Over the past twenty years, the gold price tends to shine in September. On average bullion has delivered returns of over 3pc, which is by far the best performing month for the precious metal.
Fans say there is a good reason for the trend – September marks the start of India’s gold gifting season.
During September a huge amount of gold jewellery is bought by Indians as gifts for family members during the Diwali festival.
India is the second biggest buyer of gold, behind China, so when India buys in droves the gold price is usually given a short term boost.
As traders know gold tends to perform well in September they are happy to continue buying gold when the price goes up, which drives bullion higher.
“The surge in Indian buying, during the festival period and also for the Indian Wedding season which starts at the end of September, has translated into making September the best month of the year for gold price gains,” Mr Moore said.
Index fund provider ETF Securities, which offers a range of commodity investments, said its gold ETF, which tracks the movements of the gold price, has been its most popular product over the past two months, ahead of India’s festival season.
= Gold price performance since 1994 per month =
Source: ETF Securities
= What is the best way to play gold? =
Another route is through trading platforms such as The Real Asset Company ( therealasset.co.uk ) or BullionVault ( bulllionvault.com ). Through these companies gold bullion can be bought or sold in small units and is stored in secure vaults on owners’ behalf.
Telegraph Money prefers a longer-term approach. Investors can also buy a unit trust run by a fund manager, who invests in both bullion and gold mining companies.
Evy Hambro, who oversees the respected BlackRock Gold & General , is viewed as one of the best gold fund managers around and regularly feaures on broker buy lists.
Other respected funds include S&W Global Gold & Resources and Investec Global Gold .
Investors could also own gold mining shares directly, although this is a more risky strategy.
But investing in gold is not for the faint hearted. When the bullion price and gold mining shares are out of favour they can leave investors nursing significant losses.
The price of gold has had a rocky ride since 2011. Three years ago the gold price was trading over $1,800, but today it has slumped to $1,245.
For the original article go to Yahoo Financial
Here is an excellent article written by Brian Domitrovic and published at Forbes.com website. Even though the article is filled with a lot of technical and legal language, which for me made it a little hard to follow.
It outlines some interesting benefits for Transactions Taking Place In Gold, when it comes to purchasing goods and services. Karatbars International Affiliates should enjoy this.
In 2011, the state of Utah passed a law banning taxes on the use of gold and silver coins as currency and permitting residents to remit state taxes in these coins. Big deal, you might say. That’s already in the Constitution: “No state shall…make anything but gold and silver coin a tender in payment of debts.”
Oklahoma has done something similar, confirming that transactions taking place in gold and silver are free from state taxes on the exchange medium. Currently, in federal law, if you buy things with gold, for example, you have to declare as taxable the gain on any market appreciation of the gold you used to make the purchase.
Actually, it’s not real federal law. It’s just a piece 0f “administrative law,” that poor relation of real law, which an agency, the Internal Revenue Service, came up with outside of the Congressional and the judicial processes. If you look at real law, statutes signed by the president and Supreme Court decisions from over the centuries, it has been affirmed time and again that the feds must consider gold and silver coins and their own paper notes as dollars as denominated, one and the same.
What a delicious opportunity this presents when it comes to taxation. Let’s say the members of a community somewhere here in the USA decide to do all their business in gold. The dollar price of everything would be much less. A $3 latte would go for about ten gold cents, in that the price of gold on the market (circa $1267 per ounce) exceeds that of the official Treasury price ($42.22) by a factor of thirty.
If this community is of decent size, any number of businesses and individuals could make close all their income via gold transactions. Somebody might clear, for example, $3000 in gold income in a year, or $90,000 if translated into paper dollars.
Because of the abundantly established legal precedent for treating gold and paper dollars the same, the maximum subject to taxation would be the $3000, an amount easily eliminated by the standard deduction on the income tax.
The IRS says this sort of thing is “frivolous.” But that’s administrative law again, as in Philip Hamburger’s wonderful new book, Is Administrative Law Unlawful, which of course it is. Freedom of Information Act requests inquiring of the paper-trail within the IRS about how this “frivolous” finding was made have yielded 8,000 pages of internal emails conceding there is no grounds, but let’s do it anyway. A writ of certiorari calling on the Supreme Court to stop this nonsense is in the inbox of the august body.
This information comes care of the yearly monetary summit held last week, in Salt Lake City, of the United Precious Metals Association, a group whose board I am pleased to be joining. The UPMA has a smartphone app with which you can set up a gold account and buy things in gold from all sorts of vendors.
You see the peril in this sort of thing’s spreading. If lots of vendors start taking gold and paying their taxes in Federal Reserve notes, their costs will become something like one-third less than those of their competitors—because these businesses would effectively be free of taxation. If you can transact in a dollar currency medium (gold) that is worth thirty times more than face value, and then pay your taxes in the paper stuff at face value, others will have no choice but to follow your example to stay viable.
Should this little experiment start to gain a bit in extent, it could have the effect of requiring business in this country to cut their taxation costs by arbitraging the gold-note dollar spread that the United States has allowed to emerge over the past century of serious inflation.
Again (and convention commands me to say that I am no tax lawyer), there is no hope in real law. Once you get out of the lame-o world of agency bureaucrats saying that this is the law, and into the statute books and the high court rulings, the Constitutional specifications that gold and silver coins have the same legal tender and denomination status as any U.S. money shine through every time. In the 19th century in particular, this question was litigated profusely, and the equivalence won.
First it was Bitcoin. Now the new kid on the monetary block is the Constitution. The poor U.S. put that gold and silver equivalence thing in there back in 1787. Since 1985, probably against its own narrow better judgment, the government has resumed issuing gold and silver dollar-denominated coins.
Brace yourself, IRS. You guys have been bluffing with “frivolousness,” and that bluff is getting called. The Federal Reserve and the Treasury, of all people, are going to have to clean house to get the dollar sound again against metal. Otherwise (and does this ever sound musical), real federal receipts will start the process of dwindling toward nil.
Farmers in Andhra Pradesh appear to have taken more loans by pledging gold bars and ornaments, than loans from banks for purely agricultural purposes. Some have even diverted the agri loan and bought gold.
According to official records, up to March 31, 2014, farmers have taken loans worth $5.7 billion (Rs 348 billion) by putting up gold as collateral, while $4.2 billion (Rs 257 billion) was taken as crop loans.
In their review meetings, bank officials have noted that a majority of the loans, particularly by pledging gold, were taken by farmers after January 2014. Officials said the reason for this could be attributed to the fact that the interest rate on loans meant for agriculture is far less, than other loans like personal loans, education loans, or home building loans, etc.
Another reason for the rising number of loans was Chief Minister N Chandrababu Naidu’s election promise of waiving off all farm loans after coming to power. This spurred farmers to go all out and take more loans, with some diverting loans, ostensibly taken for agriculture, to actually buy bullion.
Another official added that after Naidu’s announcement on waiver of farm loans, farmers had taken loans unrestrainedly though the agricultural activities were over.
In a major relief to the Andhra Pradesh government and farmers, the Reserve Bank of India (RBI) has agreed to reschedule crop loans. The RBI has written to the Andhra Pradesh and Telangana state governments expressing its willingness to consider rescheduling crop loans, but only for three years including a one year moratorium.
Officials engaged in the loan waiver and reschedulement exercise in both the governments said that the banking regulator had also made it clear to the governments that the gold loans, (by pledging gold), even if taken for agriculture purposes, would not be considered under the rescheduling scheme.
The RBI’s offer falls short of the government’s demand for a 5 to 7 year reschedulement period for all the loan dues, including gold loans. The Andhra Pradesh government has written a letter to the RBI post this decision, specifically asking for extending the relief to gold loans as well.
State Finance Minister Yanamala Ramakrishnudu said the state government had already sent a note to RBI governor on rescheduling of crop loans. “We are asking the RBI to treat the gold loans taken by farmers as crop loans, so that they also get the benefit of loan rescheduling,”’ he said.
Though successive droughts could have led to his defeat in 2004, Andhra Pradesh chief minister Chandrababu Naidu is incidentally using the looming drought to buttress his case for implementing the farmers’ loan waiver scheme.
Though the apex bank has said that it cannot reschedule loans taken by farmers against gold ornaments, the state government has not given up hope, as it has been banking on the massive relief from the RBI with regard to farm loan waiver. With gold loans on the higher side as compared to agri loans in the state, the government has presented another case before the regulator.
You can read the original article at MineWeb.com
At least… At least… Give up one or two fun things a week or a month, to have the money to invest in business needs now! So you can have a chance at creating the income now, that allows your family to do anything and everything you all want later.
You have to be a visionary and stick to the plan, if you truly want the lifestyle of your dreams! #sacrifice #its worth it. Be the “tough one” in your family that says, we aren’t doing these fun things now, so we can invest in our future, and we can play forever later! Be strong...
I promise…If you stay spending till your last dollar every month, and invest only your leftovers into your business…You will only have a mediocre “left over” business! You’ll never get the lifestyle you want! And..you’ll never get the lifestyle you have always desired!
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India’s government is fighting thousands of years of tradition…
LESS THAN 1% of the world’s gold is mined in India, writes Douglas French for Bill Bonner’s Daily Reckoning.
The rest comes from somewhere else. Still, India can’t get enough. It is the largest consumer of gold in the world, buying nearly a third of production in recent years. Some estimates say that 10% of all gold is held in India.
Indians save roughly 30% of their income, as opposed Americans, who save 5%. Plus, Indians are getting richer all the time. Once a very poor country, the rich and middle classes now outnumber the poor in this nation of 1.2 billion. The country has the sixth-largest economy in the world.
If people are left alone, high gold demand going forward is a lock.
Yet India’s policymakers are disturbed. Yellow metal purchases have widened the country’s current account deficit to 5.4% of GDP.
The Reserve Bank of India (RBI) has produced a report indicating “a need to moderate gold import, as the insatiable appetite for the yellow metal could jeopardize economic stability”.
So the Indian government and its central bank are trying to get people to buy other financial products.
“There is a need for banks to introduce new gold-backed financial products that may reduce or postpone the demand for gold imports,” the RBI report said.
The central banking wonks are thinking that if the Indian public can be made aware of financial paper instruments such as gold accumulation plans, gold pensions, and gold-linked accounts, it will drop its obsession with the barbarous relic.
A leading Indian trade body said country’s gold imports could fall to just 550 tonnes next year, little more than half of the peak of 967 tonnes in 2011.
Well, good luck with that. The people of India have cultural, historical, and traditional reasons to buy gold. They consider it the most valuable asset there is. Indians want to own gold like Americans want to own houses.
Ganesh Rathnam related a story that explains India’s gold obsession. When his father, a pediatric surgeon, wanted to buy land to build a new clinic, he mortgaged his wife’s jewelry to raise the purchase money.
“Similarly, millions of people in India have capitalized their businesses or farms, or secured their basic necessities after severe business reversals, by pledging their gold jewelry,” he writes.
Last year, 60 Minutes ran a segment, “India’s love affair with gold.” Correspondent Byron Pitts was stunned that the Indian people consider gold purchases as savings. Indians do not believe that they are spending when they buy gold, but, instead, that they are putting their money in a savings account. Oftentimes, a savings account that is worn around the neck or wrist.
There are 22 official languages in India, so there are 22 ways to say gold. And nothing says gold in India like a wedding. Half the country’s gold purchases are for wedding jewelry. It is said in India, “If there is no gold, there will be no wedding.” Gold must be widely owned, because there are 10 million weddings a year. Some are extravagant affairs that last for days on end.
Parents start accumulating gold for their daughter’s wedding day as soon as she is born. This gold represents some financial security that the bride brings to the union. It also gives the bride some economic status in the relationship. And while it provides security, gold is hardly ever sold, but instead passed on for generations. But it can be mortgaged if needed.
Gold is a symbol of purity and is considered sacred, but also signals prosperity. Jewelry does the talking and gold speaks loud and clear. Not for vanity’s sake, however, as gold is considered honorable. You can’t have a family without gold. The yellow metal is a way of life.
A gold analyst told Pitts that it’s impossible to explain to an Indian that gold might go down in price. Indian society has been around a few thousand years. People learn a thing or two in that time. First, save money for the unexpected. Second, don’t trust banks. And third, don’t trust the government’s paper money. They’re not interested in mutual funds and other financial products.
Even the poorest people in India buy gold, saving a little each week to buy a gram at a time.
“Gold has a rich tradition in the Hindu epics, the Ramayana and the Mahabharata,” writes Rathnam.
“It was associated with the pomp and splendor of the gods and kings who appear in these mythological stories.”
He explains that silver coins were widely used in India during the reign of the Mauryas circa 250 B.C., and the first gold coins were issued widely during the Gupta dynasty around A.D. 250. India has been a collection of kingdoms and fiefdoms often at odds. Gold was easily hidden, “enabling ordinary citizens to avoid being looted by marauding armies,” Rathnam writes. The kings changed, as did the coins, and thus gold became the preferred medium of exchange and store of wealth.
After India’s foreign reserves were decimated by its war with China, the government instituted the Gold Control Act of 1962, which forbade private ownership of gold bullion and forced all bullion to be turned into jewelry.
In the 1970s, tax rates reached 95%, and the Indian currency, the rupee, plunged in value. Indians took to not only hiding assets from the taxman, but also trying to survive inflation. Gold and real estate were the chosen vehicles. Rathnam also points out that bank deposit insurance in India is the equivalent of just over $2,000, making bank deposits a risky asset.
But finance minister Chidambaram Palaniappan doesn’t care about tradition or prudence. He sees gold purchases as consumption that has contributed $64 billion to the country’s widening current account deficit.
While the average Indian loves gold, the country’s bureaucrats do not. The numbers tell the story. The Indian government owns only 360 metric tons, while private gold holdings are estimated to be 15,000 metric tons. It is, indeed, the people’s money.
An Indian gold expert told 60 Minutes’ Pitts, “If India sneezes, the gold industry will catch a cold.”
The government is trying to make it sneeze, but the people are wise. Thousands of years of tradition will likely keep the gold market healthy, no matter how much the politicians hate it.
Building your own gold position? See how BullionVault could save you money…
The Supreme Court has long distinguished the regulatory from the taxing power.
In 1935, Secretary of Labor Frances Perkins was fretting about finding a constitutional basis for the Social Security Act. Supreme Court Justice Harlan Fiske Stone advised her, “The taxing power, my dear, the taxing power. You can do anything under the taxing power.”
Last week, in his ObamaCare opinion, NFIB v. Sebelius, Chief Justice John Roberts gave Congress the same advice—just enact regulatory legislation and tack on a financial penalty, as in failure to comply with the individual insurance mandate. So how did the power to tax under the Constitution become unbounded?
The first enumerated power that the Constitution grants to Congress is the “power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States.” The text indicates that the taxing power is not plenary, but can be used only for defined ends and objects—since a comma, not a semicolon, separated the clauses on means (taxes) and ends (debts, defense, welfare).
Editorial board member Joe Rago on how Chief Justice John Roberts’s rewrite of ObamaCare weakens the Constitution’s federalist structure. Photo: Associated Press
This punctuation was no small matter. In 1798, Pennsylvania Rep. Albert Gallatin said that fellow Pennsylvania Rep. Gouverneur Morris, chairman of the Committee on Style at the Constitutional Convention, had smuggled in the semicolon in order to make Congress’s taxing power limitless, but that the alert Roger Sherman had the comma restored. The altered punctuation, Gallatin said, would have turned “words [that] had originally been inserted in the Constitution as a limitation to the power of levying taxes” into “a distinct power.” Thirty years later, Virginia Rep. Mark Alexander accused Secretary of State John Quincy Adams of doing the same thing after Congress instructed the administration to print copies of the Constitution.
The punctuation debate simply reinforced James Madison’s point in Federalist No. 41 that Congress could tax and spend only for those objects enumerated, primarily in Article I, Section 8.
Congress enacted very few taxes up to the end of the Civil War, and none that was a pretext for regulating things that the Constitution gave it no power to regulate. True, the purpose of tariffs was to protect domestic industry from foreign competition, not raise revenue. But the Constitution grants Congress a plenary power to regulate commerce with other nations.
Congress also enacted a tax to destroy state bank notes in 1866, but this could be seen as a “necessary and proper” means to stop the states from usurping Congress’s monetary or currency power. It was upheld in Veazie Bank v. Fenno (1869).
The first unabashed use of the taxing power for regulatory purposes came when Congress enacted a tax on “oleomargarine” in 1886. Dairy farmers tried to drive this cheaper butter substitute from the market but could only get Congress to adopt a mild tax, based on the claim that margarine was often artificially colored and fraudulently sold as butter. President Grover Cleveland reluctantly signed the bill, saying that if he were convinced the revenue aspect was simply a pretext “to destroy . . . one industry of our people for the protection and benefit of another,” he would have vetoed it.
Congress imposed another tax on margarine in 1902, which the Supreme Court upheld (U.S. v. McCray, 1904). Three justices dissented, but without writing an opinion.
Then, in 1914, Congress imposed taxes on druggists’ sales of opiates as a way to regulate their use. Five years later, in U.S. v. Doremus , the Supreme Court upheld the levy under Congress’s express power to impose excise taxes.
Then, in 1922, the court rejected Congress’s attempt to prohibit child labor by imposing a tax on companies that employed children. An earlier attempt to accomplish this, by prohibiting the interstate shipment of goods made by child labor, was struck down as unconstitutional—since it was understood since the earliest days of the republic that Congress had the power to regulate commerce but not manufacturing. “A Court must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed,” Chief Justice William Howard Taft wrote in Bailey v. Drexel Furniture Co. “Its prohibitory and regulatory effect and purpose are palpable.” Even liberal justices Oliver Wendell Holmes and Louis D. Brandeis concurred in Taft’s opinion.
Things came to a head in the New Deal, when Congress imposed a tax on food and fiber processors and used those tax dollars to provide benefits to farmers. Though in U.S. v. Butler (1936) the court adopted a more expansive view of the taxing power—allowing Congress to tax and spend for the “general welfare” beyond the powers specifically enumerated in the Constitution—it still held the ends had to be “general” and not transfer payments from one group to another. After President Franklin D. Roosevelt threatened to “pack” the Supreme Court in 1937, it accepted such transfer payments in Mulford v. Smith (1939), so long as the taxes were paid into the general treasury and not earmarked for farmers.
And now, in 2012, Justice Roberts has confirmed that there are no limits to regulatory taxation as long as the revenue is deposited in the U.S. Treasury.
Are there any other limits? Article I, Section 2 says that “direct taxes shall be apportioned among the states” according to population. This is repeated in Article I, Section 9, which says that “no capitation, or other direct tax, shall be laid,” unless apportioned.
The Supreme Court struck down income taxes in 1895 (Pollock v. Farmers’ Loan & Trust Co.), on the ground that they were “direct” taxes but not apportioned by population. Apportioning an income tax would defeat the purpose of the relatively poorer Southern and Western states, who wanted the relatively richer states of the Northeast to pay the bulk of the tax. The 16th Amendment gave Congress the power to tax incomes without apportionment.
Other direct taxes should presumably have to be apportioned according to the Constitution. Justice Roberts quickly dismissed the notion that the individual mandate penalty-tax is not a direct tax “under this Court’s precedents.” To any sentient adult, it looks like a “capitation” or head tax, imposed upon individuals directly. Unfortunately, having plenty of other reasons to object to ObamaCare, the four dissenting justices in NFIB v. Sebelius did not explore this point.
Some conservatives have cheered that part of Justice Roberts’s decision that limits Congress’s Commerce Clause power. But an unlimited taxing power is equally dangerous to constitutional government.
Mr. Moreno is a professor of history at Hillsdale College and the author of “The American State from the Civil War to the New Deal,” forthcoming from Cambridge University Press.
With the presidential race heating up, I will be putting some articles here that are news headliners about the candidates. This article was taken from the Boston Globe and written By Sarah Schweitzer and Christopher Rowland
WOLFEBORO, N.H. — Mitt Romney on Wednesday said President Obama’s individual mandate in his signature health care law is “a tax,” reversing a position staked by his campaign two days earlier.
The “majority of the court said it’s a tax, and therefore it is a tax,” he said in the interview with CBS News. “They have spoken. There’s no way around that. You can try and say you wished they had decided a different way, but they didn’t. They concluded it was a tax. That’s what it is.”
On Monday, Romney spokesman Eric Fehrnstrom said Romney did not agree with the court’s majority’s “tax” label and instead considered it a penalty. That view was seen as making it easier for Romney to avoid having the same risky “tax” label applied to a similar measure in the Massachusetts health plan he enacted as governor.
“The governor believes that what we put in place in Massachusetts was a penalty, and he disagrees with the court’s ruling that the mandate was a tax,” said Fehrnstrom, who made his comments in an MSNBC interview.
On Wednesday, Romney said that while he agreed with the court’s minority view that the punishment was not a tax, he accepts the majority decision. With that declaration, Romney quickly pivoted into an attack on Obama.
“[T]he American people know that President Obama has broken the pledge he made. He said he wouldn’t raise taxes on middle-income Americans,” Romney said.
The change puts Romney in step with Republicans who have been hammering Obama over the Supreme Court’s tax determination, which held that the enforcement mechanism for the individual mandate in the 2010 health care expansion — a penalty payment made to the Internal Revenue Service — qualifies as a tax.
In the CBS interview, Romney insisted the Massachusetts health plan’s punishment on people who fail to get mandated health coverage does not meet the court’s definition of a tax.
“The chief justice said that states have what’s known as police power, and states can implement penalties and mandates and so forth under their constitutions, which is what Massachusetts did. But the federal government does not have those powers.”
Romney continued, “Therefore Obamacare’s a tax. Like it or not, it’s a tax.”
Obama’s campaign issued a statement Wednesday saying Romney “contradicted his own campaign, and himself.”
“First, he threw his top aide, Eric Fehrnstrom, under the bus by changing his campaign’s position and calling the ‘free rider’ penalty in the president’s health care law — which requires those who can afford it to buy insurance — a tax,” Danny Kanner, an Obama campaign spokesman, said in a statement.
“Second, he contradicted himself by saying his own Massachusetts mandate wasn’t a tax — but Romney has called the individual mandate he implemented in Massachusetts a tax many times before. Glad we cleared all that up.”
The campaign was referring to the several times — including a 2008 Republican debate and a 2009 opinion piece he wrote for USA Today — when Romney has referred to the state’s mandate payment as a tax.
“Using tax penalties, as we did, or tax credits, as others have proposed, encourages ‘free riders’ to take responsibility for themselves rather than pass their medical costs on to others,” Romney wrote in USA Today.
Romney’s campaign declined to state whether Romney’s acceptance of the tax label on the national law contradicted Fehrnstrom’s account.
Since the Supreme Court upheld the health care law in a 5-4 decision, the Obama administration, too, has struggled to reconcile the majority view with Obama’s repeated insistence before the ruling that the mandate was not a tax.
The CBS interview was conducted shortly before Romney marched in the Fourth of July parade in Wolfeboro, where he is vacationing at his lakeside compound with his family.
In comments after the parade, Romney sought to stay away from political topics, saying the day was one for unity.
“We have differing views on political issues,” he said, against a stunning backdrop of Lake Winnipesaukee. “But with regard to our conviction that this nation is unique and exceptional, we must come together and show respect for what it is that makes us such a great nation.”
There was little avoiding issues, though. Shaking hands along the parade route, someone in the crowd told Romney that the health care penalty was a tax.
“It is. I agree,” Romney replied.
Marching in the parade with Romney was Kelly Ayotte, a senator from New Hampshire who has been mentioned as a possible vice presidential choice. Senator Rob Portman of Ohio, another mentioned candidate, was not with Romney. He will be in New Hampshire on Saturday to attend a fund-raiser, said Tommy Schultz, a spokesman for the coordinated Romney-Republican National Committee New Hampshire campaign.
Democrats also turned out for the event, including Massachusetts Democratic Party chairman John Walsh and state Representative Jeffrey Sanchez. The Democrats received a warm though far less enthusiastic response from the crowd. The town has voted for Republicans in the last three presidential elections.
Some Republicans could be heard grumbling, “Go away,” as the Obama supporters marched by, and Romney avoided a Democratic crowd on the route with Obama signs and one reading “We are the 99%.”
For some, Romney’s presence in the parade — for the first time as a presumptive presidential nominee — made for an overly political event.
“It’s nice to have more of a mix,” said Melissa Hanson, a Romney supporter.
Her friend, Mitch Ganem, a Democrat, said, “It was gross. It was a Romney parade.”
Romney himself reveled in the parade crowd’s welcome.
“I realize that a number of people were thinking of voting for someone else besides me. I know there were a few of them in that crowd,” he said. “But you know, they were courteous and respectful and said, ‘Good luck to ya,’ and said, ‘Happy Fourth of July.’”