Gold ETF gains taxed at 28%, nearly double S&P 500 ETF's 15% rate, costing investors thousands more.

Investors in the iShares Gold Trust (IAU) face a higher tax rate on gains—28% under IRS collectibles rules—compared to 15% for gains in S&P 500 ETFs like Vanguard's VOO. This tax difference means a $100,000 profit in IAU could cost $28,000 in taxes, versus $15,000 for the same gain in VOO. Additionally, IAU charges higher annual fees and pays no dividends, increasing the cost of holding gold ETFs. Investors should consider after-tax returns and cheaper gold ETF alternatives before buying or selling gold ETFs.