Gold Price Hits New High Even as Gold Tax Talk Continues

Another day, another all-time high:

Record High Gold Price

Chalk up yet another record for gold today, having just eked by its previous record of $1,249 an ounce. You know the story by now: The EU debt crisis of today, the US debt crisis of tomorrow and an uncertain stock market… All good for good old gold.

But is it too late to buy some more?

“My short answer is no,” wrote Chris Mayer in yesterday’s Daily Reckoning, “Gold $7,000.

“Gold isn’t is always a good investment… If you bought gold in the 1980s and 1990s, your return was abysmal. So as with all assets, there are times when gold is a really good buy and there are times when it is not. Sounds obvious, but many people seem to want to think that gold is an exception to the order of things. It isn’t…

“But frankly, the gold market is set up perfectly these days. You couldn’t design it better. Bad stuff is happening — see the crisis in Europe. And you can surely bet more bad stuff will happen, given all the debt and leverage that still remains in the system. Even if you don’t know exactly what will happen or when it will happen, you know a monetary crisis is good for gold.

“As an added bonus, gold has a track record, which will attract fans soon enough. And when it does, it can’t really accommodate many buyers, because the market is small. This means the chances of the gold price spiking upward are pretty good. It’s like being in the lifeboat business on the Titanic. No price will seem too high!”

Right on cue – as the value of gold comes back into the spotlight – rumors abound that global governments are mulling some sort of tax on gold profits.

“A special tax on private gold owners’ gains may soon appeal pretty much everywhere,” friend of Agora Adrian Ash wrote recently. “Longtime holders were early and right in spotting the financial crisis ahead – and nobody likes a smart arse, remember. Even more recent buyers are also showing notable gains, and most notably against the fast-sickening euro, too… German and Greek politicians must now be wondering why Europe’s central bank gold sales ended without having a gold tax ready and waiting to keep milking the metal.”

And this, from Alen Mattich of The Wall Street Journal:

“Any assets that can be valued relatively easily and any income flows, whatever their source, that governments can get their hands on will be a temptation for the taxman.

“Is, say, a levy on gold – everybody’s favorite safe haven – impossible?”


No official word on all this yet, and of course, this won’t happen without a big fight. But our government has done worse to gold owners before…

Addison Wiggin
for The Daily Reckoning

The Daily Reckoning