7702 / How may an individual invest in precious metals?

Depending on the metal, investments may be made in two or three ways. In the case of gold or silver, an investor may purchase gold or silver bullion-type coins (e.g., the Canadian Maple Leaf), bars, or certificates that certify that a specific amount of the metal is housed in a specific warehouse for the investor. In the case of other metals, such as platinum or palladium, investments are made by the purchase of bars or certificates.

Each method of investing in precious metals has its advantages and disadvantages.

If an investor acquires bullion-type coins in a taxable transaction (such as in an exchange (noting that, post 2017 tax-reform, the IRC Section 1031 like-kind exchange rules apply only to exchanges of real property) or as payment of a stock dividend or for services rendered), the coins will be valued at fair market value, not face value, for purposes of that transaction (see Q 7717).