Investors buying into the precious metals trade are celebrating their gains, but those winnings are also likely to come with plenty of tax complexity. Silver futures for March delivery topped $100 an ounce on Friday, while gold futures surged to $4,989.90 an ounce. Contracts for both precious metals reached all-time intraday highs. @GC.1 1Y mountain Gold futures in the past year Investor interest in silver and gold has spiked as they seek relative safety in tumultuous times – like the “Sell America” trade that kicked off earlier this week. Foreign central banks have also been building their gold reserves . As a result, retail investors have been buying ETFs focused on precious metals. In just the past week, the SPDR Gold Shares (GLD) has seen more than $700 million in inflows, while the iShares Silver Trust (SLV) has picked up more than $100 million in new money. But even as ETFs offer retail investors an easy way to access gold and silver, they can also create a wrinkle come tax time. “There are so many different ways to be involved in commodities currently,” said Brian Kearns, certified public accountant and certified financial planner at Haddam Road Advisors in Evanston, Ill. “Every person is unique. What are the ETFs you’re holding and how do they operate?” Different structures, different treatments The tax treatment you’ll face for holding a precious metal ETF will depend on how the fund is structured. If you’re holding a commodities ETF whose holdings include the physical assets and you sell it after owning it for more than a year, you could be subject to a long-term capital gains rate of 28%. This is the same rate that applies to collectibles, including physical bars of silver and gold. In comparison, if you were to sell any other asset after more than a year, you’d be subject to a capital gains rate of 0%, 15% or 20%. Here’s something for owners of metals ETFs to consider: If you’re regularly trading these funds in a brokerage account, your gains are subject to ordinary income tax rates, which can be as high as 37%. “If it’s a long-term holding, your gain has a unique tax treatment,” said Tim Steffen, CPA, CFP and director of advanced planning at Robert W. Baird. “This can be a tricky calculation to do by hand, so for do-it-yourselfers, be prepared for that 28% top rate.” Funds that hold the physical assets may also sell off some of their holdings periodically to cover expenses and redemptions. “When the fund is selling the holdings, it’s realizing a gain or a loss, which comes back to you as an investor,” said Steffen. “There are transactions that happen inside the ETF that will have tax implications for you.” Sales within the fund may show up as small amounts for individual investors, but they can be a nuisance for those who aren’t used to seeing them, Steffen said. They may end up on the Form 1099 investors receive from their brokerage as tax season kicks off. Futures contracts in ETFs Commodities ETFs can also hold futures contracts as an underlying investment. These funds are structured differently from their counterparts that hold the physical assets: Futures-focused ETFs can be structured as partnerships. That means investors receive a Schedule K-1, which should show their share of income and losses. Investors in partnerships can’t file their income tax returns until they receive their Schedule K-1 – and these forms may not show up until late spring, which delay a timely filing. “Tax treatment and reporting depend on what the product actually holds, whether that’s physical metals, futures-based structures, or commodity-related equities, and each can lead to different tax treatments,” said Heather Knight, vice president and national brokerage coach at Fidelity Investments. Considerations for metals plays If you’re hoping to get into the excitement of precious metals, dig into the construction of the ETF you plan to use before you buy it. Taxes are just one factor to keep in mind. Investors should also be aware of how the fund is structured and its underlying holdings — as well as whether they are keeping the fund in a taxable account or a tax-deferred account. “Know what you own ahead of time, how it’s structured, how it reports and where it’s held to avoid surprises at tax time and keep your portfolio aligned with your broader tax strategy,” Knight said.