Is buying / selling goods for gold / silver taxable? If yes, what's the rationale behind this?
Of course. The rationale is exactly the same as always: profit is taxed. The fact that you use intermediate barter to make that profit is irrelevant.
To clarify, as it seems that you think it makes a difference that no money "changed hands".
Consider this situation:
- You produced item X, which cost you $100 to produce.
- You have 100 of those in stock.
- You priced each item X at $200 in your store.
So far your cost is $10000.
- You sold 100 units of item X to a customer who paid you with gold coins worth $20000. How did the customer come up with the amount of gold? Easy: converted your price for the items based on the current gold spot price, whatever it is.
- You didn't get any $$$, you only got some gold coins, but the value of the gold you got is "accidentally" exactly the same as the value of $$$ you would get had you sold your merchandise for $$$.
How will the tax authority address this? They will look at the fair market value of the barter. You got gold worth of $20000. So from their perspective, you got $20000, and immediately exchanged it into gold.
What does it mean for you? That you're taxed on the $10000 gain you made on your product X (the $20000 worth of barter that you received minus the $10000 worth of work/material/expenses that you spend on producing the merchandise), and that you have $20000 basis in the gold that you now own. If in a year, when you plan to sell the gold, its price drops - you can deduct investment losses. If its price goes up - you'll have investment gain.
But for the gain you're making on your product X you will pay taxes now, because that's when you realized it - sold the merchandize and received in return something else of a value.
What you are doing is barter trade. Most countries [if not all] would tax this on assumed fair value. There are instances where countries may relax this norm in border areas for a small amount.
Barter is not just for gold – one can virtually do this for any goods, i.e. sell garments in exchange for oil, sell electronic chips in exchange for consumer goods, etc. Quite a few business would flourish doing this and not exchange currency at all, hence the need for government to tax on the [assumed / calculated / arrived/ derived] fair value. A word of caution: at times this may not be fair at all and may actually cost more than had one done a transaction using currency.
This isn't new. Even before silver hit $50 in 1980, silver coins were worth 3-4X face value for 'junk' silver.
There were people writing articles on how one could sell their house and specify a lower price, but paid in silver coins. Since silver coins have a face value, it was suggested that this was a legitimate process.
These people also suggested that if you paid your tax bill in silver coins, the IRS won't credit you for for than face value, ergo, the deal was legit.
As littleadv responded, it's barter. And barter is taxable. And once again, "if it quacks like a duck...."