Bullion markup

[Lonestar]

I've noticed popular dealers marking up one ounce gold coins from $100 to $150 over spot. Many bullion coins are out of stock indicating a strong demand because of world events. If I'm not mistaken most markups in the past were around $50 per coin. Will we see these markups again in the future, or is this the new norm?

[dualstow]

Crazy, isn’t it? Makes me wonder if selling is going to be painful, but perhaps i’ll never have to sell coins.

[Smith1776]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

[vnatale]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

EXACTLY what my initial reaction was!

Vinny

[Lonestar]

ETF's were exactly what I was thinking. I've watched firearms go through this same cycle based on current events, and eventually things calm down and prices revert to norm.

Is GLD still the ETF of choice?

[pmward]

ETF's were exactly what I was thinking. I've watched firearms go through this same cycle based on current events, and eventually things calm down and prices revert to norm.

Is GLD still the ETF of choice?

GLD is a bit pricey, GLD is really meant for very short term day and swing traders. For a medium term hold I would look at IAU, as that has good enough liquidity for a medium hold and a much lower ER than GLD.

[Xan]

ETF's were exactly what I was thinking. I've watched firearms go through this same cycle based on current events, and eventually things calm down and prices revert to norm.

Is GLD still the ETF of choice?

GLD is a bit pricey, GLD is really meant for very short term day and swing traders. For a medium term hold I would look at IAU, as that has good enough liquidity for a medium hold and a much lower ER than GLD.

Do you think AAAU is not liquid enough?

[pmward]

ETF's were exactly what I was thinking. I've watched firearms go through this same cycle based on current events, and eventually things calm down and prices revert to norm.

Is GLD still the ETF of choice?

GLD is a bit pricey, GLD is really meant for very short term day and swing traders. For a medium term hold I would look at IAU, as that has good enough liquidity for a medium hold and a much lower ER than GLD.

Do you think AAAU is not liquid enough?

I like AAAU for long term holds. But I probably wouldn't use it for a holding period that is likely less than a year.

[Smith1776]

I'm not an expert in U.S. ETFs, but I keep hearing that GLDM is where it's at. Substantially identical to GLD with a much lower MER.

[pmward]

I'm not an expert in U.S. ETFs, but I keep hearing that GLDM is where it's at. Substantially identical to GLD with a much lower MER.

GLDM is basically in between AAAU and IAU. It has a slightly lower ER like AAAU, but much lower AUM than IAU. So I would not say at all that GLDM is "substantially identical to GLD". GLD is, like I mentioned, a trading vehicle first and foremost. The high ER is basically paying for high liquidity, and a minuscule spread. For a day trader or swing trader the spread is a larger fee than the ER, so a trader is going to always ignore ER and buy whatever is the most liquid. The longer someone is going to hold an ETF, the less important the spread is and the more important the ER is. So these are key differences between GLD and GLDM, they are both targeted to completely separate groups of people. I personally don't see GLDM as being better than IAU for a holding period of less than a year. For someone that is going to hold for years though, yeah GLDM or AAAU would be a cheaper alternative to IAU all things considered.

[Smith1776]

I'm not an expert in U.S. ETFs, but I keep hearing that GLDM is where it's at. Substantially identical to GLD with a much lower MER.

GLDM is basically in between AAAU and IAU. It has a slightly lower ER like AAAU, but much lower AUM than IAU. So I would not say at all that GLDM is "substantially identical to GLD". GLD is, like I mentioned, a trading vehicle first and foremost. The high ER is basically paying for high liquidity, and a minuscule spread. For a day trader or swing trader the spread is a larger fee than the ER, so a trader is going to always ignore ER and buy whatever is the most liquid. The longer someone is going to hold an ETF, the less important the spread is and the more important the ER is. So these are key differences between GLD and GLDM, they are both targeted to completely separate groups of people. I personally don't see GLDM as being better than IAU for a holding period of less than a year. For someone that is going to hold for years though, yeah GLDM or AAAU would be a cheaper alternative to IAU all things considered.

Interesting. Thanks for sharing.

[Libertarian666]

ETF's were exactly what I was thinking. I've watched firearms go through this same cycle based on current events, and eventually things calm down and prices revert to norm.

Is GLD still the ETF of choice?

There's a firearm ETF? Wow, that sounds great!

[Libertarian666]

Kitco.com has 1 oz bars for 1779.20, a $56 markup.

[Lonestar]

ETF's were exactly what I was thinking. I've watched firearms go through this same cycle based on current events, and eventually things calm down and prices revert to norm.

Is GLD still the ETF of choice?

There's a firearm ETF? Wow, that sounds great!

With the volatility in that market, it may be a good opportunity to start one. Wonder if it would be a non-correlated asset class to TSM?

[Lonestar]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

[Xan]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

The capital gains rate is the lower of 28% or your normal earned income rate.

[Libertarian666]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

The capital gains rate is the lower of 28% or your normal earned income rate.

Yes. Furthermore, if you sell the ETF to buy physical, the physical now has the same basis as what you sold the ETF for. Thus, when you sell the physical later, you will have paid the same total taxes as if you had held physical from the beginning (assuming no changes in tax rates, etc.).

[Lonestar]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

The capital gains rate is the lower of 28% or your normal earned income rate.

Can you point me to a link on that? I can only find documentation of 28% long term cap gains rate, and ordinary income tax rate on short term gains. Seems strange. Are tax rules different on ETF's vs. physical?

[Xan]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

The capital gains rate is the lower of 28% or your normal earned income rate.

Can you point me to a link on that? I can only find documentation of 28% long term cap gains rate, and ordinary income tax rate on short term gains. Seems strange. Are tax rules different on ETF's vs. physical?

There's this:
https://www.irs.gov/taxtopics/tc409
which says "Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate." (emphasis mine).

You can also look at Schedule D whose formulas spell it out pretty clearly, IIRC.

[mathjak107]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

The capital gains rate is the lower of 28% or your normal earned income rate.

Can you point me to a link on that? I can only find documentation of 28% long term cap gains rate, and ordinary income tax rate on short term gains. Seems strange. Are tax rules different on ETF's vs. physical?

There's this:
https://www.irs.gov/taxtopics/tc409
which says "Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate." (emphasis mine).

You can also look at Schedule D whose formulas spell it out pretty clearly, IIRC.

i believe the 3.80% investment tax surcharge applies too if your get high enough ... i hit it in my real estate sale .

for art it is 28% plus over the limit another 3.80% in investment tax . i would think gold being a collectible too is subject to it also if the income trips it .

[Libertarian666]

It's definitely crazy and happening here in Canada for sure. Heck, it's worse than markup, as most dealers are actually just sold out.

I figure a decent stopgap measure is to put the money you have earmarked for physical gold into an ETF until your local dealer has supply. At least that way you get price exposure until supply comes back.

I looked into this. Problem is long term capital gains rate on gold ETF's is 28%. So if my math is correct, to hedge you buy ETF equivalent of one once today and gold goes up $200/oz after one year, you end up paying $56 in cap gains. About the difference between today's bullion markup and "normal" markup. Looks like a wash to me.

The capital gains rate is the lower of 28% or your normal earned income rate.

Can you point me to a link on that? I can only find documentation of 28% long term cap gains rate, and ordinary income tax rate on short term gains. Seems strange. Are tax rules different on ETF's vs. physical?

There's this:
https://www.irs.gov/taxtopics/tc409
which says "Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate." (emphasis mine).

You can also look at Schedule D whose formulas spell it out pretty clearly, IIRC.

i believe the 3.80% investment tax surcharge applies too if your get high enough ... i hit it in my real estate sale .

for art it is 28% plus over the limit another 3.80% in investment tax . i would think gold being a collectible too is subject to it also if the income trips it .

Gold is just another collectible to the IRS. As far as I know, no special rules apply only to gold, other than the ability to put certain gold items in a tax-deferred account.

[Lonestar]

Xan:

After looking further I think you are right. 28% is max and if you are in a lower marginal tax bracket than that, you are taxed at your ordinary income rate based on "last dollar of earnings". thanks. This is why I use a CPA. Tax talk makes my eyes glaze over.

[mathjak107]

They are subject to the 3.80% surcharge too if your income hits certain levels with the gain