Letter Re: Converting Precious Metals ETFs to Physical Metals

Mr. Rawles,
I have read your blog with interest for several years now, and I am coming around to your view that using long-term physical holdings in precious metals as a “time machine” to fight inflation is a good strategy. I have some small investments in bullion-backed exchange traded funds (ETFs) that I would like to convert to physical holdings, but I am unsure of the most efficient way to proceed.

Of course I could always just sell the shares, head to the coin shop and pay the tax man next spring, but all I really want to do is shift the location of the bullion that I already own. It doesn’t seem right that this should be taxed. Okay, I’m not the first person to whine about unfair taxation, but is there some way to postpone Uncle Sam taking his cut for a while?

Are you aware of any method to convert shares in a precious metal ETF into physical holding without incurring a tax penalty?

Best Regards, – Brian in Michigan (another one of your “burbivalist” readers)

JWR Replies: Sorry, but I don’t know of any way to avoid the tax hit with cashing out an ETF. Perhaps a SurvivalBlog reader with a background in a tax law knows a way, and can comment.

FWIW, I’ve never recommended ETFs. Rather, I ‘ve always said: “tangibles, tangibles, tangibles”. To me, in the context of precious metals that means owning the physical metal and holding in your own hands. I recommend that all of your future precious metals purchases be done that way, to eventually minimize you paper or “synthetic” metals holdings,