Question: I've been fortunate to have put a bit of money into a gold ETF (GLD, for the record), one of the ones that actually just buys bullion, not stocks in gold producing companies. My question pertains to any gains I have made on this investment. Am I correct in understanding that this type of income comes under the category of "collectibles", and thus incurs a significantly larger tax rate than normal long term capital gains? Ken, Arlington, MA

Answer: Yes, gold is considered a collectible for tax purposes, and that includes the gold exchange traded funds (ETFs). And you're right, the investment comes with a higher long-term capital gains rate.

For a gold ETF held for more than a year the maximum long-term capital gain rate is 28%. (It's 15% for ordinary stocks, bonds, and other investments.) Short-term gains on collectibles are taxed at your ordinary income tax rate. The GLD prospectus has a section on capital gains and taxes.

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