Commodities & Precious Metals
Raw materials and metals, held directly, through futures, or through funds.
What is Commodities & Precious Metals?
Commodities produce no income; returns come from price changes, which are often driven by supply shocks and inflation. They have historically had low correlation with stocks and bonds. Long-term gains on physical precious metals - and on many metals ETFs structured as grantor trusts - are taxed as collectibles, at up to 28%.
Commodities & Precious Metals: a worked example
A client holding gold for 3 years pays up to 28% on the gain, not the usual 15% or 20%.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.