Dealers Say NY Dems’ Push to Tax Precious Metals is Fool’s Gold

New York Public News Network | By Jon Campbell

If you buy a candy bar in New York, you pay a sales tax. If you buy a solid gold bar, your purchase is tax-free.

That doesn’t make much sense to Democrats in the state Senate who are pushing to repeal a tax break that’s been on the books for 37 years — a move they believe could boost the state’s coffers by hundreds of millions of dollars a year.

New York does not charge tax on the sale of bars and coins made out of gold, silver, platinum and other precious metals that are purchased for investment purposes, which are known as bullion. It’s far from alone: At least 40 states have a similar tax exemption, according to the National Coin and Bullion Association.

Now, Senate Democrats want to restore the bullion sales tax as part of ongoing negotiations over the roughly $260 billion state budget. But they’ve run into opposition from Gov. Kathy Hochul’s administration and gold dealers across the state who argue it could destroy New York’s thriving market by pushing sales to other states — or even overseas.

“The real issue is if people have to pay 8% sales tax, that’s far more than we would make,” said Geoffrey Demis, a co-owner of Ferris Coin and Jewelry in the Albany area. “And the result is our customers, they’ll just go to neighboring states. They just won’t make any bullion purchases in New York.”

The tax break dates back to 1989 and applies to bullion sales of at least $1,000.

Then-Gov. Mario Cuomo and state lawmakers approved it at the request of then-New York City Mayor Ed Koch, who argued that similar tax exemptions in Rhode Island and Delaware allowed those states to take a chunk out of what had been the city’s dominance of the sale and storage of gold and silver.

The bill’s sponsor — the late state Sen. Owen Johnson, a Republican from Long Island — argued bullion should be treated the same as other investments, like stocks, securities and futures. At the time, 15 states had similar tax breaks and the number has risen steadily since.

He also argued that exempting precious metals would lead to an increase in storage fees in New York, which are subject to sales tax. Storage in a private vault in New York City’s Diamond District today costs about 0.35% of the gold’s value annually.

These days, state Sen. Andrew Gounardes of Brooklyn is leading the charge to reinstate the sales tax on bullion sales. In New York City, the tax is 8.875%; in other parts of the state, it’s between 7% and 8.875%, depending on the county.

The Democrat said he came across it when he was reading the state Department of Taxation and Finance’s annual tax expenditure report, which estimates the exemption cost the state about $600 million last fiscal year. That’s a big jump from prior years, in part because the price of gold has more than doubled since 2024 to its current price of nearly $4,700 a troy ounce, the unit of measurement for precious metals.

One troy ounce of gold is roughly the size of a thicker silver dollar.

“It just blew my mind that in this day and age, people who buy gold get a tax break,” Gounardes said.

The state Senate included a series of tax hikes in its state budget proposal last month, including a repeal of the bullion tax break. Assembly Speaker Carl Heastie, a Bronx Democrat, signaled he might be open to supporting it, too.

But gold-and-silver dealers say lawmakers would be making a major mistake.

Among them is Demis, who carries a variety of bullion in his shop a few miles from the state Capitol that dates back to 1930. His inventory varies from a 1 gram gold piece that’s about the size of a thumbnail, to coins with maple leaves or eagles or President Donald Trump’s face on them, to larger bars worth thousands of dollars.

Demis said bullion is a volume business and dealers generally work on a 1% to 2% margin. Charging a sales tax would destroy the business model, he said. And bullion sales, much like stocks, are taxed as income if they sell for more than the original purchase price.

Scott Hunt, president of Jack Hunt Coin Broker, a major supplier based in the Buffalo area, said bullion has grown in popularity in recent years and should be treated as any other investment. Some investors buy gold and silver to hedge against the markets, he said.

“Just like someone would say, for instance, buy a share of IBM or invest in a bond, you’re purchasing the item hoping that somewhere down the road you earn a return,” Hunt said.

The gold dealers have also circulated a memo to lawmakers, arguing that the Tax Department’s $600 million cost estimate for the tax exemption is inflated.

Lawmakers will need Hochul on board if they’re going to repeal the tax break. So far, there’s little sign she’s amenable to it.

Blake Washington, Hochul’s budget director, raised concern about unintentionally roiling New York City’s gold market — which is one of two major global markets, along with London.

The New York City market is largely focused on gold futures contracts, which are not subject to sales tax. London’s market, meanwhile, has a bigger focus on the sale of gold bars and other physical bullion.

But there are times where that can shift. Last year, for example, The Wall Street Journal reported banks were shipping gold from London to New York in large quantities when Trump took office threatening tariffs.

“Any person that’s in my position should be very wary of tinkering with a program where you’re in a global competition where the asset is highly movable,” Washington told reporters last week.

Gounardes’ proposal, meanwhile, takes steps to try to mitigate the potential negative impact of repealing the tax break.

It includes an exception for any purchases and sales by the federal government, central banks or foreign governments. That’s designed to account for New York’s status as a major storage center for gold owned by governments and central banks, with the Federal Reserve Bank of New York housing an estimated 507,000 gold bars weighing a combined 6,331 metric tons in a vault on the basement floor of its main office in Manhattan.

The senator held a video call with gold dealers from across the state late last month, including Demis and Hunt. He heard them out, and all sides said the call remained civil.

But Gounardes said he’s undeterred.

“Anyone making these investments, anyone making these purchases, we think they should be subject to tax,” he said. “If I have to pay tax on a pencil case for my kid’s school, why shouldn’t someone buying a Glenn Beck gold coin have to pay tax?”

Hochul and lawmakers continue to negotiate a state budget, which was due April 1. They’ve passed a pair of short-term extenders that ensures state employees will be paid through Monday, buying them extra time.

Image: Geoffrey Demis, co-owner of Ferris Coin & Jewelry near Albany, reaches into his bullion display case at his shop a few miles from the state Capitol. (Jon Campbell/New York Public News Network)