Goldringer...it's an ETF with an mighty touch

Consider ticker GLD. That fund is holding 500 tons of physical gold but
works like an open end mutual fund in that it adds holdings when there are
net buyers and sells holdings when there are net sellers. And the fund is
very popular because with it any mutual fund can hold gold just like they
hold cash. The problem is that this securitized gold holding is taxed at the
28% collectibles capital gain rate...

Now consider ticker DGL. That's short term gold futures packaged to track
the gold price rather than leveraged to the gold price. And holders of this
fund are taxed for 60% long term gains and 40% short term gains and taxed at
the same capital gain rate as stocks or bonds. And so that's a much better
tax rate than the collectibles tax rate...

So I wonder if we should write our Congresspersons and ask that securitized
bullion go for the same tax rate as stocks and bonds ?

Oh, also look at ticker GDX...

On Aug 8, 1:14 pm, "A You" wrote:
Consider ticker GLD. That fund is holding 500 tons of physical gold but
works like an open end mutual fund in that it adds holdings when there are
net buyers and sells holdings when there are net sellers. And the fund is
very popular because with it any mutual fund can hold gold just like they
hold cash. The problem is that this securitized gold holding is taxed at the
28% collectibles capital gain rate...

Now consider ticker DGL. That's short term gold futures packaged to track
the gold price rather than leveraged to the gold price. And holders of this
fund are taxed for 60% long term gains and 40% short term gains and taxed at
the same capital gain rate as stocks or bonds. And so that's a much better
tax rate than the collectibles tax rate...

So I wonder if we should write our Congresspersons and ask that securitized
bullion go for the same tax rate as stocks and bonds ?

Oh, also look at ticker GDX...

Here is a better idea to ask your congressman. If I buy 10 shares of
GLD for $675.00. Five years later, I sell the ten shares for
$810.00. I gained 20 percent over 5 years. But, the govt reports
that inflation is approximately 4 percent per year, my nominal gain of
20 percent is net ZERO, after adjusting for inflation. Why should I
pay a tax? The govt already stole 20% of my purchasing power over 5
years due to the hidden tax of inflation. No tax should be due.

How about this idea. Since gold is money, why are we required to pay
tax when we trade Federal Reserve Notes for gold, then trade gold back
to Federal Reserve Notes again, regardless of whether we got more
Federal Reserve Notes or less on the trade?

In my opinion, this transaction is the same as trading a one dollar
Federal Reserve Note for ten dimes and then back again. Money is
money, right?

Dan

Howdy,

Not familiar with DGL although being a powershares ETF, it would
strike me that it falls under the same IRS determination as GLD, SLV
and the other bullion ETFs. However, as you mention, they might be
avoiding this IRS ruling by owning futures instead of bullion. I
can't see futures as a collectible.

That said, the bullion ETF's have been determined by the IRS to be
collectibles and are taxed at 28% like you mention. This means, that
if you want to buy one, you should have it in a tax deferred account
and not in a taxable account.

An alternative for a taxable account is the closed end fund CEF
Central Fund of Canada which invests in gold and silver bullion at
about 60/40 or so. This closed end fund has never had an IRS
determination and so is still taxed at normal capital gain rates of
15% for most of us for Long Term and as income for short term.

Also, you can always look at Permanent Portfolio PRPFX which is sort
of a 'y2k' type fund. It's got 15% in gold eagles and maple leafs,
then some gold and silver COMEX futures, swiss bank notes, short term
treasury notes, etc.

Note that as a disclaimer, I own SLV and CEF and PRPFX.

peace,

rono



On Aug 8, 1:14 pm, "A You" wrote:
Consider ticker GLD. That fund is holding 500 tons of physical gold but
works like an open end mutual fund in that it adds holdings when there are
net buyers and sells holdings when there are net sellers. And the fund is
very popular because with it any mutual fund can hold gold just like they
hold cash. The problem is that this securitized gold holding is taxed at the
28% collectibles capital gain rate...

Now consider ticker DGL. That's short term gold futures packaged to track
the gold price rather than leveraged to the gold price. And holders of this
fund are taxed for 60% long term gains and 40% short term gains and taxed at
the same capital gain rate as stocks or bonds. And so that's a much better
tax rate than the collectibles tax rate...

So I wonder if we should write our Congresspersons and ask that securitized
bullion go for the same tax rate as stocks and bonds ?

Oh, also look at ticker GDX...