Can losses from selling jewelry or bullion offset other capital gains or ordinary income?

1. What counts as jewelry or bullion for tax purposes — capital asset vs. personal-use property

The IRS treats physical precious metals (gold, silver, platinum, palladium and similar items) as “collectibles” when held as investments, and those sales are capital transactions subject to collectibles tax rules; by contrast, if an item is personal-use property (e.g., everyday jewelry kept for wear rather than investment), losses on its sale generally aren’t deductible under the capital loss rules (sources explain the collectible classification and the non-deductibility of personal-use losses) ^{[2] [1]}.

2. How losses from selling bullion or collectible jewelry offset capital gains

When a sale of bullion or collectible jewelry produces a capital loss, that loss first offsets capital gains of the same character — short-term losses offset short-term gains and long-term losses offset long-term gains — and then reduces net capital gain for the year; multiple industry guides state losses on precious metals or collectibles can be used to offset other capital gains ^{[4] [5] [6]}.

3. When capital losses can reduce ordinary income and the annual limit

If capital losses exceed capital gains in a tax year, the resulting net capital loss can reduce ordinary income up to an annual limit (commonly $3,000 for individuals), with any excess carried forward to future years; tax-advice coverage and the Tax Adviser note the $3,000 annual deduction limit and carryforward mechanics for net capital losses ^{[3] [1]}.

4. The special tax haircut for collectibles and how that matters for offsets

Collectibles (including most physical bullion) have a higher long-term capital gains ceiling — gains are taxed at a maximum collectible rate (28%) rather than the typical 0/15/20% brackets — which affects how losses and remaining gains are characterized for tax rate purposes when netting different types of gains and losses (Investopedia, Nasdaq and others explain the collectible 28% cap) ^{[2] [7] [8]}.

5. Practical traps: personal-use jewelry, dealer inventory, and reporting gaps

A critical practical distinction is whether an item is inventory for a dealer (ordinary income) versus a capital asset for an investor (capital gain/loss); the same physical object can produce very different tax results depending on the taxpayer’s intent and business status, and dealers’ reporting practices can create surprises because some jewelry or bullion sales aren’t reported on 1099-B even though gains/losses must still be reported on a return (Tax Adviser on character differences; Alloy and industry sites on reporting realities) ^{[3] [9]}.

6. What the reporting and compliance landscape implies for taxpayers

Tax guides and bullion sellers consistently warn that proceeds must be reported even when intermediaries don’t issue tax forms, and taxpayers should track cost basis, holding period, and whether an item was used as a personal asset versus an investment — these facts determine whether a loss is usable to offset gains or ordinary income (investing guides and bullion sites emphasize reporting obligations and basis/holding-period rules) ^{[5] [10] [6]}.

7. Bottom line and recommended next steps

Losses from selling bullion or collectible jewelry will offset other capital gains and can reduce ordinary income up to the statutory $3,000 annual limit (with carryforwards), but losses on personal-use items generally aren’t deductible and dealer/inventory status can reclassify income as ordinary — taxpayers should document intent, basis and holding period and consult a tax professional for transactions that straddle personal use, collectible investment, or dealer trade ^{[4] [3] [1]}.