deuxsous

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    • Fri May 23rd 00:35 AM | Rating: 0 0
      Commented on:
      Commodity ETFs as Proxies for Private Money
      for d_teller:

      You wrote: "Perhaps the sponsors of GLD (and other commodity-holding ETFs, and some of the other commodity-linked ETFs, such as DBC) may have received a private letter ruling that transactions involving their marketed shares (not the creation units) aren't considered to be "Holding" of collectible commodities in a tax sheltered environment..."

      GLD says they did get a private letter OK from the IRS, and DBC and others feel they qualify on the UBTI issue. But I agree with you that people shouldn't rush off into the US collectables and UBTI tax thicket without some thought and expertise.

      In general I think people will do well to buy small gold bars and/or gold eagles and keep them (insured) in a bank vault and buy "blue" chip golds and very selective ETF's if needed.

      For Flash: thanks for your remarks!
      View article »
    • Thu May 22nd 17:52 PM | Rating: 0 0
      Commented on:
      Commodity ETFs as Proxies for Private Money
      REDEMPTION OF THE SHARES
      The Shares may only be redeemed by or through an Authorized Participant and only in Baskets.
      ======================...
      Per Basket Information: As of 05/21/2008 NAV Per Basket $9,102,967.33 NAV (in gold oz) Per Basket 9,862.37
      ======================...

      Creation and Redemption of Shares
      Authorized Participants are the only persons that may place orders to create and redeem Baskets. Authorized
      Participants must be (1) registered broker-dealers or other securities market participants, such as banks and
      other financial institutions, which are not required to register as broker-dealers to engage in securities
      transactions, and (2) DTC Participants. To become an Authorized Participant, a person must enter into a
      Participant Agreement with the Sponsor and the Trustee. The Participant Agreement provides the procedures for
      the creation and redemption of Baskets and for the delivery of the gold and any cash required for such creations
      and redemptions. The Participant Agreement and the related procedures attached thereto may be amended by
      the Trustee and the Sponsor, without the consent of any Shareholder or Authorized Participant. Authorized
      Participants pay a transaction fee of $2,000 to the Trustee for each order they place to create or redeem one or
      more Baskets. Authorized Participants who make deposits with the Trust in exchange for Baskets receive no
      fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the
      Trust, and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or
      resale of Shares.
      ======================...
      MAXIMUM 28% LONG-TERM CAPITAL GAINS TAX RATE FOR US SHAREHOLDERS WHO ARE
      INDIVIDUALS
      Under current law, gains recognized by individuals from the sale of ‘‘collectibles,’’ including gold bullion, held
      for more than one year are taxed at a maximum rate of 28%, rather than the 15% rate applicable to most other
      long-term capital gains. For these purposes, gain recognized by an individual upon the sale of an interest in a
      trust that holds collectibles is treated as gain recognized on the sale of collectibles, to the extent that the gain is
      attributable to unrealized appreciation in value of the collectibles held by the trust. Therefore, any gain
      recognized by an individual US Shareholder attributable to a sale of Shares held for more than one year, or
      attributable to the Trust’s sale of any gold bullion which the Shareholder is treated (through its ownership of
      Shares) as having held for more than one year, generally will be taxed at a maximum rate of 28%. The tax rates
      for capital gains recognized upon the sale of assets held by an individual US Shareholder for one year or less or
      by a taxpayer other than an individual US taxpayer are generally the same as those at which ordinary income is
      taxed.
      ======================...
      INVESTMENT BY CERTAIN RETIREMENT PLANS
      Code section 408(m) provides that the acquisition of a ‘‘collectible’’ by an individual retirement account, or IRA,
      or a participant-directed account maintained under any plan that is tax-qualified under Code section 401(a) is
      treated as a taxable distribution from the account to the owner of the IRA, or to the participant for whom the
      plan account is maintained, of an amount equal to the cost to the account of acquiring the collectible. The
      Sponsor has received a private letter ruling from the IRS to the effect that a purchase of Shares by an IRA, or by
      a participant-directed account under a Code section 401(a) plan, will not be treated as resulting in a taxable
      distribution to the IRA owner or plan participant under Code section 408(m). However, if any of the Shares so
      purchased are distributed from the IRA or plan account to the IRA owner or plan participant, or if any gold
      received by such IRA or plan account upon the redemption of any of the Shares purchased by it is distributed to
      the IRA owner or plan participant, the Shares or gold so distributed will be subject to federal income tax in the
      year of distribution, to the extent provided under the applicable provisions of Code section 408(d) or Code
      section 402. See also ‘‘ERISA and Related Considerations.’’
      View article »
    • Thu May 22nd 17:49 PM | Rating: 0 0
      Commented on:
      Commodity ETFs as Proxies for Private Money
      Actually, in my own personal and humble opinion only, GLD, and some other US precious metals funds, is an extremely poor way to get gold exposure. I have excerpted below from the distributor's website and from their prospectus various snippets of information about GLD.

      You can only redeem shares for gold if you are an Authorized Participant, which essentially means if you are a bank a brokerage. As of today's information at the website you would need to own $9,102,967.33 in GLD shares and pay a $2000 fee and be an AP in order to redeem GLD shares in gold.

      The taxation of GLD capital gains, if any, is quite onerous under US Federal taxes: 28% regardless of time held or dollar value of the gain. (see below)There are also some restrictions on US tax-deferred retirement funds holding GLD. (see below)

      All of these same taxation issues would also apply to CEF plus the addition of some Canadian issues.

      I do not own either or these securities. I prefer to own actual gold or to own it in paper form in etf's which hold unleveraged gold futures contracts which are taxed much more favorably for US investors and have none of the potential difficulties for tax-deferred US retirement plans. DB has some of such funds. I do not own any of those funds although I may do so in future.

      As always, one should read *and understand* the prospectus before buying anything.
      View article »
    • Thu May 22nd 17:06 PM | Rating: 0 0
      Commented on:
      Commodity ETFs as Proxies for Private Money
      For Tom Gordon:

      Are you quite sure that shares of GLD can be redeemed for physical gold? If so is the distrubution not taxable, as it should be?

      Thanks in advance!
      View article »
    • Sun May 4th 18:03 PM | Rating: 0 0
      Commented on:
      Calling It Quits on Gold, Platinum - It's Time to Go Financials!
      i've been trading them for 30 years. commodities are different. they don't just go up and up in low volalitilty walkups forever, as stocks often do. they tend to spike up in a matter of months and then consolidate somewhere just under the highs for long enough to establish that higher prices were justified after. but that's too long for today's short term bandits, so they are gone and into the latest spike somewhere else. then when everyone is bored with commodities in 3-15 months, they spike again. the average consolidation period after a spike in this commodity bull market since 2002 has been 4-5 months and we're not quite two months into this one. by the way, look at one or more of the CRB indexes which have most of the US and some London commodities in them. i prefer the CCI version (similar to the old CRB) which GCC tracks. DJP tracks another CRB version. gold alone doesn't cut it.

      the commodity bull market has at least another decade to run, and if you're not overleveraged you can just hold and kick back and do nothing. but of course EVERYONE IS overleveraged these days. so we have to have these long consolidations so we can pick them apart......yawwwwwnnnn...
      View article »
    • Wed Apr 30th 23:25 PM | Rating: 0 0
      Commented on:
      Gold ETFs Get All the Attention, But What About Silver?
      I still say that if you are interested in making money and banking it after taxes, instead of promoting a dubious silver religion, DBS or old-fashioned long silver futures are better ways to go than tax-inefficient silver ETF's.

      Silver weighs tonnes and requires many wheelbarrows to move any significant dollar amount of the physical. Try moving or storing a hundred kilos of silver sometime. Relative to weight, and therefore storage costs, silver is a minor element compared to gold or platinum or osmium. If you want to make some serious money on silver, leverage it up with futures. Otherwise buy silver eagles or bags of rice or cases of motor oil for small money.
      View article »
    • Wed Apr 30th 21:07 PM | Rating: 0 0
      Commented on:
      Canadian Oil Sands Releases Bittersweet 1Q Earnings
      Since I am retired, I live on my investment base. Most of what I hold must produce a decent income stream, not just fervent hope for capital gains. The energy area is however one place, apart from "go-anywhere bond funds", where one can get income as well as inflation protection. There are oil majors which are yielding 4-5% right now. I expect as the upper echelons of the majors begin to grasp the realities of an inability to reliably replace reserves, we are going to see some huge new royalty trusts yielding much higher rates as "wasting assets" that they do for "going concern" operations. Sabine Trust and Mesa Royalty have been giving high yields for 25 years and haven't extinguished yet.

      In particular I would urge people to look at buying Canadian Oil Sands Trust--on big pull backs--not as a feel-good, "peak oil" play but as a good yielder with a long lived reserve base. I own it and also own four of the US gas/oil trusts with conservative reserve estimates longer than ten years.

      Even in the absence of "peak oil" considerations, the simple fact of demand having oustripped supply capability in nearly all world commodities after two decades of neglect, from 1980 to 2001, provides a solid underpinning for energy as well as metals and foods for **at least** another decade. Naturally there are long periods of consolidation at new higher levels after rapid price gains, but the long term is golden for many commodities including oil.
      View article »
    • Wed Apr 30th 13:18 PM | Rating: 0 0
      Commented on:
      Gold ETFs Get All the Attention, But What About Silver?
      In my personal opinion DBS will be better for US taxable accounts as it holds Comex silver futures (unleveraged, backed by TBills) so 60% of profits will be taxed at long term rates (10-25% tax rate) and 40% at short term rates (10-35%), even if you only hold the stock for ten minutes (or for ten years).

      SLV and CEF, which hold silver bullion, are taxed as collectibles at a fixed 38% tax rate on profits, regardless of overall income tax rate otherwise. (With CEF you also have to elect whether to register it with IRS as a passive foreign trust.)
      View article »
    • Tue Apr 29th 16:00 PM | Rating: 0 0
      Commented on:
      Upstream MLPs and Canadian Royalty Trusts: High Return, High Risk?
      In answer to Elliot Miller: My understranding is that a limited partnership which has no debt and which distributes 100% of its net income can be held in US IRA's and similar tax-deferred programs. One which fits this description is DMLP, Dorchester Minerals LP. It pays quarterly (not monthly) on a current 9.20% TTM basis.

      www.mcdep.com/rtweek70...

      "The main tax complication of DMLP is that taxable holders must report distributions as partnership income including the separate items furnished in what is known as a K-1 form. For new purchasers, most or all of income in the early years would be sheltered by cost depletion. For depletion purposes conservative reporting of reserves is an advantage because the implied higher depletion means earlier tax shelter.



      "At the same time, DMLP deliberately shuns debt to be sure that it does not trigger unrelated business taxable income for tax-exempt or tax-deferred investors. In other words, the stock ought to be suitable for endowments, pension funds and IRAs. Such investors forego the cost depletion advantage, but get full advantage of the avoidance of taxation at the partnership level. Non-U.S. investors might face other considerations."

      View article »
    • Thu Apr 24th 11:50 AM | Rating: 0 0
      Commented on:
      Gold/Dow Ratio: Where Are We Holding?
      In the idealized economic long wave cycle there are 27 years of inflation followed by 27 years of disinflation. Due to the time expended for basing of disinflation (1998-2003) and the time expended for the topping of inflation (1974-1980), the actual trend periods of inflation and disinflation are a bit over twenty years each. If we take 2003 as the time when the basing of disinflation completed, then inflation will rise on a trend basis until 2023 or so. And with inflation go interest rates and gold and other commodities.

      The Dow/Gold ratio shows that selected stock sectors can still rise during gold's inflation, but overall stocks don't rise as much as gold, especially the Dow which rarely has a metals stock, although the chemicals and oils can do well.

      Commodities and gold tend to rise in quantum leaps followed by long consolidations, so it is advisable to get a broad exposure to many commodities such as in the Dow Jones-AIG Index or the Continuous Commodity Index (Son of CRB). Not every commodity moves together and at the same time, so indexing serves to dampen volatility. DJP and GCC are two ETF's which follow DJ-AIG and CCI respectively. Pimco's PCRIX/PCRDX does the same in the mutual fund format.

      I personally own GCC and PCRIX but have no other connection with the gold or commodity industry.

      View article »
    • Tue Apr 15th 16:56 PM | Rating: 0 0
      Commented on:
      Jim Rogers' Picks and Pans - Barron's Interview
      Rogers is a boorish blowhard, but he understands that the inflation cycle has another decade or more to run. He was negative on investing "IN" China for a long time because of the legal system and lack of financial transparency. He said he'd rather invest in things they were going to buy so much of that they had to go up in price. I still think that is a better plan than investing "IN" China.

      My guess is he got angry with the US because a lot of his commodity fund clients in the US and Europe got caught and lost a lot when the "famous" brokerage Hillary made her cattle killing on went belly up.

      Singapore is a good place to trade from, and the climate is no worse than NYC in the summer. He can fly all over Asia to bad mouth the US and get new clients. He'll fit right in in the rich Maylasian highlands in the summer...... A nice country club life for an aging billionaire who's burned his bridges here.
      View article »
    • Mon Apr 14th 13:26 PM | Rating: 0 0
      Commented on:
      The Dow Theory Letters' Richard Russell on Stock Values
      vaduz....it seems probable that first quarter US GDP will be positive once it is totalled up, and we're only two weeks out of first quarter. EVERYONE wanted to the the first person to anounce a recession, but we aren't in one yet on a nation-wide basis. Bonds and stocks have forecasted a recession for a year, but stocks are starting to have "second thoughts".
      View article »
    • Wed Apr 2nd 17:18 PM | Rating: 0 0
      Commented on:
      Gold: Too Volatile to Be a Safe Investment
      all commodities are too volatile to be investments, **except** in small quantities to damp long term asset sector volatility. gold was worthless from 1980 to 1999, unless you wanted to reduce your overall portfolio return. but if you don't have a clue about gold cycles--the norm--then you have to own it all the time. but you can re-balance it by settting a high and low perentage of your portfolio: being where you sell some to bring it back down to a safe percentage of total assets, or buy it when the percentage slips too low. as a rough guide i would say that 18% is tooooooo high a weighting for gold in a rational portfolio, and 8% is toooooo low.

      in general i agree with gigem77. it's very easy to own the whole US comomodity futures spectrum with GCC whcih uses the modified CRB index wherein each one of 17 comodities is owned in an equal dollar amount. i own that one and Pimco's PCRIX (for taxable accolunts) in addition to gold bullion coins. if i include my energy stock fund (VGENX) and my metals stock fund (VGPMX) and a bunch of natural gas royalty trusts it's all about 22% of total invested assets including cash. that's a bit heavy, but i own no real estate REITS or funds quite yet.

      this segment has sure saved me over the past year and much longer too.
      View article »
    • Fri Mar 14th 17:49 PM | Rating: 0 0
      Commented on:
      Gold/Dollar Ratio Goes Parabolic
      Gold certainly does look parabolic on an arithmetic chart. But on a log (%)chart gold has made three pushes up since 1999 and is weakening on that basis. I won't sell my gold, which I own from much lower, but I would not recommend that a newbie buy it at this level. I'd wait for a >$100 pullback at least for starting a new position or even for adding to existing positions.
      View article »
    • Wed Feb 27th 14:01 PM | Rating: 0 0
      Commented on:
      Too Much Money Chasing Too Few Commodities
      This inflation was all predictable and predicted in the late 1990's when all the "smart people" were deflationists. Greenspan and Bernanke didn't create inflation. Falling supply (due to twenty years of underinvestment) and mariginal growing demand from newly developing countries created inflation....as was true after 1949 and after 1896. It's a simple cycle.

      The FED is making it more certain and perhaps speeding inflation up a bit, but they are really powerless to make a lot of difference in the long run. As inverstors our job is to make money for ourselves and families (clients?) to try to stay ahead of inflation and taxes. It's harder now than when bonds are going up year after year and stocks too, but it can be done.

      If you are in commodities and gold and infrastructure (shipping) you should be proud, not feeling guilty. You are following the market instead of fighting it. You are a hero to those you are responsible for now or in the future, and you are paying taxes which may help others. You'll be paying a lot more taxes by 2010. :))
      View article »
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