Will Year-End Tax-Loss Selling Impact Gold and Silver Investors?
Source: Jeb Handwerger, Gold Stock Trades (12/6/10)
"Prices are reaching new highs, but can they be maintained?"
Already the Debt Reduction Commission is on record of citing the need of increasing taxes and how they agree with the bold steps to save the economy. In 2009, China has dealt with imported inflation from the Eurozone and The United States who have both had to essentially print money to save the markets. Both currencies came under pressure this year as investors fled to precious metals. The U.S. and European economies are weakening with high unemployment, yet food costs and hard assets are soaring. This current economic situation could exacerbate affecting the quality of life for many. Right now, we are in the midst of a euphoric period reminiscent of "happy days are here again." Oddly enough, the rosy news is occurring smack in the middle of the holiday season. Do not be misled tax loss selling will occur as investors rethink 2011 and the investment challenges ahead.
A most important factor that is occurring as 2010 winds down and 2011 is ahead of us is that the Federal Reserve Board is launching a full out offensive on the American Economy called QE2, impacting every household. This action is a latter day version of the battle of the bulge in World War II. The bulge is not in the average citizen's pocket, the bulge is in how much it is going to cost global investors and their portfolios. QE2 is nothing more than a metaphor for the profligate printing of dollars. This cannot avoid having a significant effect on every one of us and prompt many to take profits now in 2010 as the price of gold challenges new highs. Many have large profits and investors should be aware year-end profit taking.
In 2009, GLD moved from a low of approximately $80 a share to $120. In December of 2009, we saw some profit taking without any warnings except extremely overbought readings. Be careful, as this recent break to new highs has not shown much enthusiasm. Most of the excitement has been in silver, uranium and some top-quality junior miners.
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