I had a conversation with a relative of mine the other day who was asking about precious metals prices, he mentioned he has been “stockpiling” gold bars and coins for years. I got to thinking, if you are a Baby Boomer (like my Uncle) who bought gold back when he was about 25 years old in 1975 (from 1933 to 1974 it was illegal for any US citizen to own gold in the form of gold bullion unless they had a special license) the price would’ve been around $36 a troy ounce. For the sake of this blog we will say a “stockpile” is about 1000 ounces. If you held onto it year over year and cashed out….check this out.
Thinking about this further, I wondered what taxes would be incurred on this treasure trove, and I learned in the United States there is no GST, VAT or national tax but depending on which state you live in, a state tax may be incurred. It is imperative that when buying silver or gold that you keep track by receipt of what you bought and when so you can report the capital gain or loss. It is for this reason it is important to keep your receipt of purchase.
Physical holdings in gold or silver are considered collectibles and are subject, when sold, to a capital gains tax equal to your marginal tax rate, up to a maximum of 28% but you must hold it for longer than one year. This means if an individual is in a higher tax bracket, they still only have to pay 28% and only if they make a profit. You can defer paying taxes until you are older and in a different tax bracket but you cannot avoid them.
My Uncle loves gold as we do, and it sounds like a great investment but it doesn’t pay dividends like a stock does. It is also important to ask the “melt value” before you sell. This is public information and you can easily find out.
Gold’s value many times is based on fear. When times are bad many put their money in gold and precious metals. As you can see with the chart above, gold always holds its value. As always it is good to diversify, don’t put all of your eggs in one basket or maybe put a few golden eggs in there as well.
As of today gold prices aren’t looking that great, but have you ever thought of our “refine & hold” option? If you are a business, send your scrap jewelry in, we will refine it and hold it in your account until the market looks good and you decide you are ready to sell. You can’t lose!