Hi Michael,
Here's the relevant section from the Casey Research article:
"There’s one more tax consideration if you own, or plan to own, CEF or PHYS.
The Central Fund of Canada and the Sprott Physical Gold Trust are Passive Foreign Investment Corporations (PFICs) for U.S. investors. This is a complex topic, but what I learned could save you some dinero now and some hassle later if you own a foreign closed-end fund like these.
Keeping it simple, if you own CEF or PHYS you can qualify for the standard capital gains tax rates, instead of the 28% collectibles rate, if you file a timely and valid Qualified Electing Form, or QEF. There are several options you can take with a PFIC, but this is the most common election.
Even if you don’t sell the fund in any given year, you must file this form every year. If you don’t complete an annual QEF or make one of the other elections, you could get hosed when you eventually do sell because your gain will be considered ordinary income, forcing you to pay interest and penalties on top of the regular tax. You can hold a PFIC stock for years without paying tax, but if you haven’t made a QEF or other election, you get the bad result we’re describing when you sell. Further, if the PFIC company reports income in a given year, this income is reportable and taxable as regular income that year, even if no stock was sold and even if the stock ended down on the year. The point here is obvious: don’t blindly buy into a PFIC.
The QEF benefit is obvious: you can cut your tax liability up to 46%, the difference between the 15% long- term capital gains rate and the 28% collectibles rate. Yes, capital gains rates are scheduled to rise next year, but this option still reduces your tax liability.
The successful investor is the informed investor, and you should read the prospectus of PHYS or CEF before buying. And if you don’t want to mess with the tax hassle, use an ETF instead."
So my comment - and I apologize for not being more clear - was that owning these funds is more complicated in terms of tax reporting than GLD or other ETFS (which I personally wouldn't touch with a 10 foot pole) or owning actual bullion or coins, which are the best and lowest cost choice over the long run, provided you don't do much selling [due to 28% collectibles tax rate). These complexities and hassles are the kind of thing that drive some to avoid gold or buy into funds like PPRFX but IMHO it is worth the homework.