I have just used the website of our advertiser www.bullionvault.com for my first trade. I traded out of iShares Comex gold, IAU, at $11.61 from her E-trade account and then used her link on her website to buy physical gold in Zurich, Switzerland, which seemed to be cheaper than US-traded gold. I bought 38.452 grams. The comparable price per oz was $1,147/oz.

This will make my accountant happy. As a result of my responding to the advertiser on our website, he will have to do some work, reporting to the IRS to file Form TD F 90-22.1 - Report of Foreign Bank and Financial Accounts (FBAR).

While BullionVault does not consider itself to be a 'financial institution', the IRS requires those with a financial interest or signature authority over a foreign financial account to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1.

US persons are required to file an FBAR if:

a) The US person had a financial interest in or signature authority over at least one financial account located outside of the US; and

b) The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.

He will not have to file Form 8938 because I don't have enough money with Bullion Vault for that. The Foreign Account Tax Compliance Act (FATCA) requires U.S. citizens and residents to file Form 8938 listing “foreign financial assets” with an aggregate value of $50,000 or more with their annual tax return. While the guidance on the IRS website indicates that if you hold precious metals directly for investment purposes in a foreign country, you are not required to file Form 8938, it does not clearly define what ‘directly held’ means.

When and if I sell my gold at a profit, I may be liable to report and pay taxes whether at the regular income rate or as capital gains. The law is unclear about this but it beats the terms of buying a gold exchange-traded fund, where the tax is at the regular income rate. If my gold stake more than triples in value I may have to also file FATCA assuming the law is not clarified by then.

I had a loss with IAU and presumably could reduce my taxes at the regular income rather than the capital gains rate. However e-trade thinks my trade simply produced a long-term capital loss offsetting capital gains.

I also bought SPDR Gold Shares, GLD, at $115.50 to replace the IAU in the model portfolios. The physical gold, even for a small investor, was cheaper than the either exchange-traded fund.