SPDR Gold Shares (GLD)
I should start by saying that I hate gold as an “investment.” Gold can be a spectacular trade and, under the right set of circumstances, it can be a decent hedge against inflation and geopolitical tensions. Due to its long history as a monetary asset and its relative scarcity, gold is considered to be an all-purpose crisis hedge.
My advice on gold is actually the same as my advice on firearms. By all means, own some … just in case. Keep some in a lockbox or buried in your backyard. But think of it more as insurance and not as an investment. Investments should either pay you an income or should represent an ownership interest in a growing enterprise. Gold does neither of these things … which is why I believe you should consider it separately from your investments.
But if you insist on owning gold as an investment allocation, such as via the SPDR Gold Shares (GLD), then I would recommend you hold it in an IRA rather than in a taxable account. Precious metals are woefully tax-inefficient because they are taxed as “collectibles.” And this does not only apply to coins with numismatic collector’s value, but to generic, raw bullion as well.
The long-term capital gains tax rate on collectibles is 28%, and there is absolutely no reason to pay this if you don’t have to.
Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he did not hold a position in any of the aforementioned securities. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.