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Is Washington's tax exemption on bullion a gold mine?
Seattle Times The break applies to gold, silver and other precious metals sold as coins or bars, such as Krugerrands or vintage silver dollars. By not taxing those items, … and more » |
Source:Is Washington's tax exemption on bullion a gold mine? – Seattle Times
Gold rose in New York to the highest price in almost six weeks as concern that Greece’s budget deficit will widen increased demand for bullion as an alternative to holding currency.
Source:Gold Climbs in New York as Alternative Investment to Currencies (BusinessWeek)
In answer to the "gold bubble" question, simply make like Gordon Gekko…
A FEW MONTHS AGO I bet our research editor here at Hard Assets Investor a steak dinner that the Gold Price would top $1250 an ounce before sinking back below $1000, writes Lara Crigger at Hard Assets Investor.
For a while there, things weren’t looking too good for me or my appetite, as the US-Dollar Gold Price plunged off its December highs like a diver in free fall. The metal scraped as low as $1052 early in Feb., but as gold closed the month above $1117 on Friday, I’m happy to say that I might just get my dead cow after all.
Of course, renewed strength in the Gold Price means a revival of the Big Question from last fall: Is gold in a bubble? This time, however, it seems the answer on everyone’s lips is: "Who cares?"
"I absolutely believe [gold's] heading into a bubble, but that’s why you buy it," Charles Morris, manager of HSBC Global Asset Management’s $2.5 billion Absolute Return Fund, told Bloomberg earlier this week. And after predicting that gold could hit as high as $5000 an ounce in the next five years, he added, with shades of Gordon Gekko, "A bubble is good."
Perhaps that’s why we’ve seen such incredible upswing in Gold Investment demand year over year, particularly in exchange-traded trust funds. According to the World Gold Council, Gold ETF demand in 2009 hit 594.7 tonnes – 85% higher than 2008 levels.
Granted, most of that was driven by outsized buying in the first quarter of ‘09, as investors – smarting from the 2008 financial crisis, and with world equities sinking to 12-year lows – fled perilous markets into supposed safe haven assets like gold.
Still, ETF buying has remained brisk, with demand in Q4 2009 hitting 31.6 tonnes. Most of that demand has gravitated toward the SPDR Gold Trust listed in New York, the world’s biggest bullion-backed ETF and the second-largest ETF overall. Investors big and small piled into GLD last year, which saw $13.8 billion in new net investment dollars in 2009. The fund now sits at over $35.4 billion in assets under management.
Even noted gold skeptics now want a piece of the action. Famed hedge fund manager George Soros – who not too long ago dubbed Gold the "Ultimate Bubble" – had only just increased his GLD holdings before those comments made the headlines. In the fourth quarter of last year alone, Soros Fund Management bumped its holdings in GLD by 152%.
According to Bloomberg data, as of Dec. 31, 2009, the Hungarian’s firm was the fourth-largest holder of GLD with more than 6 million shares. Still, that’s nothing compared with John Paulson’s ETF bet: Paulson & Co. holds 31.5 million shares of GLD…equivalent to nearly 96 tonnes’ worth…which, at today’s Gold Price, is worth just under $3.45 billion.
What’s interesting is that the other two US bullion-backed gold ETFs – the iShares COMEX Gold Trust (NYSE Arca: IAU) and the ETF Securities Physical Swiss Gold Shares (NYSE Arca: SGOL) – haven’t seen nearly the same boost in demand as GLD.
IAU and SGOL are substantially smaller than GLD, with only 25.2 million and 3.2 million outstanding shares apiece, respectively (in comparison, GLD has about 363 million outstanding shares). IAU holds about $2.76 billion in assets under management, while SGOL holds $334 million, according to the National Stock Exchange.
One might think that with increased general interest in Gold ETFs, both funds might see a pickup in investor demand. But in fact, we’re seeing the opposite: Since the beginning of 2010, SGOL has started cannibalizing IAU’s shares…like Ross Perot siphoning votes from George H.W. Bush…as these numbers from Bloomberg show – figures quoted in thousands (’000).
The rock that is GLD remains, however. So where does gold go next?
If the Gold Price truly were in a bubble, then the sky would be the limit for where gold goes next. A recent Bloomberg survey reported 15 of 22 analysts forecasting that the yellow metal would make further gains this year, with Goldman Sachs predicting $1380 an ounce in the next 12 months. HSBC concurred, predicting a peak of $1300 in 2010.
Continued buying by central banks may lend support to prices as well. Last year, the world’s central banks became net gold buyers for the first time in two decades – and according to CPM Group, at least, the trend could continue. Currently, central banks hold approximately 18% of the total gold ever produced. Add that to continued uneasiness over the world economy – and, of course, fears over inflation – and we could see gold go much higher in the days ahead.
Still, despite its great run recently, gold has a long way to rise before I get my free steak dinner. And I haven’t forgotten what Brian Nick of Barclays Wealth said when we had him on our site a few weeks ago:
"Look at virtually any other market where you’d see signs that people were worried about inflation, and they don’t exist anywhere – except the gold market."
For the very best Gold Prices – live online – plus secure storage of your physical property in Zurich, Switzerland for one-third the cost of an exchange-traded gold fund, click through and register with BullionVault now…
Source:Gold Price: The Big Question
So there were no takers for the IMF’s latest gold sales…?
SO DID YOU NOTICE? asks Tex Norton at Whiskey & Gunpowder. The IMF didn’t get any bids for its latest offer to auction 191.3 tonnes of the remaining gold that it wants to sell.
Apparently the central banks of the world have shown a distinct lack of interest in the proposed bullion sale. So gold game-over, correct? Not exactly.
Recall that India bought 200 tonnes of gold from the International Monetary Fund late in 2009, along with Sri Lanka (10 tonnes) and Mauritius (two). The IMF gold sale is purportedly based on the IMF’s desire to raise funds to help poor countries. I’ll leave a discussion of that ill-conceived notion for discussion at another time. The fact remains that the gold is for sale and apparently no buyers are willing to step-up and be counted.
At least, not publicly counted. Wonder why?
There are probably as many excuses as there are potential buyers. Philip Klapwijk, executive chairman of GFMS, the London-based precious metals advisor, thinks the IMF’s decision underlines a general lack of buying interest now that gold exceeds $1100 per troy ounce. After noting the publicity that India, in particular, received as a result of their purchase last year, it’s quite possible that other potential buyers simply don’t want to risk any adverse publicity.
China has been reported to be Buying Gold for quite some time, as well as encouraging its citizens to also accumulate gold. It appears that China’s purchases thus far are from local mines within the country. One would think, therefore, that China would be a prime potential buyer for the IMF’s gold…but not the publicity. Could it be that China doesn’t want to rock the US Dollar? If China stepped up to the plate, the interpretation could be made that China had lost confidence in their US Treasury holdings.
It has been widely reported that Russia is also Buying Gold and, therefore, presents a likely IMF-sale buyer. Russia doesn’t have the same US Dollar exposure as does China, so their reluctance to step-forward is not immediately obvious.
Still another potential deal-killer is the outright disclosures themselves. Prior IMF sales have included specifics including the name of the buyer, the quantity purchased and the price paid. Gold Prices can be volatile. Should the price decrease after such a purchase, the buyer could then be ridiculed for having over-paid.
Recall the ridicule still being heaped (and rightly so) on UK prime minister Gordon Brown who, while still Chancellor of the Exchequer, managed to sell half Britain’s gold stash at the very bottom of the market? You have to admit it takes real talent to be that stupid.
For at least the last two decades, approximately 400 tonnes per year have been sold by European central banks in that way. But it important to acknowledge that European gold sales have recently diminished. If this trend continues, an additional 191.2 tonnes sold could be somewhat insignificant. The jury is still out.
Where does this put the investor considering a position in Gold Bullion. To answer that question, you need to go back to basics. The basic argument for owning gold is that it offers an inflation hedge. With world-wide fiat money in circulation being increased in volume at the whim of the respective issuing governments, anyone interested in preserving their accumulated wealth must take pro-active measures to protect their positions. One way has been to stash capital in assets that tend to maintain value regardless of debased currencies. Gold has met that need for thousands of years. It’s unlikely that anything will occur to change that protection in the near future. Is this not still the basic protection we seek?
And I’m always pleased when what passes for main-stream beliefs pokes fun at my investment portfolio. That tells me I’m still on the correct path to prosperity. I accumulated gold all through the 1970s as protection from the falling dollar. Recall that Nixon killed the dollar on August 15, 1971 when he closed the gold window. Anyone paying attention could then predict the outcome. Gold rose.
As gold rose in price, more and more folks became aware. In early January, 1980, several of us were having lunch at a restaurant when our waitress asked about our line of work. When we mentioned investment advisory, she volunteered as how she’d just taken a 2nd mortgage on her home and bought gold. After she left our table, I said "Guys, it’s time to sell!" I actually sold that afternoon – at $750 per ounce. That was $750 on the way up to the top at $850 before it crashed. Sold too soon, right? Wrong. Never be greedy. It was obvious by that time that the general public had become aware of gold and were now buying. In fact, it was a buying frenzy.
As Bernard Baruch was fond of saying, "When the shoe-shine boy starts touting stocks, it’s time to sell." We’re nowhere near that gold sell-point yet. Yes, you now see more and more commercials advertising Gold Investment. At the same time, you see more and more ads from folks who will buy your "junk" gold. There are even Tupper-ware-type parties where neighbors bring their "junk" gold to sell to a visiting buyer. Then the sellers brag how happy they are that they were able to get rid of their "junk" gold and get real cash they can now spend. No mention is ever made that the price they were paid was far below the prevailing spot price of the underlying gold. What a deal!
Is gold in a bubble? Possibly, but if so, it still has a long way to go before the top is reached. The top will make itself known if you simply watch the market actions. In the meantime, what else can you do, if not invest in gold, to help protect your accumulated wealth…?
Buy Gold at live wholesale Gold Prices, only by using BullionVault…
Source:Gold Bubble & the IMF Sales
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Is Washington's tax exemption on bullion a gold mine?
Seattle Times The break applies to gold, silver and other precious metals sold as coins or bars, such as Krugerrands or vintage silver dollars. By not taxing those items, … and more » |
Source:Is Washington's tax exemption on bullion a gold mine? – Seattle Times