How can gains of 5%, 10%, 30% or more in gold bullion be income tax deferred?
*Barron's, by Lauren R. Rubin with Fred Hickey & Bill Gross, January 21, 2008
“Hickey: The great gold bull market is now entering its eighth year. Last year was the best yet. The price of gold jumped 30%, as central banks printed money to stave off recession. This year, gold could soar well above $1,000. The most exciting phase of the gold market is ahead. Gold still is cheap.
Historically, the average Dow [industrials]-to-gold ratio was about 10 to 1. Now it’s 15 to 1. Demand from ETFs is helping drive up prices. These funds now hold more than 865 tons of gold, up 34% from a year ago, and there are more ETFs coming online, including one sponsored by the State Bank of India. India is the biggest end-market for gold. On the supply side, mine production remains weak. South African production has been halved in the past 10 years. Political, environmental and economic issues, plus rising production costs, have kept supply growth down.
Gross: What is the long-term real return on gold? Investors are always fascinated as it moves up 5% or 10%, but you never get any income.”
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