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December 7, 2010 / Jeb

Extension of Bush Tax Cuts Affect On Precious Metals

What has been completely overlooked or not mentioned during this sizable run up in stock market profits, including the precious metals sector, is the imminent advent of tax-loss selling. Every year around this time, as sure as snow falls in Vermont, more than ever, there are reasons why this unmentioned event is apt to at least modestly affect stocks before the year end, especially precious metals. Gold has risen over 18%, silver has shown a rise above 50% on the year. Price are reaching new highs, but can they be maintained? I believe we may see more volatility as a breakout on GLD must be monitored especially as investors who have made impressive gains may decide to take profits before the end of the year. The reasons for this are manifold. Tax-loss selling is an annual event. It takes on added significance in that investors have the shadow of increased taxation looming ominously. So tax-loss selling is apt to be more severe, in view of the possibility that the Fed has already murmured that there may be a tax increase. Not to worry they say, the Fed will try to make it “gradual.”

Read the full article here…

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