Gyroscopic Investing

Ah heck, I decided to take this down because I wasn't comfortable providing details.

Let's just say I have a big unrealized gain in GLD and no way to offset it, so I feel stuck.

Have you hit a rebalance band? If you have, you might as well bite the bullet; ya gotta pay the taxman his blood money sooner or later.

If you have any gold in a tax-sheltered account, you could sell some there and still consider your overall portfolio to be balanced even if your taxable GLD is totally overweight.

You could sell it synthetically, by selling call options.  Think of it as fancy limit orders

The premium should offset some of tax pain if you do end up having to sell and would allow to dump that premium into "on sale" asset classes.  Also, if you suck at timing like I do (yeah I know the PP has no active timing), you get some yahoo to pay you for the theta on the something the strategy told you to sell anyways.

Pointedstick wrote: Have you hit a rebalance band? If you have, you might as well bite the bullet; ya gotta pay the taxman his blood money sooner or later.

If you have any gold in a tax-sheltered account, you could sell some there and still consider your overall portfolio to be balanced even if your taxable GLD is totally overweight.

No, it's not time to rebalance.  And I don't have any losses I could tax-harvest to offset gains.  I'd like to diversify out of GLD but the cost of doing it is prohibitive in my view.

Snowman9000 wrote: Ah heck, I decided to take this down because I wasn't comfortable providing details.

Let's just say I have a big unrealized gain in GLD and no way to offset it, so I feel stuck.

A big unrealized gain is not the worst thing to have, snowman.

Bean wrote: You could sell it synthetically, by selling call options.

Careful selling call options. You might re-read some of the arguments as to why only non callable bonds are held in the PP.  I know the comparison is not obvious, but you are essentially cutting off upside overshoot with call options and part of the PP theory relies on that overshoot being there for you during crisis situations.

Mark Leavy wrote:

Bean wrote: You could sell it synthetically, by selling call options.

Careful selling call options. You might re-read some of the arguments as to why only non callable bonds are held in the PP.  I know the comparison is not obvious, but you are essentially cutting off upside overshoot with call options and part of the PP theory relies on that overshoot being there for you during crisis situations.

I only use them if I intended to sell anyways and at as close to the limit price I was going to set anyways.

Snowman9000 wrote: No, it's not time to rebalance.  And I don't have any losses I could tax-harvest to offset gains.  I'd like to diversify out of GLD but the cost of doing it is prohibitive in my view.

What is more prohibitive, or harmful -- paying 28% federal plus your state taxes, of simply losing the unrealized gain?

After watching the drop this past week I think the answer is clear.

The next question is if you want to continue to leave in GLD the 70% you would keep after taxes as speculation, or take it out as a sure thing.

The thing is, I'm not in a need to rebalance and take the gain.  So am stuck in GLD versus where I'd rather have my gold investment.  I am not going to pay 28, probably 33% with state taxes, just to switch to a different method of holding.  Stuck.

IMHO, just take the hit, move it to GTU, and avoid the problem in the future.

Well there is more to the story but I got uncomfortable in the first post.
Essentially I am no longer in accumulation phase.  And the potential taxes are not trivial, not in the least.
The moral of the story is, pick your gold holding wisely.