Most people don’t know this… But there’s a way to turn losses on your gold holdings into immediate tax savings – without losing possession of your precious metals.

It involves a loophole under Section 1091 of the IRS code. It’s known as the “wash-sale rule.”

A wash sale is when an investor sells a security at a loss to claim a tax write-off… only to repurchase the same (or nearly identical) security within 30 days of the sale.

Now, the IRS prohibits such sales. However, its rules don’t cover “precious metals.”

This means they’re not subject to a holding period for tax-swap sales.

So if you’re sitting on losses on gold bars, numismatic coins, or silver, you’ll want to take advantage of this loophole before the end of the year. And I’ll show you how.

But first…

“Wash” Your Gold or Silver

I wanted to find out why conducting a wash sale now would be good for precious metals owners. So I spoke to some of the top precious metals dealers in the country.

Rich Checkan is president and chief operating officer of Asset Strategies International. It’s one of the most reputable precious metals dealers in the country.

Here’s what he told me:

Now is a particularly good time to consider this strategy. Gold is about midway between its 10-year high and low. And over the last decade, silver is nearly 10 times closer to its low.

Why is that important? It’s simple. The lower the price when you execute a tax swap, the bigger the tax advantage, and the smaller the cost to capture it.

And if you act quickly, you should be able to put this to work this tax year.

Here’s an example of how it works…

Let’s say you bought an MS-64 $20 Saint-Gaudens gold coin for $2,200 per ounce in 2010. Today, those coins are worth about $1,581.

Under the wash-sale loophole, you could sell your coins at the current market price… and then immediately repurchase them for the same price.

In this hypothetical transaction, you’d realize a taxable loss of $619 per coin – which will lower your 2019 tax bill. But you’d still be able to keep your coins.

Now, there’s a transaction fee on the sale (1–4% on numismatics and 1–2% on bullion), and the shipping costs. So you’ll want to make sure these costs are less than what you’ll write off in taxes.

Plus, if you don’t use up all your losses this year, you can roll them forward into future tax years. And if you don’t have an offsetting gain, you can still take up to a $3,000 loss in the current year.

How to Execute a Tax Swap

Remember, this information is for general tax purposes only. We strongly encourage you to consult your accountant or tax adviser before making a tax swap.

If you do, here are the steps you should take:

  • Talk to your tax adviser: Tell them what you’re contemplating. Could you use some losses to offset gains on a one-for-one basis? There’s a chance your CPA may not even know this avenue exists.

  • Contact a gold dealer: We recommend Asset Strategies International or David Hall Rare Coins. Both can help you decide if a precious metals tax swap makes sense. Remember to do your due diligence. (Note: PBRG doesn’t receive any compensation for recommending these dealers.)

  • Know your situation: Before you reach out, you’ll need to know the types of precious metals you own, the quantity, the price you paid, your tax bracket, etc.

And if you’re ready to make the swap after talking to your tax consultant and a dealer, here’s a preview of what comes next…

You’ll have to physically mail your coins to a dealer. Dealers can “fix” the price. This means they can immediately arrange a buy-and-sell order on the same day.

If coin values spike in transit, you can have the dealer mail them back to you. No harm, no foul.

This tax loophole allows you to benefit from falling precious metals’ prices (in the past or in the future). And you’ll still be able to keep the exact same metals you started with… just with a new cost basis.

Be sure to act before the end of the year if you want to use any losses for 2019.


Grant Wasylik
Analyst, Palm Beach Daily

P.S. Which precious metals are you considering using this strategy for? And if you do make a tax swap, let us know how it goes right here.