Tax Brief

James Tubman

Acct 613

Article # 1

02/22/15

Topic: Tax-efficient investing in gold

Maximize after-tax returns of buying and holding the precious metal.

By Steven H. Smith, Ph.D., and Ron Singleton, CPA, Ph.D. 

The article I did my research on is about tax efficient investing in gold. We all know how important gold is to the whole world. However, we did not know that the value on gold is dropping as we speak, but the taxes on gold have not really drop by that much. For example to the article “Tax- efficient investing in gold stated that Gold has lured investors for centuries for its rarity and beauty, which explains why nearly half of gold demand worldwide is by the jewelry industry (World Gold Council, Gold Investor, Vol. 7, September 2014, page 8). Another 32% of gold demand is for gold bars and coins—gold bullion. An investment in gold bullion in 2004 would have provided a pretax annualized return of over 12% over the ensuing 10 years. This return is not without its risks, however. Over the past several years, gold prices have dropped dramatically, and a 2012 investment in gold would have returned an annualized pretax loss of over 14%. The volatility of commodities including gold, however, is only part of the story.” According to the article, even though that the is a loss of the value of the gold, but it is still taxed at a higher rate because it is consider a capital tax item, so it is tax at rate of 15% tax gained rate regardless of the drop 10% decline rate for the this item. The article talked about the history of gold. It talked about how gold “While it is a popular investment today, gold ownership was restricted for years. President Franklin D. Roosevelt signed Executive Order 6102 in 1933, making it illegal to own more than a small amount of gold coins and bullion. The restriction was meant to curtail gold hoarding, which under the monetary gold standard was believed to be stifling economic growth, and lasted for...