Yahoo Finance What To Do If You Receive Gold as a Gift: Sell It or Hold It?
With gold prices reaching a new record high of $2,400 per ounce recently, the precious metal has provided a return of 12% since the beginning of the year. In this economic cycle, investors are concerned about stubborn inflation figures and high interest rates, so there has been an increased demand to get away from volatile assets.
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So, if you received gold as a gift, you may be debating whether to sell it or keep it. Read on for a list of factors you should consider before making that decision.
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Should You Sell Gold or Hold?
There will be a few scenarios where selling gold could make sense and other times when you should consider holding it. Here are some of the most common.
1. Personal Circumstances
Deciding whether to hold or sell physical gold will depend on your personal circumstances. If you’ve had it for years and sell it at current prices, you could make some good money.
“If you don’t need immediate cash, our advice is to keep it,” said Christian Lyche, founder of Gold Standard Auctions. “Gold is an amazing investment, not tied to the swings of the markets, and offers a safe place to invest for your future. “
If you need the funds to pay down debt or to cover your bills, you can sell the gold to cash in. If you’re currently in a comfortable financial situation, you could benefit from holding on to the gold.
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2. The Precious Metals Market
With gold reaching record-high prices, you may want to monitor the precious metals market to determine whether right now is the ideal time to hold or sell.
“Whether you should hold onto that gold or sell it will largely depend on how gold has been performing at the time you receive it and what the experts are saying,” noted Todd Stearn, founder and CEO of The Money Manual. “Gold prices are high right now, and according to CBS News, the price increase over the last three months could be a strong indicator of future performance.”
Gold is considered a strong hedge against inflation, so you may be happy if you decide to hold on to it for now.
3. You Have Better Investment Opportunities
If you believe that you can get better investment returns elsewhere, you’ll want to think about selling the gold to liquidate so that you have the cash on hand.
“If you need the money or don’t believe gold will do well in the future or can put the proceeds to another asset with a better return, it may be best to sell the gold,” shared Patrick Yip, Senior Director of Business Development at APMEX.
4. Sentimental Value
If the gift has sentimental value due to the person who gave it to you or the occasion for which you received it, you may want to keep it. Not every decision you make will be about the bottom line, and holding on to the gift could make sense.
If you’re in a strong financial position and feel that gold prices will shoot up due to geopolitical tensions, inflaiton, and economic uncertainty, you’ll want to hold it.
Selling Gold Considerations
If you’re planning on selling the gold, there are a few key aspects that you can’t ignore.
1. Reputable Dealers
You should research reputable dealers since selling physical gold is different from tracking stocks on an exchange. You should look into dealers, auction houses, and online platforms to get the best offer for your gold.
2. Info About the Precious Metals Market
Learning about the precious metals market is crucial for making an informed decision about selling gold. You’ll want to look into the market to see how it’s performing and what experts are predicting so that you sell at the correct time.
3. Professional Advice
You should speak with a financial advisor to obtain advice on your possible tax liability for selling physical gold. This also leads us to the next section.
Tax Implications of Selling Gold
When you sell gold, you have to pay capital gains taxes, and you can’t ignore this aspect of the transaction. While you don’t have to pay taxes on gifts you receive as the giver will have to worry about that, you could get a tax bill for selling your coins.
According to the IRS, a gift is, “Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.”
You can give up to $18,000 per person as a gift in 2024, and the lifetime limit is $13.61 million.
If you’re selling the gold that was gifted to you, you must figure out how much you’ll have to pay in taxes on the proceeds.
“You’ll need to determine the difference between the sale price of your gold and your cost basis,” shared Yip. “The IRS taxes gold as a collectible, which is subject to a maximum capital gains rate of 28%.”
Even though you received the gold as a gift, it’s important that you seek out financial advice to determine what will happen to your tax situation.
Stearn added, “It’s also true that you’ll generally have to pay capital gains tax when selling gold. The amount will vary based on factors such as your income and how long you’ve held the gold — you’ll owe less if you’ve had it at least a year, so you may not want to sell right away. You may also owe a state tax, depending on the state you live in.”
When deciding whether to sell or hold that gift, you’ll want to factor in the current price of gold, economic conditions and your financial situation.
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