Question: I have read several articles about the shrinking dollar in relation to the euro. My son will be studying in Italy next year, and he posed this question: If you took gold bars and sold them to a reputable bank in Italy, could you establish an account, thereby increasing your ability to buy with the euro?
Answer: Well, you could, but you would need to weigh the hassle factor.
FOR THE RECORD:
Taking money abroad: Sunday's On the Spot column in the Travel section said you may not take more than $10,000 out of the U.S. You may take more than $10,000 if you declare it to U.S. Customs and Border Protection. —
Carrying gold bars isn't necessarily feasible. For one thing, they could raise suspicion at airport security. A brick-size gold bar, said Nico Melendez, a spokesman for the Transportation Security Administration, might look like a weapon. If the TSA won't let you take water through security, do you think it's going to let you take a brick of gold?
In a subsequent conversation with Kazmark, she said her question was actually geared to Krugerrands, the gold South African coins that people buy for investment. Ah, better, but they might raise suspicion as well; you may not, Melendez said, take more than $10,000 out of the country, so a pile of Krugerrands might set off alarm bells.
But suppose you did manage to get these through the security checkpoint (because, let's face it, you'd be insane to risk putting these in your checked luggage). You could certainly open a checking account in Italy -- but not without the requisite red tape.
"To open an Italian bank account, you must first file for a codice fiscale, which is the equivalent of a Social Security number or personal tax code," said Lisa Byrne, owner of www.ItalyPerfect.com, which specializes in vacation rental homes. "If you actually succeeded in getting to Italy with gold, I don't think the average U.S. traveler would be successful in just showing up at a bank, gold bars in hand." Byrne lived in Italy for several years and travels there frequently, so she has expertise in practical money matters.
For financial expertise, we turned to Jay Prag, a professor of economics and finance at the Drucker School of Business of Claremont Graduate University. "If you buy gold in any major country and sell it in another country, you will end up with a break-even transaction," Prag said. Gold is gold. You won't get more in euros than you will dollars.
It's when you make the transition from dollars to euros that any traveler feels the bite, but unless you're dealing in hundreds of thousands of dollars, the difference probably isn't going to be worth it, pound for pound.
Yes, the dollar is sagging against the euro, and some say the worst is yet to come. But there are better ways to hedge your bets, Byrne said. Among her suggestions:
* If you're a student, take cold-weather clothes with you; don't buy them there.
* Use prepaid calling cards, Skype or another voice-over-Internet protocol service to call home and save big bucks.
* If you need some furnishings, such as lamps or linens, in Rome or Florence, grab a cab and head to IKEA, where those items are available at a fraction of what you'll pay in regular Italian stores.
Ultimately, those money-saving tips may be worth their weight in gold.
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