Gold

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Have you considered what effect the effort to force the COMEX to run out of physical gold has had on the prices?
 
[quote author="Oscar" date=1231674592]Have you considered what effect the effort to force the COMEX to run out of physical gold has had on the prices?</blockquote>




I think a concerted effort that results in a mere $100 move is a waste of time. As you have pointed out, Sovereign banks can flood the physical markey anytime they want. Still, it might explain the *weak move north.



*weak= relative to a full-fledged inflation-induced gold rush
 
I have a tax question about gold and the ETF GLD from an article I read in the WSJ yesterday. I will cite it if you want, but I don't have the time to look it up at the moment. Anyway, it said the IRS treats gold as a collectible, including the ETF GLD since they actually own physical gold, and that you are taxed at the collectible long term cap gains rate of 28% rather than the normal long term cap gains rate. Awgee, what's up with that?



FYI, I am looking at the puts on GLD, but they haven't come down that much in price yet. I don't take morekaos' words lightly, and when he speaks, I try to follow what he says.
 
[quote author="graphrix" date=1233017373]I have a tax question about gold and the ETF GLD from an article I read in the WSJ yesterday. I will cite it if you want, but I don't have the time to look it up at the moment. Anyway, it said the IRS treats gold as a collectible, including the ETF GLD since they actually own physical gold, and that you are taxed at the collectible long term cap gains rate of 28% rather than the normal long term cap gains rate. Awgee, what's up with that?



FYI, I am looking at the puts on GLD, but they haven't come down that much in price yet. I don't take morekaos' words lightly, and when he speaks, I try to follow what he says.</blockquote>


Graphix, GLD is a fool's way to hold gold and wouldn't trust it one bit. I, personally, do not hold any GLD as I know that Gold can be leased and the high probability of third party risks. You are also taxed at the long term gains rate of 28% assuming that GLD does not default. I doubt any gold would really be there once the serious crap hits the fan in the U.S. economy. I would stay away from GLD and buy yourself the real gold bullions.
 
[quote author="graphrix" date=1233017373]I have a tax question about gold and the ETF GLD from an article I read in the WSJ yesterday. I will cite it if you want, but I don't have the time to look it up at the moment. Anyway, it said the IRS treats gold as a collectible, including the ETF GLD since they actually own physical gold, and that you are taxed at the collectible long term cap gains rate of 28% rather than the normal long term cap gains rate. Awgee, what's up with that?



FYI, I am looking at the puts on GLD, but they haven't come down that much in price yet. I don't take morekaos' words lightly, and when he speaks, I try to follow what he says.</blockquote>


First of all, you are correct. GLD is considered a collectible. But unless you are looking at leaps instead of puts, why does the long term capital gains rate even matter?



There are reasons to hold real gold, and there are reasons to hold paper gold. From my perspective, you own paper gold for trades and real gold for security. Of course physical gold can not be shorted, so if you are interested in the downside, paper gold is the only way to go.
 
[quote author="graphrix" date=1233017373]I have a tax question about gold and the ETF GLD from an article I read in the WSJ yesterday. I will cite it if you want, but I don't have the time to look it up at the moment. Anyway, it said the IRS treats gold as a collectible, including the ETF GLD since they actually own physical gold, and that you are taxed at the collectible long term cap gains rate of 28% rather than the normal long term cap gains rate. Awgee, what's up with that?



FYI, I am looking at the puts on GLD, but they haven't come down that much in price yet. I don't take morekaos' words lightly, and when he speaks, I try to follow what he says.</blockquote>


Good God, Don't put that kind of presure on me.
 
[quote author="morekaos" date=1233015796]Nope, but I am short again at $912</blockquote>


How exactly are you shorting? COMEX?
 
[quote author="awgee" date=1233023000][quote author="morekaos" date=1233015796]Nope, but I am short again at $912</blockquote>


How exactly are you shorting? COMEX?</blockquote>


Some clients use comex some calls and puts on GLD and I know everyone hates them here but I do day trade SMN and DZZ. Not for the feint of heart so be careful out there. My people are mostly pros so they understand the risks involved.
 
[quote author="awgee" date=1233031901]As required by law, the dealer reports to the IRS a transaction for an amount greater than $10,000. </blockquote>
Thanks Awgee. I think that's what I was looking for.
 
[quote author="Daedalus" date=1233035110][quote author="awgee" date=1233031901]As required by law, the dealer reports to the IRS a transaction for an amount greater than $10,000. </blockquote>
Thanks Awgee. I think that's what I was looking for.</blockquote>


Elliot Spitzer was busted because his bank voluntarily reported a series of under $10,000 "suspicious" transactions to the IRS or some other authority. Looks to me like Elliot really pissed someone off who had connections at his bank.
 
Thanks everyone for all the replies.



Now let me clarify. I saw the WSJ article, and thought that it was strange that an ETF of gold would be taxed the same way as actually buying and selling gold. I wasn't asking for myself, because if I trade options on it, it would be irrelevant since it will be a very short term trade. If I were to buy gold, I would buy the physical stuff, and technically I still am holding some. I wouldn't be as paranoid about GLD as Panda is, but if you can buy the real deal it is better. But, if you want to make a trade GLD is a much easier way to do it.
 
[quote author="graphrix" date=1233064150]Thanks everyone for all the replies.



I saw the WSJ article, and thought that it was strange that an ETF of gold would be taxed the same way as actually buying and selling gold. </blockquote>


While it's always a mistake to try to apply logic to the law, I believe the logic behind the tax treatment is based on the fact that you are buying fractional ownership of a pile of gold. Therefore, even though it is "paper" gold, you do actually own the real thing.
 
544 chapter 2 'capital assets' and code sec 408(m)(3)(b) (IRAs) seem pretty straightforward.



I'm NOT a professional, this is NOT professional advice NOR a recommendation of any kind of action.



posting about things like law, tax, medicine, etc, without backing it up is more than a little irresponsible IMO. it's also a little odd to do it on a site devoted to chronicling the wreckage when people make decisions based on false assumptions.
 
[quote author="awgee" date=1233204012]<em>Greenlight Capital Inc. founder David Einhorn, 40, is finally taking his grandfather?s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending.</em>



<em>Bullion gained for the eighth straight year in 2008 as governments in Europe and the U.S. rescued banks from collapse.</em>



<em>The 16-company Philadelphia Stock Exchange Gold & Silver Index gained 90 percent in the three months through yesterday while the Standard & Poor?s 500 Index fell 0.4 percent. Gold rose 21 percent in that period.</em>



<a href="http://www.bloomberg.com/apps/news?pid=20601014&sid=aqvwUIqllyRc&refer=funds">Bloomberg on Einhorn</a></blockquote>


Has he covered his short on Allied Capital?
 
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