Gold Revs Back Up While Bitcoin Enthusiasts Fly High

As anticipation of a crypto-friendly Trump administration lights a fire under Bitcoin, the gold market is bouncing back strongly.

Bitcoin surged to a record high of 99,000 this week. President-elect Donald Trump has vowed to make the United States the "crypto capital” of the world. He is also reportedly working on plans to create a national strategic stockpile of Bitcoin.

In the meantime, Bitcoin enthusiasts are celebrating the announced departure of Securities and Exchange Commission Chairman Gary Gensler. Under Gensler, the SEC has moved to tighten regulations around cryptocurrency markets. President Trump will have the opportunity to appoint a new SEC chair who will presumably be more friendly toward cryptos.

That said, the crypto space has been beset by numerous scams and is fraught with risks. Anyone considering buying Bitcoin in the midst of this euphoric melt up should be aware that downside risk is significant in this notoriously volatile asset class.

Whatever its virtues as an alternative store of value, Bitcoin isn’t gold. No digital asset can substitute for hard money in tangible form whose ability to retain value has stood the test of time.

Gold did come under several days of heavy selling following the election results. But it is back on the upswing this week. The monetary metal has rebounded by over $130 or a robust 5.2% since last Friday’s close to bring spot prices to $2,711 an ounce.

Turning to the white metals, the silver market shows a weekly gain of nearly $1 or 3.0% to come in at $31.35 an ounce. Platinum is advancing 2.6% to trade at $978. And finally, palladium is popping 5.8% higher this week to command $1,045 per ounce.

Well, as the Thanksgiving and Christmas holidays approach, the window of opportunity to make moves in your personal finances before the end of the year will narrow. It’s especially important to consider any tax strategies you may want to implement before the calendar turns to 2025.

For example, deferring capital gains while realizing any capital losses on investments may help to reduce your tax burden for 2024. You might also consider making charitable contributions or shifting forward any deductible medical, real estate, or business expenses rather than waiting to incur them in the New Year.

Now is also a good time to consider making contributions to tax-advantaged accounts such as IRAs. For 2024, individuals may contribute up to $7,000 to an IRA. For those over age 50, that amount increases to $8,000.

It’s also worth considering adding physical precious metals to your IRA. In order to do that, you’ll need to set up a Self-Directed IRA with an IRS approved custodian. Money Metals is happy to work with customers who are interested in funding an IRA with bullion.

Some investors understandably don’t want to deal with the compliance hassles of IRAs. The IRS imposes rules on how and when you can contribute, what you can invest in, when you can take distributions without penalty, and when you must take distributions. Bizarrely, the IRS considers it acceptable to take IRA distributions after you turn 59 ½ -- an age that no normal person keeps track of on a 365-day calendar.

Over the decades, Congress has offered Americans various savings vehicles for retirement, education, and healthcare and all sorts of credits and deductions for all sorts of things. But they all carry arbitrary and complex rules that drive up compliance costs and drive many taxpayers to frustration and exasperation.

Elon Musk’s Department of Government Efficiency notes that there are more than 16 million words in the tax code. Navigating the tax code costs Americans 6.5 billion hours each year.

The Department of Government Efficiency will propose some much-needed simplification.

One of the onerous tax provisions that unfairly hits precious metals investors in particular is the so-called collectibles tax. The IRS considers all bullion products to be collectibles and taxes them at an elevated long-term capital gains rate of up to 28%.

But a pure gold bar isn’t like a rare stamp or autographed baseball card, whose value is based almost entirely on intangible factors beyond material and manufacturing costs. The value of a gold bullion product is based almost entirely on the price of gold itself.

That distinction could be made moot if Congress would simply get rid of the collectibles tax and stop punishing investors who hold physical assets instead of Wall Street assets.

Alternatively, the IRS under the incoming Trump administration could issue new guidance that states ordinary precious metals bullion products are not collectibles. This would require no new law from Congress – just a more sensible interpretation of existing law.

*******