tax liability is a percentage of the difference between the cost of the vehicle (what he paid for it) and the sales price of the vehicle. That might turn out to be a loss considering he sold it for “$1,500″ according to the bill of sale. But then he would pay tax on the silver coins he sold. But that tax might be at a lower rate and he still come out smelling like a rose!

      The dealer is likely incorporated (for among other reasons, asset protection), and unlike private parties, corporations and other entities pay taxes based not on income but on profit and/or losses. If you make one million dollars and spend one million dollars, you still have a tax liability. If a corporation or other entity makes one million dollars and spends one million dollars (all on logical and justifiable expenses that are not “cheating the system” in any way), they break even and therefore have no tax liability because they did not make any profit.

      Another thing is, the answer is partially depending on whether the dealer “sold” the coins using the same corporation or “entity” that he used in order to buy and sell the car. It might be that he has an established relationship with the coin dealer the coins were sold to that is under a separate entity.

  • the Texian

    We were not told where “Jake” got the 54 pounds of pre-1965 quarters, but I know he probably paid much more than nominal value (face value) for them. It seems that his only financial benefit from his elaborate scheme was the lowering of his annual DMV tax on the luxury automobile. However, that benefit was lessened by the financial costs (airfare, hotel, etc.) of carrying out his scheme. A different kind of price was exacted by the TSA: Jake was bullied, humiliated, stressed, and subject to potential property loss. These “prices” resulted from Americans’ loss of much personal liberty. Past generations of Americans did not tolerate unconstitutional actions by federal agents ,and probably they were conscious that the U.S. Constitution mandates that the U.S. government shall make “only gold and silver coins to be money” (Art. 1, Sec. 10).

    • Jeff Anderson

      He probably bought them some time ago when the spot price was significantly less than the current value, so likely, he avoided some inflationary loss in his money. He didn’t just avoid handing over a larger cut to government theives in taxes, he beat their inflation game to a certain extent too.
      Also, The Con-stitution only says the “States” are limited to coining gold and silver.

    • paulthecabdriver

      “Past generations of Americans did not tolerate unconstitutional actions by federal agents”…. Wrong my friend, which is why we are in the mess we are in.No one protested when Washington committed treason by attacking Pennsylvania with an army (Whiskey Rebellion) No one arrested Adams when he passed the Alien and Sedition Act…. No one hounded Jefferson from office for the Louisiana Purchase (unconstitutional because no where is the FedGov authorized to purchase land in this manner)…. From the BEGINNING the Constitution has been a very bad joke, and the butt of the joke is the American people. Either the Constitution has authorized such as government as we now have, or it was powerless to prevent it. In either case, it is unfit to exist.

      • Jeff Anderson

        Lysander? Is that you?

    • http://profile.yahoo.com/Z6W2EXSSTWMESVANHOIZF4FGMM Phever

      When is the last time you’ve gone to the bank and asked for $500 worth of dimes or quarters?

      Well, I found a few silver dimes just last week, just by obtaining rolled coins while I was already at the bank for something else when I sorted through them! I wouldn’t recommend this for someone looking for 4,000 silver quarters all at once, though. It would take an awful long time to accumulate that much silver coinage in a short amount of time. But it is not impossible to still find the older coins wrapped in with the new ones. And the thing is, in the case of silver coins they are very easy to spot when mixed in with the newer ones made today. If he has been doing this systematically every time he needed to visit a bank for another transaction it is a logical assumption that he could have actually “paid face value”.

      And besides, not everybody goes to Las Vegas to gamble. Some people prefer the weather there in part of year. (Still others find some of the most wondrous yet inexpensive treasures in the pawn shops in the downtown area pawned by people who lost their “assets” in the casinos and had to sell those assets on their way to the bus station to buy a ticket home!)

      Or, if you’re truly a business-minded person, you will head for the downtown area and then catch a cab to the nearby “expedite-only” office of the Nevada Secretary of State (which is only about a 5 minute cab ride away) and file a few Nevada corporations while you’re there, to hold onto for future sale to someone else and make back the money on your trip when you sell it . . .

      Just food for thought.

  • Dave R

    a guy paid his employees with $5 face value gold coins (from US Mint) and they paid income tax on face value. The IRS sued and laost. The judge said’you can’y have it both ways’ GOOD!! Dave, forward-usa.org

    • http://www.facebook.com/rkentesqva Richard Kent

      No, the guy went to jail. Google it.

      • Ron

        And he won on appeal

      • http://profile.yahoo.com/Z6W2EXSSTWMESVANHOIZF4FGMM Phever

        Yeah, he might have gone to jail, but according to the Google on MY computer it wasn’t for paying the employees in gold. It was because “he also stopped filing tax returns and withholding taxes from employee pay.”

        By the way, earlier juries had exonerated him!

        This is the same crime the IRS has more recently charged Lauren Hill of, willful failure to file.

        Want more details:

        Check it out here:

        h t t p://bobhurt. blogspot(DOT)com/2011/03/why-dollar-is-dollar.html

        (be sure to remove spaces and all, this blog doesn’t like links for some reason . . .

      • http://profile.yahoo.com/Z6W2EXSSTWMESVANHOIZF4FGMM Phever

        Here’s something else to think about. The US Postal Service is attempting to lull Americans into the exact same situation.

        How?

        The last time I bought a first class postage stamp, there was no denomination listed on it. Instead of a value denoted in dollars and/or cents, it just said “forever”. That means it will still get a letter sent anywhere in the USA 10 or 20 years from now, no matter how much I paid for it (if the USPS manages to stick around that long . . . considering their defaults and deficits lately, that’s somewhat of a gamble!)

        In other words, today I can pay 45 cents for that stamp. If during any future postage increases the price of mailing a first class letter goes to $1.25, or even $15.00, I’m still good by just sticking that one stamp on my letter as long as I am mailing a first class letter anywhere inside the USA.

        Other than the fact it’s not a currency, I don’t see how this is all that different from having or obtaining legal tender marked with a value of 50 dollars. Like it says, a dollar is a dollar (or in my case, a first class letter stamp is still a first class letter stamp in the future). If the US government can spend north of 6 cents to manufacture every nickel then what’s the difference with American taxpayers spending north of $1,500 to obtain a $50 gold piece if they must? (And who’s to say these people did? We don’t know WHEN they bought their coins!)

        The tilde thing is interesting, as I cannot help but wonder why the “dollars” was spelled out on the gold coin but not on the platinum coin. The dollar symbol (which originally comes from Spain, I might add) on the platinum coin looks like it was used simply because there is not enough room left to spell out “dollars” on the platinum coin and still have the coin design work out the way it is. But they could have just as easily put a dollar sign on the gold piece instead of spelling it out . . .

      • http://profile.yahoo.com/Z6W2EXSSTWMESVANHOIZF4FGMM Phever

        Yeah, he might have gone to jail, but according to the Google on MY computer it wasn’t for paying the employees in gold. It was because “he also stopped filing tax returns and withholding taxes from employee pay.”

        By the way, earlier juries had exonerated him!

        This is the same crime the IRS has more recently charged Lauren Hill of, willful failure to file.

        Want more details:

        Check it out here:

        h t t p://bobhurt. blogspot(DOT)com/2011/03/why-dollar-is-dollar.html

    • Joe Spoof

      Why would anyone want to be a U.S. Citizen? Dave Redick is a bit confused or needs to go back & read the law books…You cannot be a man and a fiction at the same time…

  • GoneApe

    Good move.

  • http://www.facebook.com/profile.php?id=550948980 Kent Cowan

    I’ve been suggesting the same since 1992, when we called it “freedom gold”. You can also make it so the person you’re buying from declares a loss on his taxes. Most everyone we talked to about it said it wouldn’t work, though my partner in freedom used this method a number of times (I never did).

  • wa_state

    This cleaver way of reducing the sales tax won’t work in washington state. When you buy a car here the agent can force you to pay tax on the price they think you should have paid. They have some magic book that determines what fair market value for the vehicle is while completely ignoring that fact that fair market price is no more or less than what two adults determine it to be. Let alone the point made that they have any business collecting on that transaction in the first place.
    When you got to the clerk she would have taken that $1500 receipt for a car that was a deal at $25,000 and denied the license unless you paid the 9.1% on the “approved” amount.
    Are TSA agents that dumb….nevermind.

  • David

    Of course, in some states (CT and MA that I know of) it doesn’t matter

    what’s on the bill of sale…the tax rate is based on the Blue Book Value!

    So, no matter what, you get the satisfaction of “paying your fair share”

    when you want to enjoy the privilege of “legally” buying, registering, and

    “operating” a motor vehicle.

  • Elise Doran

    Try telling the DMV that you traded something for a car. They will get a deer in the headlights look.
    I traded 2 macaw chicks for a 1960 metropolitan car. Not listed in Kellys blue book

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