7962 / What special tax rules apply to metals ETFs?

Individual taxpayers who trade or invest in gold, silver, or platinum bullion are subject to the IRS’ rules that govern “collectibles” for tax purposes. The same rules apply to ETFs that trade or hold gold, silver, or platinum. Under the rules that apply to collectibles, if gain is short-term, it is taxed as ordinary income. If gain is earned over a period that spans more than one year, then it is taxed at one of three capital gains rates, depending on the taxpayer’s income tax bracket. This means that taxpayers cannot take advantage of the normal capital gains tax rates on investments in ETFs that invest in gold, silver, or platinum. The ETF provider will specify what is considered short-term and what is considered long-term gain or loss.