It has come to our attention from some accounting professional friends that metals ETFs in general have a tax treatment that should be carefully considered.

To quote from the SPDR Gold Shares prospectus, "Under current law gains recognized by individuals from the sale of 'collectables,' including gold bullion, held for more than one year are taxed at a maximum rate of 28%, rather than the 15% tax rate applicable to most other long term capital gains."

This quote comes from the prospectus of the ETF with the symbol GLD.

We suggest you check with your tax advisors and not take our word for it.

If the information that we have gleaned from the company documents is correct, for tax purposes it would be wiser to make long term investments in common shares of gold mining companies rather than owning gold ETFs in taxable accounts.

Respectfully yours,
Monty Guild.
www.GuildInvestment.com


Jim,

ETF'S and paper Gold

I read an article last month reviewing ETF contractual documentation, a significant weakness was discovered in that provisions to audit the keepers contracted by the ETFs to store ''Gold'' were expressly excluded and that the ''Gold'' held need not necessarily be the Element Gold atomic number 79 on the periodic table.

One has to ask why an ETF would agree to such terms if it were not intentional to engineer a weak link in the audit trail apparently absolving the ETF's management of responsibility at this point.

If ''Gold'' is in fact kept as paper then it would surely be in the interests of the keepers so as to profit at the time of redemption and to invest; (short); so as to drive the price of Gold down.

CIGA Peter