Gold prices have surged nearly 60% in the past year, reaching over $4,200 per ounce, outperforming the S&P 500. Analysts predict gold could hit $5,000 by 2026, with central banks and retail investors driving demand for gold ETFs.

However, not all gold ETFs are taxed like S&P 500 ETFs, and choosing the wrong one can impact returns. Gold tends to shine when interest rates drop, making it an attractive investment, but its volatility should be considered.

Gold ETFs like SPDR Gold Shares allow investors to buy gold without physical storage. Experts recommend keeping gold at 5-10% of a portfolio, as it can underperform stocks and bonds over time.

The tax treatment of gold ETFs varies based on structure. Grantor trust gold ETFs are taxed as collectibles, with gains up to 28%. Futures-based gold ETFs follow the 60/40 rule for tax treatment, while ETNs offer capital gains treatment.

Investors can avoid tax complications by holding gold ETFs in retirement accounts. Despite potential tax traps, gold can still play a strategic role in a balanced portfolio.

Read more at Yahoo Finance: Gold’s surge draws ETF investors, but unexpected taxes may apply. Here’s what you need to know