As Tax Day approaches, millions of Americans are becoming increasingly filled with panic and dread.

The Trump tax cuts may offer some relief. But not everyone will benefit greatly from them. A few could even see a higher tax bill for 2018 thanks to newly imposed limits on certain deductions.

The tax code itself remains absurdly complicated, needlessly invasive, and patently unfair. Some of that unfairness targets precious metals investors in particular.

For example, the tax code arbitrarily treats capital gains on all forms of physical precious as “collectibles.” For no good reason, the IRS taxes collectibles at a rate of 28% instead of the lower rates that apply to long-term gains on real estate or paper assets such as stocks.

Still, physical precious metals can be tax efficient investments if held the right way.

Since a gold or silver coin pays no interest or dividends, it never generates any tax liabilities unless and until you sell.

By contrast, stocks, bonds, mutual funds, and exchange-traded products (including those that purport to track metals markets) can issue taxable distributions that you literally can’t refuse.

The IRS will be notified of all the interest and dividend income you receive. It will know about any sales of financial assets that generate capital gains or losses. Your financial records can potentially be perused by other third parties such as trial lawyers – or hacked into by data thieves.

Physical precious metals purchases and sales almost never generate such records. Except in very rare circumstances, coin dealers file no tax forms with the IRS or transaction reports with other government agencies. Unlike paper assets, bullion can be held privately.

This isn’t to suggest that you should avoid reporting any capital gains on bullion that you are legally required to report! Fortunately, there are legal ways to shelter your gold and silver gains from taxation.

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