Are Gold ETFs Taxed as Collectibles or Securities? (w/Examples) + FAQs

Yes, some gold ETFs are taxed as collectibles, while others are taxed as securities. The tax you pay depends entirely on the ETF’s legal structure, not the fact that you’re investing in gold. This creates a major conflict for investors because of a specific federal law.

The problem stems from Internal Revenue Code (IRC) Section 408(m), which defines physical gold bullion as a “collectible,” like art or antiques. This rule means that if your ETF is structured to give you direct ownership of the physical gold it holds, your investment profits are hit with a punishing maximum tax rate of 28%—much higher than the 0%, 15%, or 20% rates for traditional stock investments. This single rule is responsible for countless unexpected tax bills, with over 40% of investors being surprised by the tax implications of their investments.

This article will give you the knowledge to navigate this complex landscape. Here is what you will learn:

🪙 Why physically-backed gold ETFs like SPDR Gold Shares (GLD) can trigger a surprise 28% tax bill, and how to know which funds are affected.
🏢 How gold mining ETFs like VanEck Gold Miners ETF (GDX) qualify for the much lower 0%, 15%, or 20% long-term capital gains tax rates.
🤔 The “middle-bracket tax trap,” a counterintuitive rule that can cause middle-income earners to pay a higher percentage tax on gold gains than the wealthiest investors.
📜 Step-by-step strategies, including using special retirement accounts, to legally reduce or even eliminate taxes on your gold investments.
❌ The most common and costly mistakes investors make and how you can easily avoid them to protect your profits.

The Critical Difference: Why the IRS Sees Two Kinds of Gold ETFs

The U.S. tax code does not have one single rule for “gold.” Instead, it has rules for different types of assets. The tax treatment of your gold ETF depends on whether the IRS classifies it as a “collectible” or a “security.”

This classification is not your choice; it is determined by the legal structure of the fund itself. Understanding this is the single most important factor in managing your tax bill.

What Is a “Collectible” in the Eyes of the IRS?

The IRS specifically lists certain items as collectibles, including works of art, antiques, stamps, and, most importantly, any “metal or gem”. This means physical gold and silver bullion are, by definition, collectibles. This rule was created to apply higher tax rates to tangible items that don’t produce economic output, unlike a company’s stock.

If you own an asset classified as a collectible for more than one year, your profit is taxed at your ordinary income tax rate, but it is capped at a maximum of 28%. This is significantly higher than the top 20% long-term rate for most other investments, like stocks.

What Is a “Security”?

A security is a more traditional investment, like a share of stock in a company such as Apple or a bond issued by the government. For tax purposes, most ETFs that hold a basket of stocks are treated as securities.

If you own a security for more than one year, your profit qualifies for the much lower long-term capital gains tax rates. These rates are 0%, 15%, or 20%, depending on your total taxable income for the year.

The Hidden Tax Trap in Your GLD and IAU Shares

The most popular gold ETFs, like SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), fall into a special category that creates a major tax headache for unsuspecting investors.

These funds are legally structured as “grantor trusts”. Think of a grantor trust as a clear glass box. The IRS ignores the box itself and treats you, the investor, as if you are the direct owner of what’s inside—in this case, physical gold bars sitting in a vault.

Because the IRS sees you as owning physical gold, your shares in the ETF are taxed as a collectible. This means any profit you make from selling your shares after holding them for more than a year is subject to that higher 28% maximum tax rate. This rule catches thousands of investors by surprise every year.

The Middle-Bracket Tax Trap: A Painful Surprise

Many people mistakenly believe the 28% collectibles rate only affects high-income earners. In reality, it is a cap, not a flat rate. If your ordinary income tax bracket is below 28% (for example, 22% or 24%), you pay tax on your long-term gold gains at that ordinary income rate.

This creates a “middle-bracket tax trap” where middle-income investors can pay a proportionally higher tax penalty than the wealthiest investors.

Investor Action	Tax Consequence
A middle-income investor in the 22% tax bracket sells a stock for a long-term gain.	The gain is taxed at the 15% long-term securities rate.
The same investor sells a physically-backed gold ETF (like GLD) for the same long-term gain.	The gain is taxed at their ordinary income rate of 22%, because it’s lower than the 28% cap. This is a 47% increase in the tax paid.
A high-income investor in the 37% tax bracket sells a stock for a long-term gain.	The gain is taxed at the 20% long-term securities rate.
The same investor sells a physically-backed gold ETF (like GLD) for the same long-term gain.	The gain is taxed at the 28% collectibles cap. This is a 40% increase in the tax paid.

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This shows the tax penalty for holding a collectible-style ETF is actually more severe for the middle-income investor in this scenario.

The Tax-Friendly Alternative: Gold Mining ETFs like GDX

In complete contrast, ETFs like the VanEck Gold Miners ETF (GDX) and the VanEck Junior Gold Miners ETF (GDXJ) are structured as standard investment funds, known as Registered Investment Companies (RICs).

These funds do not hold any physical gold. Instead, they hold a portfolio of stocks in companies that mine for gold. Because the fund’s underlying assets are corporate stocks—which are securities—the ETF shares themselves are taxed as securities.

This means if you hold shares of a gold mining ETF for more than one year, your profits are eligible for the favorable 0%, 15%, or 20% long-term capital gains tax rates. This simple difference in legal structure can save you a significant amount of money.

Scenario 1: A High-Income Investor’s Choice

Maria is in the 35% federal income tax bracket. She invests $100,000 into a gold ETF and sells it two years later for $130,000, making a $30,000 long-term profit. Her choice of ETF dramatically changes her tax bill.

Investment Choice	Tax Calculation
Maria invests in SPDR Gold Shares (GLD), a physically-backed ETF.	Her $30,000 gain is taxed as a collectible at the 28% cap. Her federal tax is $8,400.
Maria invests in VanEck Gold Miners ETF (GDX), a mining stock ETF.	Her $30,000 gain is taxed as a security at the 20% rate for her income level. Her federal tax is $6,000.

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By choosing the gold mining ETF, Maria saved $2,400 in taxes on the exact same investment gain.

Comparing Your Gold ETF Options

The choice between these two types of ETFs involves trade-offs beyond just taxes. Physically-backed ETFs track the price of gold more directly, while mining ETFs carry the risks of the stock market and the specific companies they hold.

Beyond ETFs: How Other Gold Investments Are Taxed

ETFs are not the only way to invest in gold. Other popular methods include buying physical bullion directly or trading futures contracts, each with its own unique tax rules.

Physical Gold Bullion and Coins

Directly owning gold bars or coins is the classic example of a collectible investment. Any profit from selling physical gold held for more than one year is taxed at the maximum 28% collectibles rate.

When you sell certain amounts of physical gold, the dealer is required to report the sale to the IRS on a Form 1099-B. This is required for sales of 25 or more one-ounce gold coins (like Canadian Maple Leafs) or gold bars totaling one kilogram or more. However, there is a key exception: sales of American Gold Eagle coins do not require a 1099-B filing, offering more privacy.

Gold Futures Contracts: The Section 1256 Advantage

Gold futures are contracts to buy or sell gold at a future date. These are considered “Section 1256 contracts” by the IRS and receive special tax treatment.

All profits from gold futures are taxed under the “60/40 rule,” regardless of how long you hold the contract. This means 60% of your gain is taxed at the lower long-term rate (max 20%), and 40% is taxed at the higher short-term rate (your ordinary income rate, max 37%).

For a top-bracket investor, this creates a blended maximum tax rate of 26.8% ((0.60×20%)+(0.40×37%)). This is lower than the 28% collectibles rate and much lower than the 37% rate on short-term trades in other gold investments.

Strategic Tax Planning: How to Legally Reduce Your Gold Tax Bill

Understanding the rules is only half the battle. With smart planning, you can use specific accounts and strategies to significantly lower the taxes you pay on your gold investments.

Using an IRA: The So-Called “Loophole”

Normally, the IRS prohibits you from holding collectibles in an Individual Retirement Account (IRA). However, a special exception in the law allows you to hold certain high-purity government coins (like American Gold Eagles) and bullion inside an IRA, as long as it is stored with an IRS-approved custodian, not at home. The IRS has also allowed physically-backed gold ETFs like GLD to be held in IRAs.

Using an IRA changes the tax rules entirely.

Account Type	How It Works
Traditional IRA	You may get a tax deduction on your contribution. The money grows tax-deferred. When you withdraw funds in retirement, *all of it is taxed as ordinary income*.[1, 22, 24]
Roth IRA	You contribute with after-tax money (no deduction). The money grows completely tax-free. When you make qualified withdrawals in retirement, *you pay zero tax*.[22, 25]

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Holding a gold ETF in a Roth IRA is incredibly powerful, as it can turn a taxable 28% gain into a 0% tax-free gain. However, a Traditional IRA can be a double-edged sword. If you are in a high tax bracket in retirement (e.g., 32%), withdrawing your gold profits would mean paying a 32% ordinary income tax, which is higher than the 28% collectibles rate you would have paid in a regular brokerage account.

Scenario 2: A Retiree’s Tax-Smart Withdrawal

David is retired and in the 24% tax bracket. He needs to sell $20,000 worth of a gold ETF he bought years ago for $10,000, resulting in a $10,000 long-term gain. The account he holds it in makes a huge difference.

Account Holding the Gold ETF	Tax Consequence
David holds it in a regular brokerage account.	The $10,000 gain is taxed as a collectible at his 24% ordinary income rate. He owes $2,400 in federal tax.
David holds it in a Roth IRA.	The $10,000 gain is part of a qualified withdrawal. He owes $0 in federal tax.
David holds it in a Traditional IRA.	The entire $20,000 withdrawal (his original investment plus the gain) is taxed as ordinary income at 24%. He owes $4,800 in federal tax.

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The Wash Sale Rule: An Area of Costly Confusion

The wash sale rule is an IRS regulation designed to stop investors from selling an investment at a loss to get a tax break, only to buy it back again right away. The rule says you cannot claim a tax loss if you buy a “substantially identical” security within 30 days before or after the sale.

The IRS has never clearly defined what “substantially identical” means for ETFs. This has created a gray area. Many tax professionals believe that selling one S&P 500 ETF (like SPY) and immediately buying another S&P 500 ETF from a different company (like VOO) is allowed because they have different managers and expense ratios.

However, this is a common practice, not a written rule, and the IRS could change its stance in the future. When it comes to gold ETFs, selling GLD at a loss and immediately buying IAU would be a risky strategy because they are so similar in structure and purpose. A safer approach would be to sell a physically-backed ETF like GLD and buy a gold mining ETF like GDX, as their underlying assets are completely different.

Do’s and Don’ts for Gold Investors

Navigating these rules can be tricky. Here are some simple do’s and don’ts to help you make smarter tax decisions with your gold investments.

Do’s	Don’ts
✅ DO understand the legal structure of your ETF before you buy. Check if it’s a grantor trust (taxed as a collectible) or a RIC (taxed as a security).	❌ DON’T assume all gold ETFs are taxed the same way. This is the most common and costly mistake.
✅ DO consider holding physically-backed gold ETFs in a Roth IRA to potentially eliminate taxes on gains.	❌ DON’T store IRA-owned physical gold at home. This is strictly prohibited and results in immediate taxes and penalties.[31, 32]
✅ DO hold investments for more than one year if possible to qualify for lower long-term capital gains rates.	❌ DON’T forget about the 3.8% Net Investment Income Tax (NIIT) if you are a high-income earner. This is an extra tax on top of capital gains.[4, 33, 34, 35]
✅ DO use gold mining ETFs (like GDX) in your regular brokerage account if your primary goal is tax efficiency on long-term gains.	❌ DON’T ignore the small “phantom income” reported on your 1099-B for physically-backed ETFs. This is from the trust selling gold to pay expenses and must be reported.
✅ DO keep detailed records of your purchase dates and costs. This is your “cost basis” and is essential for calculating your taxable gain correctly.	❌ DON’T try to get around the wash sale rule by selling a gold ETF at a loss in your account and having your spouse buy it back in theirs. The IRS sees this as a wash sale.[29]

Pros and Cons of Different Gold Investment Types

Each way of investing in gold has its own set of advantages and disadvantages. Choosing the right one depends on your goals, risk tolerance, and tax situation.

✅ Easy to buy and sell in a brokerage account. | ❌ Subject to the high 28% maximum collectibles tax rate.

❌ Involves annual “phantom income” tax reporting from expense sales. | | Gold Mining ETF (GDX, GDXJ) | ✅ Qualifies for the lower 0%, 15%, or 20% long-term capital gains tax rates.

✅ Can be more volatile, offering higher potential returns. | ❌ Does not track the price of gold directly.

❌ Carries stock market risk and individual company risk. | | Physical Bullion (Coins, Bars) | ✅ You have direct, tangible ownership of the asset.

✅ American Gold Eagles offer some reporting privacy. | ❌ Subject to the high 28% maximum collectibles tax rate.

❌ Incurs costs for storage and insurance. | | Gold Futures Contracts | ✅ Favorable blended tax rate (max 26.8%) due to the 60/40 rule.

✅ Exempt from the wash sale rule. | ❌ Complex financial instruments not suitable for beginners.

❌ Requires annual “mark-to-market” tax reporting on unrealized gains. |

Your Tax Reporting Checklist: Key IRS Forms

When you sell a gold investment or receive income from it, you will need to report it to the IRS using specific forms. Knowing which forms to expect can help you stay organized and avoid mistakes.

Investment Action	Key IRS Forms You’ll Use
Selling a Gold Mining ETF (like GDX)	Form 1099-B from your broker shows the sale. You report it on Form 8949 and summarize it on Schedule D of your tax return.
Selling a Physically-Backed ETF (like GLD)	Same as above: Form 1099-B, Form 8949, and Schedule D. Your broker will note the sale is for a collectible.
Selling Physical Gold Bullion	You report the sale on Form 8949 and Schedule D. You may also receive a Form 1099-B from the dealer if you sell a large enough quantity.
Trading Gold Futures Contracts	Your broker will send you a Form 1099-B. You must report all gains and losses (realized and unrealized) on Form 6781, which then flows to Schedule D.
Taking a Withdrawal from an IRA	Your IRA custodian will send you Form 1099-R showing the total amount of your distribution. You report this on your main tax form (Form 1040).

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Frequently Asked Questions (FAQs)

Q1: Are all gold ETFs taxed at the higher 28% collectibles rate? No. Only physically-backed ETFs structured as grantor trusts (like GLD and IAU) are taxed as collectibles. Gold mining ETFs (like GDX) are taxed as securities at the lower long-term capital gains rates.

Q2: If I hold a gold ETF in my Traditional IRA, is my withdrawal taxed at 28%? No. All distributions from a Traditional IRA, regardless of what was held inside, are taxed as ordinary income at your current tax rate. The 28% collectibles rate does not apply to IRA withdrawals.

Q3: Can I use losses from my gold ETF to offset gains from stocks? Yes. Capital losses from collectibles first offset gains from other collectibles. Any remaining collectible loss can then be used to offset gains from other assets like stocks, up to the annual limit.

Q4: Do I have to pay taxes on my gold ETF if I don’t sell any shares? Maybe. If you own a physically-backed ETF like GLD, the fund sells a tiny amount of gold each year to pay its expenses. This is a taxable event that flows through to you and must be reported.

Q5: Are American Gold Eagle coins taxed differently than gold bars? No. The tax rate is the same; both are collectibles. The only difference is that dealers are not required to issue a Form 1099-B to the IRS when you sell American Gold Eagles, offering more privacy.

Q6: Does the 3.8% Net Investment Income Tax apply to gains from gold? Yes. If your income is above certain thresholds, an additional 3.8% tax applies to all investment gains, including those from gold ETFs, physical gold, and futures. This can raise the effective top rate on collectibles to 31.8%.