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I have been following precious metals for a very long time and this is the first I've heard of this law:

Does Your State Prohibit You From Purchasing
Precious Metals Offshore?

By Mark Nestmann

An increasing number of Americans are concerned enough about the threat of precious metals confiscation that they want to store gold or silver overseas. But laws in effect in 21 states may stand in their way.

I learned about these laws a few weeks ago when I received a phone call from a Sovereign Society member in Arizona. He wanted to buy gold from a foreign dealer for storage offshore, but the dealer refused to sell to him. The reason: the Arizona Model Commodities Act.

After some research, I learned that 21 states have enacted the MCA or some variation of it: Arizona, California, Colorado, Georgia, Idaho, Indiana, Iowa, Maine, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oregon, Utah, and Washington.

I looked into the Nevada law, which a lawyer in that state told me was typical of MCAs in other states. Basically, residents of Nevada can purchase "commodities" only under circumstances which effectively exclude having precious metals delivered a non-U.S. storage facility.

The MCA came into existence in the 1980s, after a series of commodities scams in the 1970s. One of the most notorious ones was International Gold Bullion Exchange (IGBE). Beginning in 1979, William and James Alderdice built their tiny jewelry business in Fort Lauderdale into a multi-million-dollar enterprise with over 1,000 employees.

IGBE advertised in The Wall Street Journal, Barrons, and many other respected financial publications. In exchange for discount prices, customers waited three months or more for delivery. But many customers never received anything. When authorities finally caught up with IGBE, much of the gold supposedly stored for customers turned out to be railroad ties painted gold. In the end, customers lost millions of dollars.

With this background, it's not surprising that states acted to protect their residents from commodities scams. But the laws appear to prohibit commodities purchases for delivery overseas.

Fortunately, companies that sell precious metals for storage overseas have developed some creative ways to deal with these laws. One option is for the buyer to use the address of a friend or family member in a non-MCA state. Another is to purchase the metals through an IRA with a custodian in a non-MCA state. A third is to sell the metals to an offshore structure that the buyer controls or is a beneficiary.

Ultimately, though, the lesson of IGBE and similar scams is "buyer beware." Wherever you buy, if you don't take physical possession of precious metals you purchase, make sure that the company you're dealing with is storing real gold, si