Greetings, There seem to be rumblings that GLD is not all it should be but PHYS is actually ok. Any thoughts? Thank you
There is some tracking error between GLD and spot gold since the etf uses derivatives to create the exposure.
PHYS is a CEF rather than an ETF. CEF's almost always trade at a premium or a discount to their underlying assets. In the current market environment, you are going to most likely going to be paying a premium to own PHYS. If PHYS ever trades at a discount to its net asset value then by PHYS...otherwise buy GLD. Recently, conspiracy theorists have been spreading rumors that GLD doesn't actually have all of the physical gold it is supposed to have sitting in vaults. If you believe that nonsense then pay a premium to buy PHYS instead and wear a tin-foil hat at all times to protect yourself from the mind-control beams that the government broadcasts from street lamps.
The tax treatment for the two differs as well. Long term cap gains tax on PHYS is 15% GLD is taxed at 28% That's a big reason for the discrepancy in premium. "A closer look at the prospectus reveals one unique and potentially exciting feature: any gains realized on the sale of units by an investor may be taxable at long-term capital gains rates (i.e., 15%), âcompared to a long-term capital gains tax rate of 28% applicable to the disposition of physical gold bullion and other âcollectiblesâ held for more than one year.â Under current U.S. law, the gains recognized from the sale of âcollectiblesâ (a category into which gold ETFs fall for tax purposes) held for more than one year are taxed at a maximum rate of 28%, rather than the 15% rate applicable to most other long-term capital gains (it should be noted that the availability of the favorable tax treatment on PHYS is a complex issue that likely requires advice from a tax professional)." http://etfdb.com/2010/sprott-launches-new-canada-gold-etf-phys/
There's a couple people in Canada worth a few hundred million each that like to read the COMEX strip everyday.