Is a Gold Bar a Good Gift?

Unlike most investments, you can physically hand someone possession of a gold bar. And watch them stagger under the literal weight of your gift. 

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But is a gold bar actually a good gift to receive? How has gold performed historically compared to other assets? How easy is it to store or sell? What are the tax implications?

Prepare for a crash course on gold, if you’ve never owned it before. 

Historical Appreciation

In 1971, President Nixon severed the US dollar from the gold standard. After that, the price of gold started moving at market value.

It spent the rest of the 1970s catching up on lost time, notching an average annual return of 40.2%. It then settled into a more normal market rhythm, and earned an average annual return of 4.4% from 1980 through the end of 2023 (Note that average annual return is not a factor in compounding).

That underperforms just about every other investment option over that timeframe:

  • S&P 500: 13.0%
  • 10 Year Treasuries: 7.0%
  • Corporate Bonds: 9.2%
  • Real Estate: 4.7% (appreciation only, not income)

However, if you average gold’s annual returns since 1971, it comes out rosier at 10.5%. 

Secure Storage

You probably don’t want to store a bar of gold worth tens of thousands of dollars in your underwear drawer. 

You could store it in a home vault, if your vault offers advanced security and is fixed to the wall. Or you could store it in a safe deposit box at a bank or a dedicated storage facility for precious metals. The latter can cost you anywhere from 0.12% to 0.9% of your gold’s value per year. 

Depending on the amount of gold you’re storing and its current value, that could add up to hundreds of dollars a year. 

Selling Gold Bars

Selling a bar of gold isn’t quite as simple as clicking the “Sell” button in your brokerage account. 

You can start by looking up local gold bullion dealers, but you may get a better price per ounce from online dealers. Online dealers often cover your shipping costs, and insure the package against loss or theft. 

Before agreeing to a price per ounce, research the current spot price of gold. Unscrupulous dealers might lowball you on their purchase offer.

Tax Implications

The donor pays taxes on gifts at the time of giving, not the recipient. And in many cases, the giver pays no taxes. 

In 2024, you can give up to $18,000 to each recipient, tax-free, without reporting it. If you give an individual person more than $18,000, you must report it to the IRS, but you still won’t pay gift taxes on it as long as you haven’t exceeded the lifetime gift and estate tax exemption of $13.61 million. 

That said, the recipient does owe capital gains tax when they sell the gold (or any other gift). The cost basis resets at the time of the gift — if you receive a gift of one ounce of gold worth $2,000 and then sell it at $2,300 a few years later, you pay capital gains tax on $300. 

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Final Thoughts

Investors view gold as a hedge against geopolitical uncertainty, inflation, and stock market crashes. But it’s largely a defensive investment, a fallback plan in a crisis. 

If you’re thinking about giving money to a younger person, who has plenty of time to let their portfolio compound before they’ll need to tap it for retirement, consider giving them stocks instead. Gold is inconvenient to own and sell, and hasn’t delivered the same historical returns as stocks or real estate. 

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This article originally appeared on Is a Gold Bar a Good Gift?

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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