Investors Piling Into Gold ETFs Face a Surprising Tax Bill
Exchange-traded funds backed by physical gold are taxed at a higher rate than stocks of gold mining companies.
Photographer: Lisi Niesner/Bloomberg
Gold exchange-traded funds are one of this year’s hottest investments, with war, inflation and stock-market volatility sending people scrambling for safe havens. But those buying physical gold ETFs may face an unexpected tax burden.
Funds that invest in precious metals like gold and silver are treated like collectibles for U.S. tax purposes, meaning long-term capital gains from those funds will be taxed at a top rate of 28%, compared with a maximum rate of 20% for stocks. This could be costly for investors who decide to cash out after the recent rally in gold prices, which hit a peak of over $2,000 an ounce earlier this month, up more than 20% from a year ago.