Precious Metals Investing and Taxes

With tax time right around the corner, investors of all types are preparing their finances to determine their final tax burden. While some investors are paying as little as 15% on their capital gains, precious metals investors are stuck paying 28% – but perhaps not for long.

Capital Gains Taxation

In the United States, long term capital gains taxes come in at just 15%, well under ordinary income tax rates. Unfortunately, the US government refuses to recognize gold and silver as similar investments, choosing to relegate them as “collectibles” and stamping a hefty 28% charge on any potential profits.

However, as precious metals investing becomes more popular, this once small group of investors is gaining weight with Congress. In recent years, many new resolutions to declare silver and gold an investment rather than a collectable have come before Congress.

An Unlikely Helper

Although physical bullion and exchange-traded funds compete directly with each other for investment dollars, exchange-traded fund companies are helping to lead the charge against unfair tax treatment. Even ETFs – which trade like stocks, pay dividends like stocks, and are bought and sold like stocks – are subject to the collectible tax rate of 28% if they hold certain commodities, mostly precious metals. Of course, these companies have a stake in retaining their clients, and they have become leaders in a fight against unfair tax treatment.

Luckily for individual investors without the weight and pull of multi-billion dollar businesses, banks are also some of the biggest lobbyists in the nation, and they too have the ability to help the taxation lot of precious metals.

The Time is Now

With gold and silver prices making the nightly news alongside indexes like the Dow Jones and Nasdaq, now is a better time than ever for real tax reform and fair treatment for silver and gold investors.

Although a higher tax rate is unlikely to scare anyone away from the huge benefits of gold and silver, it would be a benefit for investors to receive the same tax treatment when they decide to cash in their earnings. Seeing as tax credits and fair taxing solutions are on the top of voters’ wish lists, and with the previous bill earning 15 cosponsors in the Senate, silver and gold investors are very much on their way to fair treatment.

Taxes Aside

Even with unfair taxing schemes by the federal government, the advantages of gold and silver as a store of wealth are not lost. Throughout history, these two metals have prevailed through every financial meltdown, depression, war and famine to emerge as the best currency.

Though Uncle Sam may not appreciate your wise financial decision to buy metals and hedge your assets, you're doing the right thing. And as the political winds shift from left to right, pro-government to anti-government and everything in between, precious metals investors should be assured that they're on their way to one of the biggest tax overhauls in history. When real money is taxed fairly, expect a whole new movement into precious metals as currency.

For more on how to get started with precious metals investing, and specifically silver, check out out Free Guide and E-Course.

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