Most Tax Efficient Gold ETFs

I’ve received some questions about which gold ETFs are most tax efficient.  So here is an article from Barron’s with the scoop …

If the ETF sells some of its gold or silver, as funds typically do to pay expenses, including management fees, then gains or losses on such sales flow through to the fund’s investors, though they receive no cash distribution. In the case of gains, the investors must include their share of the profit in gross income, which likewise would be taxable at the maximum 28% rate.

The SPDR Gold Trust (ticker: GLD), a popular gold-backed ETF, instructs shareholders on its Website how to compute the gain or loss when the ETF sells metal to pay expenses. (See http://www.spdrgoldshares.com/media/GLD/file/SPDR_Gold_Trust_2008_Tax_Information.pdf.)

These tax rules also apply to other precious-metals ETFs, such as the iShares Comex Gold Trust (IAU) and iShares Silver Trust (SLV). But they don’t apply to ETFs that use futures or derivative contracts to track the performance of metals, such as PowerShares DB Gold (DGL), PowerShares DB Silver (DBS) and PowerShares DB Precious Metals (DBP). Exchange-Traded Note funds, or ETNs, also have different tax rules, as do ETFs that buy stock in companies in precious-metals-related businesses.

Go read the whole thing HERE (subscription required.

And as I’ve said previously, my preference for long-term buy-and-hold gold is to own it physically.

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