How are gains on gold and precious-metals ETFs taxed differently?

This surprises many investors: the IRS treats physically backed gold, silver, and precious-metals ETFs as collectibles, so long-term gains are taxed at a maximum rate of 28 percent rather than the usual 15 or 20 percent long-term capital gains rate that applies to stocks. Short-term gains are still taxed as ordinary income. This higher tax treatment makes precious-metals ETFs less tax-efficient than stock funds, which is one reason to hold them in a tax-advantaged account if you own them at all. Funds that hold gold-mining stocks rather than the metal itself are taxed at normal capital gains rates. Always check whether an ETF holds physical metal or mining companies, because the tax difference is significant. Confirm current rules at irs.gov, since tax law can change.