Wash Sale Rules and Precious Metals: The Line
Section 1091 reaches stocks and securities. Physical bullion is a collectible, but a gold ETF or a mining share is a security and does fall under it.
The wash sale rule is one of the most misstated provisions in writing about precious metals, usually by people asserting that a law extended it to bullion. No such law has been enacted. What actually exists is a line between instruments, and the line is worth understanding precisely because it runs through positions that feel identical.
What Section 1091 Says
The rule disallows a loss on the sale of stock or securities where substantially identical stock or securities are acquired within a window around the sale.
The disallowed loss is not lost. It is added to the basis of the replacement, deferring the benefit until that replacement is sold.
The operative words are stocks and securities. That phrase is what determines everything below.
Where Metal Sits
The Internal Revenue Service treats physical precious metals as collectibles, a category that also carries its own rate treatment on long-term gains; see collectibles tax rate.
A collectible is not a security. On the face of the statute, the wash sale rule does not reach a bar or a coin.
That is a statement about the text of Section 1091, not a recommendation. The economic substance doctrine is a separate matter, and it is discussed below.
The Line Between Instruments
This is the practical content of the page.
| Holding | Security? | Wash sale rule on its face |
|---|---|---|
| Physical bullion, bars and coins | No, a collectible | Does not reach it |
| Exchange traded product holding metal | Yes | Applies |
| Mining company shares | Yes | Applies |
| Mutual fund holding metals or miners | Yes | Applies |
| Futures contracts | Their own regime | Different rules apply |
| Metal held in a retirement account | Inside the account | Losses are not recognised there in the usual way |
Someone who holds the same exposure in two forms can face two different answers. A loss realised on an exchange traded product, followed by a repurchase inside the window, raises the wash sale question. The same loss realised on bars in a vault does not, on the text.
That asymmetry is the thing worth knowing, and it is the reason a general statement about “gold” is usually wrong for one of the two cases.
The Claim That a Statute Changed This
Content asserting that a law extended the wash sale rule to precious metals, or to digital assets, appears regularly. Proposals have been introduced over the years; enactment is a different matter, and none has brought physical metals within the rule.
The useful response to such a claim is to ask which statute and which section. That question resolves it quickly.
Rules in this area can change, and a proposal that failed in one Congress can return in another, so the position should be confirmed for the tax year being filed rather than carried forward from an older article.
Economic Substance
The absence of a specific rule is not the same as a safe harbour.
Tax authorities can examine whether a transaction had a purpose beyond producing a tax result. A sale of an identical item followed by an immediate repurchase, with no change in position and no market exposure in between, is the pattern that invites that examination.
How much risk that represents depends on facts a reference page does not have: the amounts, the timing, the pattern across years, and what else is on the return. It is a question for a CPA or an enrolled agent who can look at the actual position.
Anyone planning a loss-harvesting strategy in metals should have that conversation before executing it rather than afterwards.
Recording the Loss Properly
Where a loss is claimed, it has to be substantiated: acquisition date, cost including any premiums and fees, disposal date, and proceeds.
Losses on investment metal are capital losses and follow the ordinary netting rules; see capital losses on gold. Losses on items held for personal use, such as jewellery, are generally not deductible at all, which is a distinction that catches people.
See also cost basis for gold and gold tax records.
What People Get Wrong About This
The first mistake is repeating the claim that a statute extended the rule to metals. It has not happened.
The second is treating all gold exposure as one thing. An exchange traded product and a bar in a vault are taxed differently in more than one respect, and this is one of them.
A third is reading “the rule does not apply” as “anything goes”. Economic substance is a separate doctrine and it is not disposed of by the absence of Section 1091.
A fourth is claiming a loss on personal-use items. That loss is generally not deductible.
And the last is relying on an article rather than a preparer. The wash sale question interacts with the rest of a return, and the answer depends on the whole picture.
Confirming Your Own Position
Take the actual transactions to your own tax professional: what was sold, what was bought, when, in what form, and why. Those facts decide it.
Nothing on this page is tax advice, and the rules described here can change.
Common questions
Does the wash sale rule apply to physical gold?
Section 1091 is written to reach stocks and securities. Physical bullion is treated as a collectible rather than as a security, so the rule does not reach it on its face. That is not the same as a clear licence to sell and repurchase, and the position should be confirmed with a tax professional before relying on it.
Does it apply to a gold ETF?
An exchange traded product is a security, and securities fall within the rule. This is the distinction that matters most on this page: the same economic exposure held through different instruments is treated differently, and a loss on an ETF followed by a repurchase within the window raises the question that a loss on bullion does not.
Has any law extended the wash sale rule to metals?
No. Proposals to broaden the rule have appeared over the years, and none has been enacted to bring physical precious metals within it. Anyone told that a statute did so should ask which one, because the claim does not survive the question.
Can I sell bullion at a loss and buy it back immediately?
The wash sale rule is not the only consideration. Tax authorities can look at whether a transaction had economic substance beyond the tax result, and a sale and immediate repurchase of an identical item is exactly the pattern that invites the question. This is a case for professional advice on your own facts.
What about mining shares?
Shares in a mining company are securities. They fall squarely within the wash sale rule in the same way as any other stock, which is one of several places where holding metal exposure through equities is taxed quite differently from holding the metal.
Read next
- Gold Capital Loss: Can a Loss on Selling Gold Be Deducted? Learn how a loss on selling gold is treated for tax purposes. Understand the difference between personal-use and investment gold, and what the IRS allows.
- Capital Losses on Gold: Netting and the Personal-Use Trap Losses offset gains of the same character first, then across. A loss on jewellery held for personal use is generally not deductible at all.
- Gifting Gold: Tax Rules for the Giver and Receiver Learn how gifting gold works for tax: no gain at gift, but the recipient inherits your basis. Annual exclusion, reporting thresholds, and future sale tax.
- Foreign-Held Gold, FBAR and FATCA: Where the Line Is Metal in a private vault is generally not a financial account. Metal in an account at a foreign institution can be, and the penalties are severe.
- Holding Period and Gold: The Line and What Is Past It The long-term line is the same as for other property. What sits past it is collectibles treatment rather than the ordinary long-term rates.