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Are the PHYS capital gains taxes really that bad?
Posted: Fri Feb 14, 2014 2:27 pm
by jason
I already have most of my gold in GTU, and the next time I buy gold, I would like to diversify a bit. I was thinking that PHYS is a good option because it's outside the US and hopefully does not use fractional reserves. From what I have seen, the main disadvantage of PHYS as compared to GTU is that the shareholders of PHYS have to pay taxes when someone redeems their shares for physical gold. I called PHYS and the guy there made it sound like the taxes paid by the shareholders would be so small, I wouldn't have to worry about it. Does anyone else agree? What's the worst case scenario?
Re: Are the PHYS capital gains taxes really that bad?
Posted: Sat Feb 15, 2014 8:30 pm
by bronsuchecki
I don't have much info on the tax issue or size of it, but note that there have been some large redemptions out of PHYS recently due to the fact it was trading at a discount, aroun 14% has been withdrawn, so not sure if that will create a large tax bill for the fund.
Re: Are the PHYS capital gains taxes really that bad?
Posted: Sun Feb 16, 2014 10:18 pm
by jason
bronsuchecki wrote:
I don't have much info on the tax issue or size of it, but note that there have been some large redemptions out of PHYS recently due to the fact it was trading at a discount, aroun 14% has been withdrawn, so not sure if that will create a large tax bill for the fund.
Considering that PHYS is trading fairly close to its all time low, I am thinking that the fund may not have incurred a lot of capital gains on the shares being redeemed for gold recently. I am more worried about a SHTF scenario where if the banking system is on the verge of collapse, the price of gold could skyrocket, and, at the same time, people may be afraid of brokerage firms collapsing, so people might want to redeem their PHYS shares for physical gold to get out of the financial system, entirely. In such a scenario, there would be a huge increase in the price of gold along followed by a very large amount of PHYS redemptions for gold, which could theoretically cause a very large tax burden on the PHYS shareholders. Is this something that PHYS shareholders should be worried about? Does this sound logical?
Re: Are the PHYS capital gains taxes really that bad?
Posted: Mon Feb 17, 2014 10:27 am
by Libertarian666
jason wrote:
bronsuchecki wrote:
I don't have much info on the tax issue or size of it, but note that there have been some large redemptions out of PHYS recently due to the fact it was trading at a discount, aroun 14% has been withdrawn, so not sure if that will create a large tax bill for the fund.
Considering that PHYS is trading fairly close to its all time low, I am thinking that the fund may not have incurred a lot of capital gains on the shares being redeemed for gold recently. I am more worried about a SHTF scenario where if the banking system is on the verge of collapse, the price of gold could skyrocket, and, at the same time, people may be afraid of brokerage firms collapsing, so people might want to redeem their PHYS shares for physical gold to get out of the financial system, entirely. In such a scenario, there would be a huge increase in the price of gold along followed by a very large amount of PHYS redemptions for gold, which could theoretically cause a very large tax burden on the PHYS shareholders. Is this something that PHYS shareholders should be worried about? Does this sound logical?
IMO, in that scenario a PHYS holder would have a lot bigger worries than tax consequences, as the only safety would be in physical gold.