Author Topic: How to deinvest from gold-related stocks  (Read 2569 times)

mareofnight

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How to deinvest from gold-related stocks
« on: March 30, 2016, 05:28:36 PM »
I received some investments from a family member a couple months ago, to use for a down payment for a house. (Technically the remains of my education fund, which I didn't have direct control of til now.) It looks like it's mostly stock in gold and silver mining companies, and gold-related mutual funds, split across 10 different stocks and funds.

I left the investments alone for a couple months, since I didn't want to upset the family member who set it up by changing it immediately, and the investments were doing well at the time. Now I've had an offer accepted on a house, and I need a strategy for getting the money into cash so I can use it for a down payment. It's worth about $10k, and I'll need to withdraw about $7k at least, and might withdraw all of it so I can put what's left into Vanguard index funds.

What's the best way to turn this into cash over the next month? Sell all at once when it looks high? Sell 1/4 of each fund every week? Sell all of one stock at a time, starting either with the lowest or highest? Something else? I've only invested in VTSAX before, so I could really use some advice.

Telecaster

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Re: How to deinvest from gold-related stocks
« Reply #1 on: March 30, 2016, 05:33:58 PM »
Sell it all when you are ready to do something with the money.  If you think about it, it doesn't matter the order or even when you sell it.   At some point in the near future it will all be sold.  Since you don't know what the market will do between now and then, there is no value in doing anything other than selling all of it at the same time.   

Tyler

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Re: How to deinvest from gold-related stocks
« Reply #2 on: March 30, 2016, 05:44:52 PM »
You might want to talk to a tax adviser before selling.  Miners are taxed like stocks but other gold funds are not, so depending on your specific funds, capital gains, and tax situation there may be preferential ones to sell that will minimize your tax bill.

Sarnia Saver

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Re: How to deinvest from gold-related stocks
« Reply #3 on: March 30, 2016, 07:32:52 PM »
You might want to talk to a tax adviser before selling.  Miners are taxed like stocks but other gold funds are not, so depending on your specific funds, capital gains, and tax situation there may be preferential ones to sell that will minimize your tax bill.

I get the impression that the tax liability and tax bracket for Mareo isn't that high.  Talking to a tax advisor is a costly proposition when selling a relatively small amount of many securities.

As for the original question, it is 'free' money and to me the most costly thing you can do is loss sleep over whether or notyou cashed out at the 'right' time.

Sell it all when you are ready to do something with the money.  If you think about it, it doesn't matter the order or even when you sell it.   At some point in the near future it will all be sold.  Since you don't know what the market will do between now and then, there is no value in doing anything other than selling all of it at the same time.   

I agree, you need the money now, sell it.  You might be selling at the perfect time, it might be a bad time, don't sweat it.  The dollar value isn't that large that it is likely to make a huge difference, but if you happen to wait, and time it perfect so as to make more of a profit, you are setting yourself up for some bad habits down the road, thinking you can successfully time the market coming in or out.
« Last Edit: March 30, 2016, 07:34:33 PM by Sarnia Saver »

Financial.Velociraptor

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Re: How to deinvest from gold-related stocks
« Reply #4 on: March 30, 2016, 07:43:59 PM »
Just sell.  Gold is poorly correlated to...everything... trying to time it is even more useless than trying to time S&P 500.

Tyler

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Re: How to deinvest from gold-related stocks
« Reply #5 on: March 30, 2016, 09:18:08 PM »
You might want to talk to a tax adviser before selling.  Miners are taxed like stocks but other gold funds are not, so depending on your specific funds, capital gains, and tax situation there may be preferential ones to sell that will minimize your tax bill.
I get the impression that the tax liability and tax bracket for Mareo isn't that high.  Talking to a tax advisor is a costly proposition when selling a relatively small amount of many securities.

Perhaps you're right, but I personally would never recommend that anyone "sell it all now" without first knowing the tax treatment of the specific funds and the cost basis involved. 

Since the OP asked for other factors to consider -- Some precious metals funds are taxed as ordinary income (no matter how long you've held them) and not long term capital gains, so you may be able to save on your tax bill by prioritizing selling some funds over others.  Maybe that's not a big deal in the end and selling everything makes sense, but it's something worth looking into. 
« Last Edit: March 30, 2016, 09:20:35 PM by Tyler »

Telecaster

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Re: How to deinvest from gold-related stocks
« Reply #6 on: March 30, 2016, 09:41:41 PM »
Perhaps you're right, but I personally would never recommend that anyone "sell it all now" without first knowing the tax treatment of the specific funds and the cost basis involved. 

Since the OP asked for other factors to consider -- Some precious metals funds are taxed as ordinary income (no matter how long you've held them) and not long term capital gains, so you may be able to save on your tax bill by prioritizing selling some funds over others.  Maybe that's not a big deal in the end and selling everything makes sense, but it's something worth looking into.

I agree it is worth thinking about at least.  But I personally wouldn't spend a lot of time or money on it.  For one, if you need the money, you need the money, and it sounds like the OP needs the money.  Secondly, it sounds like the OP just got finished with school, so realistically in a low-ish tax bracket.  Low-ish tax brackets are about the same as long term capital gains. 

I would frame it more as "are there any of these I want to keep?"   


nobodyspecial

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Re: How to deinvest from gold-related stocks
« Reply #7 on: March 31, 2016, 06:52:16 AM »
Just sell.  Gold is poorly correlated to...everything... trying to time it is even more useless than trying to time S&P 500.
Except it's easier to get a TV spot and persuade enough people that the end of the world is coming and raise the gold price than it is to move the SP500 up!

..... I wonder how much Gold a certain Mr Trump bought at the wrong time .....?

Cognitive Miser

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Re: How to deinvest from gold-related stocks
« Reply #8 on: March 31, 2016, 01:02:41 PM »
I had gold ETFs for a while, and the basis calculations when I sold them were a pain in the butt, but I was able to do it myself.
Sell what you need, then get started early on your 2016 taxes in case you need to bring in outside help.
I agree with the sentiment that it's not worth losing sleep over the precise value of free money.

mareofnight

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Re: How to deinvest from gold-related stocks
« Reply #9 on: April 02, 2016, 12:45:43 PM »
Thank you all for the advice!

I just sold one of the three mutual funds, and put in 'sell all' limit orders for the stocks I had less than $1k worth of. (Just out of nervousness; better to mess up selling $200 of something than $2,000.) After figuring out how market orders work, it wasn't as hard as I'd expected. (The UI just looked intimidating at first, because I'd never done a market order before.) If the transactions seem to be working how I expected, I'll sell the rest in a week or so.

nobodyspecial

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Re: How to deinvest from gold-related stocks
« Reply #10 on: April 02, 2016, 02:56:15 PM »
Yep, my bank's site sets a $ limit amount on limit orders.
On Questrade you set a limit relative to market in $0.01 units - I'm always VERY careful to check which one i'm on !