Gold is still trading near its all-time high. Many feel that the gold bubble will burst soon, dollar is strengthening. But inflation is everywhere, banks in the western world are printing more money. Will the bull run continue? Historically dollar has won. This time around, it is a very different situation. Thinking QE2, and dollar debasing, gold could well become a standard?
What is interesting is that over 12% of total gold consumption is now through ETFs, which is a very convenient way to hold gold. While Gold ETF's trail gold price, mark-up charges by banks and making charges & wastage for jewellery is no free ride. The cost of maintenance for ETFs will go down, and gold ETF's ia a very attractive tool. With ETFs, you can buy gold in whatever small chunks you feel comfortable with.
So, what do you need to know from a tax perspective? Gold ETF's held for over a year qualify for long-term capital gains tax. But, wait! From a tax perspective, gold ETF's are treated as debt funds, not equity funds. So, you will have to shell out some income tax. Gold held in paper form does not attract any wealth tax (unlike physical gold). So, book some profits but keep some exposure in this uncertain environment.
