Gold is considered to be the best means of investment in comparison with shares and bonds. Moreover, this yellow metal has been the most trusted metal for middle income groups.
Alike any other gem, gold can fetch you a lucrative deal whenever you require them to sale. Resale value of gold majorly depends on its purity. Purity is measured in carats. The purest form is 24 carat, though jewelleries are made with 18 carat or 22 carat- which means that other metals have been added to give it strength. It’s preferable to go for 24 carat pure gold which is available in markets as coins and biscuits. This can fetch you more in comparison to gold ornaments.
Gold has been one of the most primitive form of investment known to mankind which doesn’t lose its value, rather gives a consistent return. But there are three major facts that should be known about the gold.
ILLUSIONS ABOUT GOLD
The value of gold is in how it’s perceived. Even though gold has been considered a valuable and trusted medium of exchange from thousands of years, the reality it is that it’s really not “pure money.” Although there are states that accept gold and silver as legal tender in addition to Federal Reserve notes, having this precious metal in physical form might not earn good business for you.
The gold prices are fluctuating like a rollercoaster ride in the recent years.
According to equity research analyst, Henry Blodget, gold is just as susceptible to the whims of the market as any other investment. He pointed out that gold has no true fundamental value: “But there’s no solid theoretical way to ‘value’ gold, so its price could do almost anything.” Later, he says: “Speculating about what gold prices will do is speculating, not investing…”
He further points out, “If a financial apocalypse comes, would you rather have food storage and good land or a safe full of gold coins?
Questioning at the value of gold, the expert says, “Who’s going to trade for your gold — and who would be able to afford it at the time of financial crunch?
28% TAX RATE!!
Physical gold is taxed at the collectibles capital gains rate, which is 28%. Notably, it doesn’t matter what income bracket you’re in.
Forms of gold taxed at this rate include wafers, bars, coins and rounds, as well as certificate gold, electronic gold and gold ETFs.
Following are the gold forms that are taxable:
• All denominations of Gold Bullion coins and numismatic/rare coins;
• Precious metal bars, whether ounce, kilo or larger – whether held at home or via secure custody services such as GoldMoney and BullionVault – and also gold wafers
• ETFs like GLD, PHAU and so on (closed-end funds have different rules; see below);
• Any “paper gold” or Gold Certificates, such as Perth Mint Certificates and EverBank accounts;
• All forms of pool gold, rounds, and commemorative coins
Is there sales tax on gold? Some states have a sales tax on gold coins and bullion. However, Arizona does not have any sales tax.
HOW MUCH GOLD YOU CAN OWN?
There are no restrictions on private gold ownership in the United States. You are limited only by your budget and common sense.
Gold STORAGE TROUBLE
Storage of gold is very troublesome. You either need a secure location at your home or you need to pay someone to store it for you.
Finding someone to store it for you comes with full of risk. It will impose additional burden on your pocket besides giving you headaches.
By the time you pay a premium for buying physical gold, and then pay for its storage (or shipment to you), it’s a little hard to make a profit out of the ‘GOLD’.