Today in gold news, the UAE just announced they’re dropping their VAT on gold. You may remember last month we reviewed the UAE’s efforts to extract more local income from their gold market, and noted merchants were asking for a reduction in the Value Added Tax (VAT) that was pricing UAE gold above other markets. Well the local authorities are apparently good at math, as they’ve changed their tune and dropped the VAT. After all, no taxes on higher sales is better than taxes on no sales.
The change should be good for merchants but leaves the country in the same predicament as before: growing infrastructure maintenance costs with tax revenues not keeping up. Of course this is a standard story around the world; almost every large country has run deficits for years, leading some to prognosticate all sorts of terrible things happening in the future.
Fears about deficit spending is definitely weighing on big equity (stock) markets. US markets are definitely uneasy, and China’s markets have take a hit lately. Usually such uneasiness would be good for gold prices, but lately all it’s meant is gold holding at support.
Of course we’re happier to see gold holding rather than dropping, and the recent gold news is leading some to bold claims of higher prices coming for gold. There are some good points in the argument, but of course the market is the final arbiter. For your Friday viewing pleasure we’ll point you toward a Bank of America analyst who lays out his case for higher gold prices on video. Now that’s truly bold for a Friday.
Signed, The Gold Enthusiast
DISCLAIMER: No specific securities were mentioned in this article. The author is long NUGT and JNUG, and has some long-side options positions in NUGT. Any of these might be traded in the next 48 hours.