How Are Gains on Gold Taxed?

When purchasing and selling precious metals for profit, the IRS taxes your gains as capital gains. Physical gold investments are taxed at the maximum 28% rate as collectibles, as compared to 15% or 20% long-term capital gains rates that apply to most other investments.

However, gold mining company shares sold through a taxable account qualify for long-term capital gains rates as low as 0% for middle-income taxpayers.

Physical Gold

Physical gold investments such as coins, bars, jewelry or ETFs backed by it will be taxed as collectibles rather than investments because dealers must mark up its value to turn a profit and this difference in valuation is taxed as ordinary income when sold.

However, when investing in gold mutual funds or exchange-traded funds (ETFs) that contain precious metals or mining companies, any gains are subject to long-term capital gains taxes (LTCG). Therefore, comparing the annual costs associated with owning physical gold versus those of gold mutual funds or ETFs in order to determine which investment type offers the optimal after-tax return.

Futures Contracts

Many investors turn to precious metals such as gold as an inflation hedge and diversifier in their investment portfolio, but be wary that any gains from these investments may not be as tax-efficient as first thought.

The IRS classifies physical gold as collectibles and taxes them at an eye-watering maximum rate of 28% – much higher than long-term capital gains rates of 15%-20% that apply to assets like stocks.

Investors can avoid capital gains tax on gold profits if they reinvest them into assets that move in tandem with gold prices, such as mining stocks or ETFs that track its performance. Gains on such investments held for at least one year are taxed as long-term capital gains and subject to capital gains taxes at rates determined by HMRC.

Mutual Funds

There are various methods for investing in gold, from physical coins to exchange-traded funds (ETFs). Each has their own benefits and disadvantages as well as different tax treatments; our office can assist in selecting the most suitable vehicle based on your goals and circumstances.

Physical gold coins are subject to collectible tax rates of 28%; by contrast, gains on gold-backed ETFs that trade like stocks would likely be taxed at ordinary income rates depending on your income tax bracket.

At least gold mutual funds or ETFs that don’t purchase physical assets like gold mining stocks or futures contracts don’t suffer the same tax treatment, making these investments much more tax-efficient after tax returns than physical gold investments. Still, you should keep track of your gold investments to calculate any possible capital gains.


Investing in gold ETFs through a taxable brokerage account incurs capital gains taxes of between 0% to 20%; any profits on coins and bars held within one year by these investments, are taxed as ordinary income instead.

Investors opting for bullion-backed ETFs may reduce insurance, storage and shipping costs associated with direct ownership. When selling shares of these ETFs they are taxed as either long-term capital gains if held for over one year or short-term capital gains if sold within a year – so smart planning may reduce taxes when selling within this period. IRA-approved ETFs may also present appealing tax saving opportunities.


Gold’s timeless value as an investment makes it an appealing option for protecting wealth against inflation and geopolitical risk, yet investors should ensure they understand its tax implications so as to maximize returns while minimizing taxes.

The Internal Revenue Service treats physical gold investments as collectibles and taxes any gains at a maximum collector’s tax rate of 28%; this rate is significantly higher than the 20% long-term capital gains (LTCG) tax rate that typically applies to other financial investments held for more than 12 months.

Investors could save on taxes by using capital losses incurred on gold investments to offset gains made during either the same tax year or future years, though this should only be attempted after careful thought and consultation with an advisor.

Raymond Banks Administrator
Raymond Banks is a published author in the commodity world. He has written extensively about gold and silver investments, and his work has been featured in some of the most respected financial journals in the industry. Raymond\\\'s expertise in the commodities market is highly sought-after, and he regularly delivers presentations on behalf of various investment firms. He is also a regular guest on financial news programmes, where he offers his expert insights into the latest commodity trends.

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