The ETFs listed in this Physical Precious Metals theme are physically backed by gold, silver, platinum, palladium or other precious metals, held in a vault
With global investment in bars and coins, the gold-backed ETFs segment is at 22% the second largest constituent of the total 'above-ground' gold stock , which represents an estimate of all gold ever produced
Unlike the other major - and fairly stable - factors driving gold demand (jewelry, central banks and manufacturing), investment in gold bars, coins and gold-backed ETFs is quite volatile, rising by 100% from quarter to quarter before falling back
Demand of gold as investment, and especially of gold-backed ETFs, could be the critical variable supporting the gold price as gold supply remains constrained
In effect, each ETF share represents ownership in the underlying metal, treated as "collectibles" for tax purposes, like art, antiques and coins, according to accountants
Because of IRS classification, ETF investors face a tax rate of up to 28% on long-term capital gains, applied to all collectibles when they sell shares (as compared to a 20% top tax rate on long-term profits)
Actual taxation rate aligns with regular income tax rates, of which there are seven (from 10% to 37%) - with the cap à 28% on collectibles for the higher tax brackets
The rule applies to ETFs structured like grantor trusts, as is the case for our selection of physically backed funds
Alternative options - such as holding the metals ETFs in an individual retirement account may be worth considering; make sure to check with your accountant
Different fund structures in the precious metals space are invested either in precious metal miners themselves or in futures, directly or indirectly (by way of ETNs)
- Precious Metals - Miners
- Gold Commodities Futures
By controlling for performance of the constituents of the selection over short time frames, shifts in market anticipations will be highlighted
Check performance and volatility from 1 week to 3 months - on tab at top right of your screen