Hmmmmmm .... but if the price of gold rises primarily due to inflation and the value of the dollar decreases correspondingly, are we not in a worse position as an investor because if I bought $100 of gold today, which could buy 1 loaf of bread and in a year's time my gold went to $200 but could still only buy 1 loaf of bread, then if I convert my gold into cash, I will have to pay CGT and I am worse-off than when I started? Example: Nominal Buy Price - $100 Sell Price - $200 Gain - $100 Tax - $23.50 (assuming top rate of tax and 50% discount) After-Tax Gain - $76.50 % Gain - 76.5% Real Value Buy Price - $100 Sell Price - $100 (as still only buys 1 loaf of bread) Gain - $0 Tax - $16.75 ($23.50 as above but half as value of $ has reduced by half) After-Tax Gain - $(16.75) % Gain - (16.75)% Yes, the increase in the price of PMs may not mirror exactly the rate of inflation, however, with my scepticism of official inflations rates, is this something that we should all be considering? My apologies if I have missed something but I am currently drunk and for some unknown, damn reason, when I get drunk I become all analytical and anal (but rest assured I'm a happy drunk ) Zargor
When the time comes, I'll give you CASH for your gold...100% of it's worth, OK?! (taps finger to nose and winks)
Capital Gain Tax is taxing governments' incompetence. Inflation is the percentage of money governments issue over GDP grows. Rising prices are the effect of this extra money printing not the cause of it as you hear in MSM and from government sources. If governments do not spend more than they collect from taxes we would never have to pay CGT, but they do and we lose the purchasing power on previously hard earned money, and if we fight against that by buying assets we have to pay back the money we did not lose because government caused inflation. On the end government get extra money twice. Once from the printing effect, and twice from the inflation affect this money printing caused by taxing there own incompetency.
Another reason for CGT is to act as a disincentive for investors from cashing out and stopping the game of musical chairs.
what if you bought your PMs with an interest only "fixed" loan? capitalising the interest, and paying the debt back eventually with inflated dollars?
Could potentially work, if the differential between interest rates and inflation was more accommodating. Given the loan would increase exponentially with the capitalising of interest, have to make sure the bank was OK with the security offerred. Zargor
loan balance would stay the same as you'd be paying "interest only". my mistake, when i said capitalise i meant in regard to adding the interest paid to the cost base of the PMs.... so potentially then you need a PPOR (which is CGT free) as security for this hypothetical loan....
