Good Gold/Sliver ETFs

[ccw]

Hi,

Can anyone recommend good Gold/sliver ETFs?

Also what are good criteria to choose good gold/sliver ETFs?

And what are the risks of such ETFs? I search online and most of the articles just say market risks of ETFs. But I think there is also an issuer risk. So ETF from large bank such as "Goldman Sachs Physical Gold ETF" should be much more safer than those issued by unknown banks. Is that correct?

Thanks

[Rocky Mtn Man]

SLV for silver

GLD or GLDM for gold

CEF holds both gold and silver

The funds hold physical gold/silver bars that are independently audited. But, you are correct the precious metal markets are small and can be very volatile.

[rogue_economist]

I find Gold/Silver ETFs a useless product, kinda like buttons on a dishrag.

Gold & Silver are not investments, they don't produce a return. Real estate produces rents, stocks produce dividends, bonds produce coupon payments, but Gold & Silver produce...nothing. They aren't investments.

What Gold and Silver actually are is money, hard money. They hold purchasing power over time, which fiat money does not do. But in thinking about how to place Gold and Silver in a portfolio it is much better to think of them as money than as an investment.

Likewise, having Gold and Silver held by an ETF negates the value of them as hard money because an ETF is a security that can only be exchanged for dollars or some other currency via a broker. The best uses of Gold and Silver are as hard money that you can hold independent of the broader financial system. So a Gold or Silver ETF ends up being like a spork (a fork with tines too short and stubby to stab into anything and a spoon with slots that drain out the liquids), its the worst of both worlds. You end up with the limitations of an ETF but none of the benefits of an actual investment.

[Kagord]

And what are the risks of such ETFs?

Well, there's a risk of faulty assumptions one might make that they fully understand these instruments and their future implications for proper tax treatment.

TL;DR: I recommend reviewing tax guides these funds publish before purchase, so that one understands what they are actually buying and getting into. IE, here is the 2023 taxable information for the Goldman Sachs Physical Gold (AAAU) ETF (that is really a trust) mentioned in the OPs post: https://www.gsam.com/content/dam/gsam/p ... ome%20tax.

more depth below

With precious metal funds, though ETF is sometimes used and assumed, you may be actually purchasing a trust (perhaps a classified as a grantor trust). When you click the buy button, brokerages don't, at least that I am aware of, have an "Are you sure you really want to purchase a headache at tax time?" confirming message box. Why, because you have likely already accepted the broker terms that you are experienced in trading and are responsible performing due diligence for knowing the tax implications of these types of funds.

Then, at tax time, sometimes years past, might begin the journey of learning these tax nuances, if one was not already aware. This journey might begin with some expletives possibly uttered under one's breath, and perhaps even more so, if holding these funds for long periods. This comes with the realization, for the longer term holders not aware of proper tax treatment, that prior tax returns may have been submitted with omissions. This is because annual trust activity flows to the individual tax return, including the very frequent purchases, sales, and expenses relevant to the entire trust. So if you don't sell in a given tax year, you still likely have tax work on these. And when sold, these are not usually under the reportable sale sections on the 1099-B, and in the unreported sections. This is likely because of de minimis notes in Treas. Reg. Sec. 1.671-5(c)(2)(iv)(B), neither the trust nor brokers are required to report the gross proceeds of trust sales to shareholders on form 1099B (taken from AAAU tax treatment above). Therefore, it will likely be your responsibility to account for all of this, and will likely not be simple, like what did I buy it for, and what did I sell it for.

If a foreign trust, like Sprott trusts, there are other tax considerations (PFIC), that, for optimization, may need to be declared and accounted for in the tax year of purchase.

IANAL or tax professional, some say these types of instruments in retirement accounts are easier. In the past, there have been some online calculators, by trust, that aid in tax treatment calculations.

[technovelist]

And what are the risks of such ETFs?

Well, there's a risk of faulty assumptions one might make that they fully understand these instruments and their future implications for proper tax treatment.

TL;DR: I recommend reviewing tax guides these funds publish before purchase, so that one understands what they are actually buying and getting into. IE, here is the 2023 taxable information for the Goldman Sachs Physical Gold (AAAU) ETF (that is really a trust) mentioned in the OPs post: https://www.gsam.com/content/dam/gsam/p ... ome%20tax.

more depth below

With precious metal funds, though ETF is sometimes used and assumed, you may be actually purchasing a trust (perhaps a classified as a grantor trust). When you click the buy button, brokerages don't, at least that I am aware of, have an "Are you sure you really want to purchase a headache at tax time?" confirming message box. Why, because you have likely already accepted the broker terms that you are experienced in trading and are responsible performing due diligence for knowing the tax implications of these types of funds.

Then, at tax time, sometimes years past, might begin the journey of learning these tax nuances, if one was not already aware. This journey might begin with some expletives possibly uttered under one's breath, and perhaps even more so, if holding these funds for long periods. This comes with the realization, for the longer term holders not aware of proper tax treatment, that prior tax returns may have been submitted with omissions. This is because annual trust activity flows to the individual tax return, including the very frequent purchases, sales, and expenses relevant to the entire trust. So if you don't sell in a given tax year, you still likely have tax work on these. And when sold, these are not usually under the reportable sale sections on the 1099-B, and in the unreported sections. This is likely because of de minimis notes in Treas. Reg. Sec. 1.671-5(c)(2)(iv)(B), neither the trust nor brokers are required to report the gross proceeds of trust sales to shareholders on form 1099B (taken from AAAU tax treatment above). Therefore, it will likely be your responsibility to account for all of this, and will likely not be simple, like what did I buy it for, and what did I sell it for.

If a foreign trust, like Sprott trusts, there are other tax considerations (PFIC), that, for optimization, may need to be declared and accounted for in the tax year of purchase.

IANAL or tax professional, some say these types of instruments in retirement accounts are easier. In the past, there have been some online calculators, by trust, that aid in tax treatment calculations.

While you are correct about the tax headaches you can get into with the foreign trusts like CEF, it is also apparently the case that if you jump through all the hoops properly, you can get normal (i.e., non-collectible) capital gains treatment with such trusts, which of course is a tremendous benefit if you can get it.

I'm not a tax expert or attorney, and this seemed to be an unsettled question the last time I looked at it, so you'll need to do your own research.

[ccw]

I want to buy spot gold/sliver. But InteractiveBrokers tell me that China tax resident cannot buy based on law. My only options are gold/sliver futures and ETFs. But I want to keep gold/sliver for long term, while futures always has a time limit. So my only option is ETFs.

I find Gold/Silver ETFs a useless product, kinda like buttons on a dishrag.

Gold & Silver are not investments, they don't produce a return. Real estate produces rents, stocks produce dividends, bonds produce coupon payments, but Gold & Silver produce...nothing. They aren't investments.

What Gold and Silver actually are is money, hard money. They hold purchasing power over time, which fiat money does not do. But in thinking about how to place Gold and Silver in a portfolio it is much better to think of them as money than as an investment.

Likewise, having Gold and Silver held by an ETF negates the value of them as hard money because an ETF is a security that can only be exchanged for dollars or some other currency via a broker. The best uses of Gold and Silver are as hard money that you can hold independent of the broader financial system. So a Gold or Silver ETF ends up being like a spork (a fork with tines too short and stubby to stab into anything and a spoon with slots that drain out the liquids), its the worst of both worlds. You end up with the limitations of an ETF but none of the benefits of an actual investment.