Sprott Physical Gold Trust (NYSE Arca: PHYS) lets you own physical gold in a convenient and secure way that has potentially favorable tax advantages for U.S. non-corporate investors, versus owning gold through ETFs or directly through coins or bullion.
|U.S. Tax Treatment if
Held Over 1 Year
|Sprott Physical Gold Trust1
15% or 20%2
Taxed at Long-Term Capital Gains Tax Rate
|Gold ETFs, Coins, Bullion
Taxed at Collectibles Tax Rate
This bar chart compares the after-tax returns of hypothetical investments of $100,000 in PHYS and a hypothetical gold ETF,3 for the 1-, 3-, 5- and 10-year periods ending 12/31/2020. For the PHYS example, we assume a 35% short-term capital gains tax rate4 for the 1 YR period and a 15% long-term capital gains tax rate for periods longer than one year. For the Hypothetical Gold ETF, we apply the 35% short-term capital gains tax rate4 for the 1 YR period and the 28% collectibles tax rate for periods longer than one year.
This chart represents hypothetical investment examples and is shown for illustrative purposes only.
In addition to tax considerations, PHYS can offer several advantages when compared to other gold ETFs, including:
|Sprott Physical Gold Trust (PHYS)||Hypothetical Gold ETF|
|Product & Tax Structure||
Closed-End Exchange Listed Trust
Example: Open-Ended ETF such as Grantor Trust
|Tax Treatment if Held > 1 Year||
Taxed at Long-Term Capital Gains Tax Rate7
Taxed at 28% Collectibles Tax Rate8
|Redemptions||Fully Redeemable for Physical Bullion||Example: Physical Redemption Restricted to Authorized Participant Institutions|
Gold Stored at Royal Canadian Mint
Example: Gold Stored in Commercial Bank Vaults such as HSBC or J.P.Morgan
|N/A; the Mint shall not assign or transfer its obligations||Example: Commercial bank vaults can use sub-custodians for storage and other duties. These sub-custodians may themselves select sub-custodians to perform their duties, creating additional and unknown counterparty risks|
|Fees9||Total Annual Operating Expense Ratio of 0.45%||Example: Total Annual Operating Expense Ratios typically range between 0.25% to 0.40%|
|1||Requires the timely filing of IRS Form 8621 with your tax return.|
|2||15% long-term capital gains tax rate for single filers earning between $40,000 to $441,450 per year; 20% long-term capital gains tax rate for married filers earning over $496,600 per year.|
|3||The performance of the "Hypothetical Gold ETF" is based on the historical performance of Sprott Physical Bullion Trust (PHYS) and treating it as an investment subject to the 28% collectibles tax.|
|4||For U.S. investors who purchase and sell PHYS in less than one year, short-term capital gains will be treated as ordinary income and will be taxed 10% to 37%, depending on income level. As an example, 35% applies to U.S. single filers earning between $207,351 to $518,400.|
|5||Source: How Are Collectibles Taxed? Investopedia.|
|6||For more information, please see "Tax Considerations-U.S. Federal Income Tax Considerations" in the Prospectus and always consult your tax accountant regarding your particular situation.|
|7||For U.S. non-corporate investors only; requires the timely filing of IRS Form 8621; units must be held for at least one year.|
|8||Applicable only if the shares are held for more than one year; the tax rates for capital gains recognized upon the sale of assets held by an individual U.S. shareholder for one year or less are generally the same as those at which ordinary income is taxed.|
|9||As of 12/31/2020.|
The Sprott Physical Gold Trust is generally exposed to the following risks. See the prospectus of the Trust for a description of these risks: fluctuation in gold price, fund expense risk, cash redemption risk, risk of losing London good delivery status, future gold price may be lower, risk of asset sale to pay expenses, uninsured losses, invalid insurance claim, inadequate insurance held by service providers, currency risk for non-US unitholders, limited insurance recovery, losses relating to physical redemption, speculative investment, liquidity risk, limited recourse against bullion custodian, investment risk, redemption risk, bullion custodian risk, trust termination, premium/discount of trading price, suspension of redemption, regulatory risk, competition from other gold buyers, market risk, forced asset sales, regulatory status of the trust, official sector sale of gold, reliance on the manager, obligation to reimburse certain liabilities, no management of the trust by unitholders, limited unitholder rights, changes in investment objective and restrictions, substantial redemption risk, currency risk, taxation risks, unitholder may be liable for the trust’s obligations, unenforceable actions or judgments.
Past performance is not an indication of future results. All data is in U.S. dollars unless otherwise noted. The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering or tax, legal, accounting or professional advice. Readers should consult with their own accountants and/or lawyers for advice on their specific circumstances before taking any action. Sprott Asset Management LP is the investment manager to the Sprott Physical Gold Trust (the “Trust”). Important information about the Trust, including the investment objectives and strategies, applicable management fees, and expenses, is contained in the prospectus. Please read the prospectus carefully before investing. There are ongoing fees and expenses associated with owning units of a Trust. The Trust must prepare disclosure documents that contain key information about the Trust. You can find more detailed information about the Trust in these documents. Investment funds are not guaranteed, their values change frequently. This communication does not constitute an offer to sell or solicitation to purchase securities of the Trust. The information contained herein does not constitute an offer or solicitation to anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Sprott Asset Management LP. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell.
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