Thomas J. Gordon

Commodity ETFs as Proxies for Private Money

deuxsous,

yahoo profiles says "The Trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets." although this may have to do with the back end etf clearinghouse function (did more people net/net buy or sell gld etf today) rather than a service for individual investors. I just made a call to streetTracks and they are going to clarify for us.

My answer to your tax question is unequivocably that you redeeming your gold would not be a taxable event. You did not sell your gold to anyone else, you just changed the form you held it in. Then you are in the same boat as all the old gold bugs. You can buy gold coins, and if you sell them you are supposed to pay your gains on them. Disclosure: I am not a tax attorney.

The tax angle that came up in this thread does not obviate the idea of using gld as a store of value. In economics they tell you "inflation is a hidden tax", we have just discovered another form of this problem. If inflation was 50% you would still rather have gains on your commodites than hold paper dollars. But the tax angle is an important one to consider.

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