1202.50

[dbarberic]

Re: 1202.50

This is one reason that GTU and CEF trade at a premium over their NAV.

Here is a statement from CEF about how they are "likely" classified as a passive foreign investment company (PFIC).

Traslation please? Does this mean the potential for CEF to be taxed as a collectable?

[ASH]

Re: 1202.50

Traslation please? Does this mean the potential for CEF to be taxed as a collectable?

I haven't had to worry about this because I hold all my CEF in tax-deferred retirement accounts, so I don't have any direct experience with taxation of passive foreign investment companies (PFIC). I found this discussion of the US tax treatment of PFIC, which is pretty good. Also, here is a decent FAQ about the tax implications of PFIC for a company that holds gold bullion.

My understanding is that a US citizen who holds CEF or GTU outside a retirement account will wish to treat these companies as "qualified electing funds" (QEF) by filing Form 8621 with their annual federal income tax returns. If one does this, one has to include the ordinary earnings and net capital gains of CEF (or GTU) in the individual's income. However, the thing is, CEF and GTU are structured so that they never have any ordinary earnings or net capital gains, so there is no adverse effect upon the income taxes you must pay. The benefit gained, however, is that one can then pay regular capital gains taxes when you sell shares of CEF (or GTU) rather than the higher collectibles rate. (I think the fact that CEF pays an annual 1-cent dividend is what permits them to claim they are a PFIC rather than a bullion equivalent.... and you obviously do need to pay tax on that dividend every year.) Anyway, the key thing here is that if you didn't file for QEF while holding CEF, the tax treatment of a PFIC is different -- and you would end up having to distribute the capital gains over the period during which you held the CEF stock, as regular income, and pay regular income tax on them. That is why filing form 8621 is essential.

(Disclaimer: I'm not a tax accounting expert rendering professional advice; I'm just some dude on the internet; verify this with a qualified professional before acting upon it; yadda yadda yadda.)

[Prazak]

Re: 1202.50

Toast!? What are you doing, my man.

Let's ignore the fact that you had invested in gold stocks in spite of EJ strongly recommending against such, haven't you read all the bad posts on this site about GLD? It's my understanding the GLD is a scam waiting to be uncovered...not the place you'd want your money to be when the curtain is pulled back. The concensus has been that GTU and/or CEF are far better options than GLD...with physical being the ultimate medium (BullionVault or backyard depending on your arsenal).

You have dodged a bullet so far, but that doesn't mean you should continue dancing around the wrong end of the gun range. Yikes!

Owning gold stocks these past few months has been a great ride, a lot better than USTs. I understand EJ's reluctance to dabble in equity markets, picking up coins in front of a steamroller. But that's what tight trailing stops are made for. Even if these positions turn south and are stopped out I'll still be sitting on large gains.

[cjppjc]

Re: 1202.50

Owning gold stocks these past few months has been a great ride, a lot better than USTs. I understand EJ's reluctance to dabble in equity markets, picking up coins in front of a steamroller. But that's what tight trailing stops are made for. Even if these positions turn south and are stopped out I'll still be sitting on large gains.

I hate stops. I got stopped out of 50% of my portfolio. That 50% is now up almost 40%:mad:

Something like this has happened the only other time I used stops. These stocks are too volitile for that.

[Jay]

Re: 1202.50

Thanks!
I've had the stocks since before I found iTulip so I'm trying to sell into rallies while still holding the same equivalent of gold. I've read some of the posts about GLD and I'm looking into alternatives. I'm being pretty wishy-washy as to where's the best place to put it. I was nervous about GLD before, but after reading your comments, now I'm really nervous!

Take your PM total and divide it three ways:
33% physical
33% GTU
33% bullionvault

flavor to taste

[Jay]

Re: 1202.50

Would you have any idea how BullionVault or GoldMoney are taxed in the U.S.?

I believe bullionvault is taxed as a collectible. I don't know anything about the tax status of GM.

[jtabeb]

Re: 1202.50

That is all.

Looks $25 too light, to me.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 09 08 07 06 05 04 03 02 01 00 99

Click to enlarge

[Jay]

Re: 1202.50

Looks $25 too light, to me.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 09 08 07 06 05 04 03 02 01 00 99

Click to enlarge

How light is it going to look in a year?

[jtabeb]

Re: 1202.50

How light is it going to look in a year?

I honestly think today's spot price will look like a 75% off sale in a year's time.

They ran out of physical to supply the market. Time to just sit back, smoke a lucky and watch the bastard-fucks burn to death in their shorts. (Please add to your shorts, Please, won't you? Please double down again, and again and AGAIN)

The physical gold market is a powder keg resting on lake of gasoline that is sitting above an underground nuclear test site that has a 100 Megaton H-bomb with timing fuse just counting down past 30 secs on it's way to "IGNITION".

Disclaimer - My Call Sign in the Squadron is "Goldie" for a reason.

[strittmatter]

Re: 1202.50

I honestly think today's spot price will look like a 75% off sale in a year's time.

GOLD B$TCHES!!!!!!!!!!!

(sorry, I'm done)

[Jay]

Re: 1202.50

I honestly think today's spot price will look like a 75% off sale in a year's time.

They ran out of physical to supply the market. Time to just sit back, smoke a lucky and watch the bastard-fucks burn to death in their shorts. (Please add to your shorts, Please, won't you? Please double down again, and again and AGAIN)

The physical gold market is a powder keg resting on lake of gasoline that is sitting above an underground nuclear test site that has a 100 Megaton H-bomb with timing fuse just counting down past 30 secs on it's way to "IGNITION".

Disclaimer - My Call Sign in the Squadron is "Goldie" for a reason.

As I've posted elsewhere, I would rather be heavy than light right now. 100% agreed.

[Prazak]

Re: 1202.50

I hate stops. I got stopped out of 50% of my portfolio. That 50% is now up almost 40%:mad:

Something like this has happened the only other time I used stops. These stocks are too volitile for that.

I got stopped out of a few positions as well, and a few others have raced up to gains in the 90% and 100% range. So obviously I wasn't happy to have been stopped out of some of the other miner stocks I had bought. On the other hand it has been a lot better than parking 70% of my liquid assets in cash. And in an equity market like this, where you can't be sure whether it will rocket further upwards or come crashing down, and in a global environment like this, where you can't be sure whether a major European country might join Dubai in tinkering with debt default, or whether Israel might drop a few bombs on Iran, it would (in my view) be reckless to go long equities without keeping stops relatively tight (except for certain commodities vehicles like CEF, GTU, USL, which I hold for the long haul).

[raja]

Re: 1202.50

I haven't had to worry about this because I hold all my CEF in tax-deferred retirement accounts, so I don't have any direct experience with taxation of passive foreign investment companies (PFIC). I found this discussion of the US tax treatment of PFIC, which is pretty good. Also, here is a decent FAQ about the tax implications of PFIC for a company that holds gold bullion.

My understanding is that a US citizen who holds CEF or GTU outside a retirement account will wish to treat these companies as "qualified electing funds" (QEF) by filing Form 8621 with their annual federal income tax returns. If one does this, one has to include the ordinary earnings and net capital gains of CEF (or GTU) in the individual's income. However, the thing is, CEF and GTU are structured so that they never have any ordinary earnings or net capital gains, so there is no adverse effect upon the income taxes you must pay. The benefit gained, however, is that one can then pay regular capital gains taxes when you sell shares of CEF (or GTU) rather than the higher collectibles rate. (I think the fact that CEF pays an annual 1-cent dividend is what permits them to claim they are a PFIC rather than a bullion equivalent.... and you obviously do need to pay tax on that dividend every year.) Anyway, the key thing here is that if you didn't file for QEF while holding CEF, the tax treatment of a PFIC is different -- and you would end up having to distribute the capital gains over the period during which you held the CEF stock, as regular income, and pay regular income tax on them. That is why filing form 8621 is essential.

(Disclaimer: I'm not a tax accounting expert rendering professional advice; I'm just some dude on the internet; verify this with a qualified professional before acting upon it; yadda yadda yadda.)

My understanding is that you have to file form 8621 the year that you buy GTU or CEF, or you can't claim the capital gains tax rate.

However, I wasn't clear whether I had to send it in during the year of purchase itself, or whether I should send it in with my 1040 for that year, which is due in April of the next year.

To be on the safe side, I sent it in during the year of purchase, along with a note asking for clarification about when the form was actually due. I received a letter from the IRS saying that they had received my note, and would respond to it. That was a year ago, and I've still received no response :eek: :rolleyes:

I get the feeling that they really don't keep good track of things . . . or even know what's required half the time.

[raja]

Re: 1202.50

Makes me wish we would have gotten a little more gold at 800 but we have more than most people. The majority of our money being in cash is making me nervous with how much the market has been going up lately.

I don't get what you're saying . . . .

You are in cash, and the market has been going up, so you're afraid your missing out on potential profits?

Or you're afraid that the market is going up and now ripe for a crash? But being in cash would be good in that event, wouldn't it?

Or, that you think cash is jeopardized by one of these two alternatives, and that you think gold is safer?

In any case, I don't think anyone would not have wanted "a little more gold" given that it gone up so rapidly.

[raja]

Re: 1202.50

Kadriana...

If you had a guru like EJ that has been so right about so many calls,

a guru that is more often than not TOO conservative in his predictions,

and a guru that expects physical gold to go to $2,500 before he feels he needs to take another serious look at it's relative value,

then wouldn't it make sense that $1,200 is a fine time to buy?!

You should be nervous that the majority of your money is in cash, but not because you fear missing out on this inexplicable stock market rise. Go gold instead.

rjwjr,

EJ has a good record, but as we know, Past Performance Does Not Guarantee Future Results.

I missed EJs Dec 2007 call for personal reasons, and greatly lamented not making some money on shorting. (However, I came to iTulip in 2006 with everything in Treasuries and TIPS, so I didn't lose anything, either.)

Later, people on this site were having some success with SKF and SRS, and EJ had previously listed them as possible shorting tools. AFAIK, he never withdrew that recommendation, so I assumed (incorrectly) that they still might be a good idea. I plunged in, then SKF and SRS plunged, and I am now down about 80% on "investment".

When EJ came out with his China call, I thought, "Now I can make up some for my loses in SKF and SRS."
Nope. I'm down 40% on that.

The point of this tale of woe is that I when you say what you said to Kadriana, I feel the need to inject a little caution. I'm not trying to dis your advice, but just throw in a "caveat emptor" regards following a guru. As we have seen, EJ is not infallible.

As jk has said, it's a good idea to allocate one's portfolio to the probabilities of various outcomes, and some outcomes are not gold friendly. We don't really know for sure what's going to happen . . . it's still gambling.