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"I've shifted my gold from GLD to this..."

6/15/2012 8:38:18 AM | Dr. Steve Sjuggerud, DailyWealth

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You are taxed at a 28% tax rate for gains on collectibles, and it has a relatively high expense ratio

"Up until now," gold stock expert John Doody has held what he calls his "investment" gold "mostly in the big gold ETF – GLD."

Now, John has made a major change OUT of the big gold ETF.

GLD is probably the easiest and most popular way for individual investors to "invest" in gold...

It trades on the stock market, just like a stock. So you can buy gold through GLD with one click of your computer mouse. You can sell it just as easily.

The problem is, the big gold ETF "has several warts," as John explains in the latest issue of his Gold Stock Analyst newsletter.

He told his subscribers it's time for an "upgrade" out of GLD. In short, he's shifted all his GLD holdings to CEF (Central Fund of Canada) and PHYS (Sprott Physical Gold Trust).

What are CEF and PHYS? And what's wrong with GLD?

For one, with GLD, you are taxed as if you held gold as a "collectible." So you are taxed at a 28% tax rate for gains on collectibles. Second, it has a relatively high expense ratio, according to John.

John lists other reasons as well – including the scariest – a CNBC report from a London gold vault that GLD might not have the gold it claims to have...

Reporter Bob Pisani held a gold bar up for the camera with the numbers clearly visible. Pisani said it was owned by GLD, but the bar wasn't listed in the holdings on GLD's website, but on that of another, ETF Securities.

One of John Doody's alternatives to GLD is PHYS. It trades on the New York Stock Exchange. Canadian billionaire (and natural resources expert) Eric Sprott created it.

John Doody points out its important advantages over GLD:

It actually has the gold. "Bullion bars are stored in a third party facility in Ottawa, Canada and audited periodically and annually."
It has a lower expense ratio than GLD. "The expense rate is 0.35%/year."
It has a potentially lower capital gains tax rate. "U.S. investors getting 15% capital gains tax treatment with timely filing of QEF form (consult tax advisor)."

It is a closed-end fund – so it can trade at a premium or a discount to the actual underlying value of the gold it holds. But as I write, it trades very close to its underlying gold value.

John Doody – the man who follows the numbers with gold stocks more closely than anyone we know – has shifted his "investment gold" out of GLD and into other gold funds, like PHYS.

You should consider following his lead...

ABOUT THE AUTHOR

Dr. Steve Sjuggerud, DailyWealth

DailyWealth is free daily investment newsletter focused on the best contrarian investment opportunities in the world. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments. http://www.dailywealth.com/

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