Most gold and silver investments are taxed as collectibles at rates up to 28%, which can significantly reduce after-tax returns compared to traditional equities.
Gold and silver are back in the headlines. Prices have surged, volatility has spiked, and investor interest has followed. From physically backed gold ETFs to Costco selling gold bars, precious metals are suddenly everywhere again.
But here's the problem: most investors have no idea how gold and silver are actually taxed.
They assume gains are treated like stocks. They're not.
They assume ETFs simplify things. Often, they don't.
They assume a strong rally equals a strong after-tax return. That's where many get burned.
If you're thinking about investing in gold or silver, or already own it, understanding the tax rules is not optional. It's the difference between a smart hedge and an expensive mistake.
This article breaks down how precious metals are taxed in plain English, why so many investors are caught off guard, and how to think about gold and silver inside a modern wealth plan.
Under the U.S. tax code, most precious metals are classified as collectibles, not traditional investments.
That distinction matters.
Under IRC Section 408(m), collectibles include:
If an asset is considered a collectible and held longer than one year, long-term gains are taxed at a maximum federal rate of 28%, not the standard 15% or 20% long-term capital gains rate that applies to stocks and ETFs.
Short-term gains are taxed as ordinary income, just like stocks.
This single rule is responsible for most of the confusion and disappointment investors experience with gold and silver.
There is no tax when you buy gold or silver bars, coins, or bullion.
Sales tax may apply depending on your state, but there is no federal tax at the time of purchase.
When you sell:
This applies to:
If you sell jewelry at a loss, the loss is not deductible. Jewelry is considered personal-use property. That means you get taxed on gains, but you do not get tax relief on losses.
A common assumption is that ETFs make taxation simpler.
With precious metals, that's often false.
Many popular gold and silver ETFs are structured as grantor trusts that hold physical metal.
For tax purposes, the IRS treats you as if you personally own a slice of that metal.
This has been confirmed by IRS guidance and technical assistance memoranda.
In other words, buying gold through an ETF does not avoid the collectibles tax.
These are different.
If a fund owns:
Then gains are taxed like normal equities.
That means:
This distinction matters enormously when building a portfolio.
Most investors assume gold and silver are not allowed in IRAs.
That's mostly true, with limited exceptions.
If an IRA purchases a collectible that doesn't qualify for an exception:
Certain coins and bullion are permitted only if:
Even then, gains inside the IRA are deferred, but distributions are taxed as ordinary income.
The tax benefit comes from deferral, not from avoiding the collectibles rate.
When selling precious metals:
For inherited metals, a step-up in basis may apply, significantly reducing taxable gains.
This is another area where professional guidance matters.
Gold is frequently marketed as:
Those claims may or may not hold depending on the period.
What is often ignored is after-tax performance.
A 20% gain in gold taxed at 28% is not the same as a 20% gain in equities taxed at 15%.
Taxes matter, especially over long holding periods.
In practice, gold often reveals more about investor psychology than portfolio construction.
We see investors buy gold:
That timing risk compounds the tax inefficiency.
Gold can play a role, but it should be sized appropriately and understood clearly.
We do not view precious metals as core growth assets.
When used, they are:
The biggest mistake is treating gold as a standalone decision rather than part of a coordinated strategy.
Gold and silver are emotional assets wrapped in financial clothing.
They can protect, but they can also mislead. Before buying into the hype, make sure you understand not just the price chart, but the tax bill waiting on the other side.
If you're considering precious metals, or already hold them, this is a conversation worth having before the trade, not after the sale.
Yes. Most gold investments are taxed as collectibles with a maximum long-term rate of 28%, compared to 15% or 20% for stocks.
Some are. Physically backed ETFs are taxed like collectibles. Mining stock ETFs are taxed like equities.
Not for physical metals or grantor-trust ETFs in taxable accounts. Holding qualifying metals inside an IRA defers tax, but distributions are taxed as ordinary income.
Yes. Silver is also considered a collectible.
Inherited assets generally receive a step-up in basis, which can reduce taxable gains significantly.
It can be, but usually in moderation and with full awareness of liquidity, volatility, and tax treatment.
Sometimes, over certain periods. But it is volatile, produces no income, and is tax-inefficient compared to other inflation-sensitive assets.
Ignoring taxes and chasing headlines.
Precious metals can play a role in a portfolio, but only when properly structured and evaluated on an after-tax basis.
If you already own gold or are considering an allocation, let's make sure it fits within your broader wealth plan.