Between events in Israel, Iran, Ukraine, Venezuela and elsewhere, a feeling of uncertainty has crept into financial markets over the past few years, sending the price of gold and commodities soaring.
But few realize that the trend toward physical gold, like coins and bars people keep around their house or in safety deposit boxes, brings along a surprising tax rate, higher than some other investments.
Gold's value is up by more than 30% this year because of those geopolitical events and other market concerns, but gold bullion, coins and even jewelry are taxed for capital gains purposes as "collectibles," much like valuable paintings, baseball cards and expensive pottery.
And the capital gains tax on collectibles can top out at about 28-percent, considerably higher than the average 20-percent top-out rate for investment-grade gold-related instruments like mining stocks and Exchange Traded Funds (ETFs) when held by people who make more than a certain amount of money, according to certified financial planner Bill Dendy.
"Some people who've had some gains in the hard asset of gold come to realize that the taxes are going to be about a-third of the gain," he says.
That's something that should be considered before investing.
Investors should also consider investing "in gold mining stocks, with the idea that when gold goes up, the companies that bring gold up out of the ground are going to do well."
And Dendy points out that "people can use options or futures that are traded and will appreciate like gold and may have potential leverage inside of them so you can still participate in the appreciation of the precious metal."