Question about Gold ETF expense ratios
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Question about Gold ETF expense ratios
Do the expenses you pay have any type of tax implications? Have not looked at my 1099's in a while but I do not think so. But just want to be sure.
Re: Question about Gold ETF expense ratios
My understanding is that holding a gold ETF in a taxable account does indeed have tax implications due to the "micro transactions" which occur periodically to cover the fund's expenses. Which is why I only hold gold ETFs in tax advantaged accounts and stick with physical gold for taxable. Here is a link to a bogleheads forum discussion on the topic: https://www.bogleheads.org/forum/viewtopic.php?t=250680. Apparently your broker is not required to report the information on a 1099-B, so different people have different experience depending on which broker they use. The costbasis.com site helps some figure the info out when the broker does not report:
- for GLD: https://costbasistools.com/gold/gld.php
- for IAU: https://costbasistools.com/gold/iau.php
Goldman Sachs has an example of the calculation (see page 11) for their AAAU fund at: https://www.gsam.com/content/dam/gsam/p ... ?sa=n&rd=n
It seems you are supposed to track this for each lot! Probably most people don't know, or they know and don't bother, and so is only a potential issue if audited.
Re: Question about Gold ETF expense ratios
I vaguely remember I did this a few years ago but then I just forgot. This would seem to apply to every ETF / Mutual fund expense. And I looked back and none of the etf / fund expenses show up on my 1099.
Re: Question about Gold ETF expense ratios
Most ETF/MF funds generate income from the assets they are invested in (e.g. interest from bonds, dividends from stocks). Fund expenses can be deducted from this income before distributions are paid to fund shareholders. But gold ETFs that are invested only in gold bullion produce no income stream from the assets held. So small amounts of gold must be sold periodically to cover expenses like storage costs, etc. These "micro transactions" create the tax complication specifically for gold ETFs. This also causes the amount of gold represented by one share of the fund to slowly decay over time.
- dualstow
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Re: Question about Gold ETF expense ratios
I definitely had to report a form with those microtransactions on an ETF (for ethereum), but I guess I didn’t think about a relation to the ER. Interesting.
If you own a fund of stocks with no dividends, I guess they have to generate some capital gains even if there are no portfolio changes, for the same reason. But, without a long list of microtransactions.
I read that funds also have to sell to meet redemptions, e.g. if an ETF is in thinly traded and not large enough to always do in-kind share swapping.
If you own a fund of stocks with no dividends, I guess they have to generate some capital gains even if there are no portfolio changes, for the same reason. But, without a long list of microtransactions.
I read that funds also have to sell to meet redemptions, e.g. if an ETF is in thinly traded and not large enough to always do in-kind share swapping.
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Re: Question about Gold ETF expense ratios
One advantage of having a physical gold IRA is you pay the custodian with after-tax money. It's a bit like making an additional small IRA contribution into an IRA containing ETF every year to counteract the ETF decay. My custodian expense ratio is lower than SGOL or GLDM anyway, so I'm very happy. I'm HODLING for almost seven years now. Nothing to do, nothing to watch, just pay the fee every May with a 2% cashback card.
Re: Question about Gold ETF expense ratios
What’s the fee? And how much over spot do you pay?
- dualstow
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Re: Question about Gold ETF expense ratios
Here’s some info on Fidelity’s gold IRA (that I failed to find at the official site)
https://www.einpresswire.com/article/73 ... t-released
https://www.einpresswire.com/article/73 ... t-released
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Re: Question about Gold ETF expense ratios
I pay a flat $190 per year. For my number of ounces, it works out to less than any comparable ETF expense ratio.
As to bid/ask spread, it's whatever exists in the marketplace at the time of purchase. The custodian does not sell you metals. The gold dealer of your choice coordinates the purchase with the IRA custodian, then the metals are shipped to secure storage managed by the custodian, you don't receive the metals ever. My custodian is GoldStar Trust in Amarillo, TX. The spread or premium I paid is whatever it was in early 2018.