Gold’s price is on a tear, hitting one record high after another as investors are now following the lead of central banks and flocking to the world’s most popular safe-haven asset. Time and time again, gold has proven to be a viable investment, and recently large investment houses have even changed their recommendation to hold up to 20% in your portfolio. But gold comes with an asterisk.

One hiccup in owning gold is its tax treatment. The IRS loves gold almost as much as the Fed hates it. Under U.S. tax law, physical gold and most gold-backed ETFs are treated as collectibles. That classification means long-term gains face a maximum tax rate of 28%, compared with just 20% on stocks and bonds. Now this is unfair, since gold functions as a form of money and a hedge against inflation, and that is not in line with it being a collectible like fine art or a baseball card.

With the renewed interest in gold and investors hedging against global uncertainty, the higher tax treatment requires your attention. What you hold, and where you hold it, can change your investment outcome as much as gold’s spot price.

The Unequal Playing Field of Gold Investments

One rationale discouraging long-term gold ownership compared to equities is gold’s higher tax rate. And we can all see the result: Investor portfolios are skewed toward paper assets and away from a hedge designed to protect them. It’s a distortion that undercuts gold’s traditional role in conservative portfolios.

But investors wanting to capture the lower tax rate on equities for their gold investment need to know that not all gold investments are taxed equally. Gold mining stocks and mutual funds that invest in gold-related securities are taxed like regular equities, with long-term capital gains taxed at a 20% rate.

Now, a gold purist would tell you that a gold mining stock is not like physical gold, and I will not argue differently. Physical gold is an asset you can hold without any third-party risk. A gold bar will not default or go bankrupt, and no new technology will make it obsolete, so a gold investor may say that this alone is worth the additional tax hit.

But, if you only want to bet on the rising price of gold and don’t want to buy physical gold because you don’t want the storage cost, the higher tax treatment, and the high premiums for buying and selling physical gold, then a derivative like a mining stock or a gold mining ETF is a great choice.

When betting on the spot price of gold, two types of gold investments done at the same time with the same spot price of gold could end up with dramatically different after-tax returns, depending solely on how these investments are held.

Many investors miss this nuance and end up with smaller net returns than expected. The tax code punishes those who don’t plan ahead. The good news: by choosing the right vehicle, you can keep gold’s hedge while trimming the IRS’s cut.

There are additional benefits to investing in gold mining stocks when gold prices rise. They are a derivative of the spot price of gold, as gold miners’ profits are impacted when the price of gold rises. A word of caution: this is also true on the downside, when the price of gold is declining. In today’s bullish gold environment, we see gold miners as a great opportunity for both upside and lower tax treatment.

Your Gold Playbook

Gold matters. It’s a strategic defense against inflation, debt monetization, and geopolitical chaos, but structure determines payoff. The right approach gives you gold exposure while dodging the 28% collectibles charge. We’ve picked three ETFs for income and growth. Open each recommendation below to see why it’s a top choice:

VanEck Gold Miners ETF (GDX)

iShares MSCI Global Gold Miners ETF (RING)

Sprott Gold Miners ETF (SGDM)

Bottom Line

Gold’s shine may dim under IRS rules, but mining ETFs such as GDX and RING deliver gold-linked upside at lower tax rates than bullion ETFs and physical gold. The wrapper you choose makes the difference between a hedge and a tax drag.

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November 28, 2025