H.R. 9060: Precious Metals Parity Act

The Precious Metals Parity Act is a bill that aims to change how certain investment income is treated under U.S. tax law as it pertains to regulated investment companies (RICs). Here are the key points of what the bill proposes:

Adjustment to Tax Code

The bill proposes an amendment to the Internal Revenue Code of 1986. Specifically, it seeks to modify section 851(b) to include precious metals as qualifying income for regulated investment companies. This section currently specifies what types of income can be classified as "qualifying income" for RICs, which allows them to maintain their special tax status.

Definition of Precious Metals

Under this bill, the term "precious metals" is defined to include:

• Gold
• Silver
• Platinum
• Palladium

These metals must be in bullion form, as described in section 408(m)(3)(B) of the tax code.

Inclusion in Investment Income

The amendment would allow income derived from investments in precious metals to be treated similarly to income from other assets currently classified under RICs. This potentially expands the scope of investment opportunities for these companies, allowing them to include precious metals in their portfolio without affecting their tax status.

Effective Date

Once enacted, the changes proposed by this bill would apply to taxable years that begin after the date of the law’s enactment.

Potential Impact

By enabling RICs to classify income from precious metals as qualifying income, the bill could lead to increased investments in precious metals by these companies. This change could attract more investment into the precious metals market from regulated investment companies.

Relevant Companies

• GLD - The SPDR Gold Shares ETF, which might see changes in its investment strategy.
• SLV - The iShares Silver Trust, potentially affected due to its reliance on precious metal investments.
• PPLT - The Aberdeen Standard Physical Platinum Shares ETF, which may benefit from increased regulatory clarity on investments in platinum.
• PALL - The Aberdeen Standard Physical Palladium Shares ETF, which may also gain from the inclusion of palladium under qualifying income.