- Jan 2010
The Gold Bug Bailout
September 27th, 2011 at 9:13 am DAVID FRUM
(snip ... )
Like all commodities, gold is volatile. Unlike, say, soybeans, or even silver, the gold market is small enough to be manipulated by deep-pocket insiders.
There is also the further difficulty that the form of investment most accessible and seemingly affordable to the small investor – gold coins – happens to be the costliest in reality, subject to markups that often rise 30% over the intrinsic value of the metal.
And yet radio talkers who hold themselves out as the arbiters of principle – who urge their listeners (as I heard Mark Levin last night) never to read the hated Main-Stream Media but to trust only themselves and other information sources that also happen to depend heavily on advertising from gold dealers – these talkers have pushed and pushed and pushed this one particular investment on people who may not be very well positioned to absorb a loss. Since the advertising often mentions that “financing is available,” some of these small investors likely bought on margin. For margin buyers, the comical promise that “gold has never been worth zero” can easily prove false and worse than false.
Yet there is some good news for these small good buyers: Senators Mike Lee, Jim DeMint and Rand Paul have authored a bail-out for them.
The three conservative senators have co-sponsored legislation to exempt gold and silver coins from capital gains tax. This measure won’t do much for those whose gold investments prove outright losers. But it will at least cushion the disappointment for those whose investments have fallen short of the hoped-for gains, even as shrewd hedge funds that bought gold futures, rather than the clunky solid stuff, have realized vast gains in large measure thanks to the tragically abused trust of talk-show listeners in their bought-and-paid-for gurus.
The Gold Bug Bailout | FrumForum
Jim DeMint, Rand Paul, and Mike Lee .... now there's a troika.