Thanks for reading, Enric! The Monetary Metals program leases or lends gold (or silver) to businesses. Lease payments and interest payments are both taxed at ordinary income tax rates. If the metal price rises during the lease period, you get taxed on the gain at capital gain rates. All these returns, lease and interest income, and capital gains or losses are calculated in dollars based on the gold price when you earn the return. You don't need to worry about those calculations. Monetary Metals provides a timely K-1, so filing your tax return is easy. Beyond this basic information, I would like to refer you to a MM account rep, which you can easily find on the MM website.https://www.monetary-metals.com/
Thank you, Jim! I have a representative at Monetary Metals that I was conversing with two years ago that I’ve restarted the conversation with. I’ll continue going over questions with him.
When you sell gold—whether it’s in the form of bullion, coins, or jewelry—it’s typically treated as a "collectible" by the IRS. Gains from selling collectibles are subject to a higher capital gains tax rate than regular investments like stocks. If you’re selling shares in a gold-related exchange-traded fund (ETF) or mining company stock, these are taxed like regular securities (not collectibles). Not sure on Monetary Metals.
Jim, thank you for the great podcast. And more importantly for all of the prescient advice you've given since I started talking with you about finances at the inception of Covid. One question... My hunch is many of your listeners already own gold. I'd be curious whether your thoughts on what portion of the portfolio to allocate have changed. And as always, I am curious to here your thoughts both with respect to percentage of the "financial portfolio" (stocks, bonds, cash, etc.) and relative to total net worth. Thank you!
Hey Tom, thanks for the question, which is difficult to answer precisely, because everyone has unique knowledge, convictions, and objectives. After all, that's what makes markets! I think it is inevitable that all fiat currencies will continue to depreciate. So, I would advise anyone saving money over a time horizon of five years or longer to regularly put aside money and save it in gold. The more conservative you are, the more you should favor gold. The more long-term you are, the more you should favor gold, up to the point of reasonable diversification. If you dollar-cost-average, you are buying more gold on price pullbacks. So, I advocate saving in gold but not speculating on its price. If you are someone who watches the market closely, I think it is OK to trade based on your convictions (I don't do that). As you know, I mainly invest in "value" stocks, emphasizing those that return larger-than-average dividends. I also am not a fan of long-term government bonds. So, outside investments in gold, income-producing real estate, and farmland, dividend growth stocks are the core of my portfolio. For a passive investor who doesn't have the time or the inclination to study investing, I would say 10-20% of your portfolio in precious metals (or related) investments makes sense. If that grows due to price appreciation, you can rebalance occasionally if you feel uncomfortable with the bigger exposure. As far as stocks go, I tend to hold my dividend stocks for a long time unless I see a better alternative. If it appreciates to the point that the yield on the current price is very low, I will take the gain and redeploy the money, but only if I have a better alternative. So, to put some color on it, right now, I am (roughly) 20% gold (earning interest); 15% gold miners (some of which pay good dividends); 40% dividend-oriented stocks (weighted toward energy, which I am evaluating due to the recent oil price decline, which is a bit surprising); and 25% T-bills. The gold miners all qualify as value stocks, in my view. The gold and T-bill positions are both higher than what I would consider "normal" because I believe the prospects for gold are presently above average while the number of available dividend-growth stocks is below average. As I said, my big income producers (energy) are under review even though they have been very good to me for the last five years. I hope this level of detail will illustrate how I am thinking, and of course, I do not advocate this exact mix or strategy for anyone else on the planet. Sorry for the too-long answer!
Thanks for the insights.
Question on owning gold: How is gold taxed when sold, or gains from owning at Monetary Metals?
Thanks for reading, Enric! The Monetary Metals program leases or lends gold (or silver) to businesses. Lease payments and interest payments are both taxed at ordinary income tax rates. If the metal price rises during the lease period, you get taxed on the gain at capital gain rates. All these returns, lease and interest income, and capital gains or losses are calculated in dollars based on the gold price when you earn the return. You don't need to worry about those calculations. Monetary Metals provides a timely K-1, so filing your tax return is easy. Beyond this basic information, I would like to refer you to a MM account rep, which you can easily find on the MM website.https://www.monetary-metals.com/
Thank you, Jim! I have a representative at Monetary Metals that I was conversing with two years ago that I’ve restarted the conversation with. I’ll continue going over questions with him.
When you sell gold—whether it’s in the form of bullion, coins, or jewelry—it’s typically treated as a "collectible" by the IRS. Gains from selling collectibles are subject to a higher capital gains tax rate than regular investments like stocks. If you’re selling shares in a gold-related exchange-traded fund (ETF) or mining company stock, these are taxed like regular securities (not collectibles). Not sure on Monetary Metals.
That's a good distinction, Tom. Your MM metal is taxed as regular income or capital gain, not as a gain on a collectible.
Thanks.
Jim, thank you for the great podcast. And more importantly for all of the prescient advice you've given since I started talking with you about finances at the inception of Covid. One question... My hunch is many of your listeners already own gold. I'd be curious whether your thoughts on what portion of the portfolio to allocate have changed. And as always, I am curious to here your thoughts both with respect to percentage of the "financial portfolio" (stocks, bonds, cash, etc.) and relative to total net worth. Thank you!
Hey Tom, thanks for the question, which is difficult to answer precisely, because everyone has unique knowledge, convictions, and objectives. After all, that's what makes markets! I think it is inevitable that all fiat currencies will continue to depreciate. So, I would advise anyone saving money over a time horizon of five years or longer to regularly put aside money and save it in gold. The more conservative you are, the more you should favor gold. The more long-term you are, the more you should favor gold, up to the point of reasonable diversification. If you dollar-cost-average, you are buying more gold on price pullbacks. So, I advocate saving in gold but not speculating on its price. If you are someone who watches the market closely, I think it is OK to trade based on your convictions (I don't do that). As you know, I mainly invest in "value" stocks, emphasizing those that return larger-than-average dividends. I also am not a fan of long-term government bonds. So, outside investments in gold, income-producing real estate, and farmland, dividend growth stocks are the core of my portfolio. For a passive investor who doesn't have the time or the inclination to study investing, I would say 10-20% of your portfolio in precious metals (or related) investments makes sense. If that grows due to price appreciation, you can rebalance occasionally if you feel uncomfortable with the bigger exposure. As far as stocks go, I tend to hold my dividend stocks for a long time unless I see a better alternative. If it appreciates to the point that the yield on the current price is very low, I will take the gain and redeploy the money, but only if I have a better alternative. So, to put some color on it, right now, I am (roughly) 20% gold (earning interest); 15% gold miners (some of which pay good dividends); 40% dividend-oriented stocks (weighted toward energy, which I am evaluating due to the recent oil price decline, which is a bit surprising); and 25% T-bills. The gold miners all qualify as value stocks, in my view. The gold and T-bill positions are both higher than what I would consider "normal" because I believe the prospects for gold are presently above average while the number of available dividend-growth stocks is below average. As I said, my big income producers (energy) are under review even though they have been very good to me for the last five years. I hope this level of detail will illustrate how I am thinking, and of course, I do not advocate this exact mix or strategy for anyone else on the planet. Sorry for the too-long answer!