Liberty Dollar Profit Statement
This document answers the questions about the financial operation of the Liberty Dollar. It is also available in PDF format.
Why isn’t the Liberty Dollar a 501(c)(3) tax-exempt entity?
Good, let's cover the basics. The Liberty Dollar is not a 501(c)(3) tax-exempt entity because under 501(c)(3) the only advantage is to accept donations. And as the Liberty Dollar does not accept donations there is no reason to be a 501 (c)(3). The Liberty Dollar acts like a non-profit by reinvesting all its profits towards its goals.
Liberty Dollar is a private company. Is it audited?
In addition to the warehouse audits, Mr. Alfred J. Wagner, an independent CPA from Philadelphia, PA, has performed a third-party review of the Liberty Dollar's accounting for the first four years. His accounting firm found that all gross income was used appropriately and that there were no irregularities to report. Since Mr. Wagner's initial financial review, the Liberty Dollar has been audited annually by an independent CPA.
Why does the Liberty Dollar operate at a gross profit, anyway? Why not give the money away?
Profit is a necessary component of any ongoing business organization. The Liberty Dollar is based on free enterprise and operates as a business. Because the Liberty Dollar, offers real value, we expect it to exist as a business, operate as a business, and create a gross profit. Our profit is the measure of the value the Liberty Dollar is providing in the marketplace.
So where do the profits go?
Our first response would be, “What profits?” Because of the economics of scale and the fact that the Liberty Dollar's printing & mintage runs are so small in comparison to industry standards, our overhead costs run over 20%. Often, there is not a 20% margin available to cover the overhead. For example: At the current $10 Silver Base, the Liberty Dollar’s cost of goods sold (COGS) for the $1 Silver Certificate is $1.09:
1/10 oz 999 fine silver - $0.50
Printing of $1 Silver Certificate - $0.37
Mintage & Storage of silver - $0.22
Total - $1.09
The $1 Silver Certificate is not only our most popular item; it also loses money. We exchange it for $0.90, and it costs us $1.09 to produce. Luckily, the $5 and the $10 Silver Certificates usually compensate for the losses from the $1 Certificate.
Now let’s look at the one ounce Silver Liberty - the Liberty Dollar's second-most popular item. Sometimes we exchange a single Silver Liberty for $10 USD. In today’s market the COGS for that Silver Liberty is $6: $5 for silver plus $1 minting, when done in volume with another order. On that rare transaction, the Liberty Dollar generates a gross profit. Unfortunately, very few single Silver Libertys are exchanged. Have you ever ordered a single Silver Liberty? Very few people have.
Most people who order Libertys get them at a discount. The pie chart on the next page, entitled “Where the Money Goes”, shows how each $1 in Liberty Dollars in circulation has been distributed, broken down by percentage.
OK, so how does the Liberty Dollar make money and stay in business?
By growing Liberty Associates (LA). It costs $250 to become a new LA and $50 of that is retained for an administration fee, which yields the 20% profit margin the Liberty Dollar needs. Ever wonder why we are so dedicated to helping you sponsor a new LA? Liberty Associates are the lifeblood of the organization and the only way that we will reach our goal of protecting America's money.
The Liberty Dollar organization simply distributes a unique product and generates a gross profit. To be competitive in the marketplace, we operate on a slim margin and run lean, so that every available dollar can be applied to promoting the Liberty Dollar, educating Americans about their money and guiding our fellow Americans to adopt a genuine value backed monetary system. After overhead is paid, all available funds are quickly absorbed by new brochures, additional printing of currency and other operational necessities.
Where does "all" the money go?
In a word: overhead. Do you know who pays when you call the Liberty Dollar toll-free line? Liberty Dollar. Do you know how much we make selling our stickers and brochures? Nothing. Do you know how much our volunteers get paid? Nada! (We do pay our six-person full-time staff, of course.) When you add up rent, electricity, security, staff payments and shipping costs, 29 cents of every dollar goes to overhead! That doesn’t leave much to develop new marketing materials or new products. Then there are always the big office projects like web site developments or modernizing our data systems, which further stretch our financial resources to the max.
Is the Liberty Dollar a scam or a fraud?
Of course not! How could it be? Where is the scam or the fraud? The Liberty Dollar holds no one's money. It does not promise investment. It simply exchanges US dollars for Liberty Dollars. The Liberty Dollar is dedicated to demonstrating the superiority of a value backed monetary system.
But Liberty Dollar just sells silver at inflated prices!
The Liberty Dollar is not “selling silver at inflated prices” any more than your local bar is “selling hops & barley at inflated prices!” Think about that next time you buy a beer using a Silver Liberty. What the Liberty Dollar is in fact doing is offering America a honest monetary system. All currency profits are used towards that goal. The more profit we make, the more work we can do, and the faster we will reach our goal.
What about the 20% Liberty Associate profit? It seems suspect.
The Liberty Dollar puts people first, where money is worth the most. When you’re first in line to get the money, you deserve to get the best deal, and that’s what happens when you become a Liberty Associate. In the Federal Reserve System, the banks are at the front of the line and they make the profits that you don’t see. Ever seen an annual report from a big commercial bank? The profits from LAs don’t even begin to compare with bank profits.
The reality of the competitive marketplace is that a new currency, even a superior one like the Liberty Dollar, will not succeed unless people have a direct incentive to use it. The Liberty Dollar is offered at a discount as an incentive for people to stay active and put more free market currency into circulation. Without this incentive, Liberty Dollar has found that people simply did what was easiest – they kept visiting their bank ATMs for spending cash.
We believe one can either be part of the solution or part of the problem. Please become part of the solution – become an active Liberty Associate and make a profit while protecting you own money - one Liberty Dollar at a time.
Where the Money Goes:
The percentages above are averages from the aggregate of all Silver Libertys and Silver Certificates exchanged. For example, by calculating every dollar ever paid out to an LA divided by the total amount of Liberty Dollars in circulation, the percentage of currency devoted to LA fees is found to be 9%.