“Big Brother” And The Coin Collector

Published by Larry on Tagged Coin Collecting Basics, Instuctional

Back in the early 70’s I was a high school contemporary literature teacher and one of my favorite books to teach was George Orwell’s 1984. George introduced us to Big Brother who watched over every aspect of our lives. 1984 came and is well past us, but Big Brother is very much alive in the 21st century. Our government’s ever growing squad of enforcers and regulators are constantly peeking over our shoulders, and getting right into all of our financial activities. Computers have become the biggest weapon in Big Brother’s arsenal and coin collectors and dealers need to wary of his actions.

Computers have revolutionized the entire coin industry even to the users of metal detectors to find coins and build coin collections. Almost all new detectors are computers and these units are having a very positive impact on treasure finders, both land and sea users. Computerized trading has greatly facilitated coin trading too. The power of computers to help buyers “see” the coins, makes purchasing from dealers all over the world, a reasonably safe “sight-unseen” buy. Computers are now also being used in the grading of coins. However, the impact of computers on the coin business is a two-edged sword. In the hands of Big Brother, regulation of the coin business is having a very negative effect on coin marketplace activity. The Internal Revenue Service, and other government agencies, are using computers to look right into our bank books and actually view our receipts for every transaction made. Buying or selling becomes a risky business as coin purchases can be subject to several of “BB’s” reporting requirements. Here is an example of one of these regulations that pertains to making cash transactions:

Each person engaged in a trade or business who, in the course of such trade or business, receives more than $10,000 in cash in one transaction (or two or more related transactions) must file form 8300. For example, multiple receipts of cash from any person which in any one day total more than $10,000 should be treated as a single receipt (and therefore reportable).

Another IRS regulation requires bullion dealers to file a Form 1099-B on each transaction covered by contracts of the Commodity Futures Trading Commission (CFTC). Although it was intended to regulate transactions involving precious metals in bullion form, “BB” has interpreted it to cover sales of bullion type coins as well. As a result, potential buyers have become cautious. This has dramatically hurt both marketplace activity and values. Big Brother is in control of the reins and this galloping stallion in the business world, has been slowed down significantly. What’s next Big Brother?