Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Markets Rallying on Vaccine Hopes, but Higher Taxes and Inflation Loom

Stock-Markets / Stock Markets 2020 Dec 15, 2020 - 06:44 PM GMT

By: MoneyMetals

Stock-Markets

For months, including this past week, markets have rallied on hopes for a vaccine and more stimulus – even as the real economy is suffering under expanding virus restrictions and as a stimulus deal keeps getting thwarted by partisans in Washington.

Negative divergences are showing up, with market momentum waning and volume thinning in the major averages.

Another threat markets seem to be overlooking – at least for now – is that of tax hikes under an incoming Joe Biden administration.

More on that in a moment. But first, let’s review this week’s price moves in metals markets.


Gold and silver attempted a rally early in the week, but bulls ran into heavy selling pressure on Wednesday.

Elsewhere in the metals space, copper continues to be red hot. The bellwether industrial metal climbed for a sixth straight week to hit fresh new multi-year highs.

Copper’s relative strength versus the precious metals is again reflective of the tremendous optimism being exhibited for an economic rebound next year. Similar positive moves are underway in the energy sector, including energy metals like uranium.

But in addition to virus and lockdown risks which are far from over, investors will likely face new political risks come 2021.

Absent President Donald Trump’s legal team being able to somehow get fraudulent election results overturned in multiple states, Joe Biden and Kamala Harris will take power next month. At the top of their agenda… repealing the Trump tax cuts and raising taxes on investors.

Fox News Anchor: Tax hiker in chief, Joe Biden telling the New York Times, "There's no reason why the top tax rates shouldn't be 39.6%, which it was in the beginning of the Bush administration."

President Donald Trump: He wants to terminate the tax cuts that we gave you.

Vice President-Elect Kamala Harris: Joe Biden has been very clear. He will not raise taxes on anybody who makes less than $400,000 a year.

Vice President Mike Pence: He said he's going to repeal the Trump tax cuts.

Vice President-Elect Kamala Harris: Mr. Vice President, I'm speaking.

The Kings Collage Professor Brian Brenberg: So, when you have somebody talking about raising taxes next year, not just on individuals, by the way, but on businesses as well – the corporate income tax – people start to wonder how's that going to affect my job? And the answer is it will and here's why.

Businesses make decisions about hiring on a prospective basis. They look ahead and they say, "Will I have the money to bring people on board?" And if taxes are going up, that's money, that one way or another, is going to have to come out of workers' pockets.

Higher taxes, higher inflation, or some combination of both seem inevitable given the U.S government’s financial predicament. The next administration will be confronted with a record high budget deficit plus a looming shortfall of trillions more in Social Security and in Medicare.

Raising taxes may be futile given the size and scope of Uncle Sam’s fiscal gap. It may even be counterproductive given the precarious state of the economy and the lessons of the Laffer Curve. Tax hikes may also be politically difficult if Republicans maintain control of the U.S. Senate.

The temptation for the presumptive Biden administration will be to pursue Modern Monetary Theory or something akin to it. Essentially, that would entail coordinating directly with the central bank to print whatever cash the Treasury Department needs.

With former Federal Reserve chair Janet Yellen set to become the next Treasury Secretary, she could usher in a Great Reset of sorts – one that merges fiscal and monetary policy to enable unlimited government deficit spending.

Of course, as with taxes, the costs of financing government spending through pure currency creation will ultimately be borne by wage earners, savers, and poorly positioned investors.

Now is the time for investors to think strategically about how they might protect themselves – in 2021 and beyond – from the twin threats of inflation and taxation.

One potentially powerful strategy to consider is to sock away wealth in a tax-advantaged retirement account funded with physical precious metals. A time-tested way to hedge against currency depreciation combined with a shelter from ruinous taxation is a wealth protection double play!

Maxing out qualified retirement account contributions for 2020 is a great year-end tax strategy.

If you have already maxed out your IRA for 2020, it’s not too early to be thinking about getting a head start on 2021. By making those contributions as soon as possible in the New Year, you can maximize the time those assets enjoy tax deferral.

You can also dedicate new contributions or rededicate existing accounts to the security of physical precious metals.

A conventional IRA, whether Roth or traditional, can be converted to a Self-Directed Precious Metals IRA. Switching is easy. Most providers can enroll you right online and work directly with your existing IRA custodian to transfer funds.

Not only can you purchase, hold, and sell real precious metals inside a tax-advantaged Self-Directed Precious Metals IRA, but also you can withdraw your bullion and take direct physical possession of it under normal IRA distribution rules.

The IRS does impose certain restrictions on size and purity, but a wide variety of bullion coins, rounds and bars are eligible. In addition to gold and silver, you can even hold physical platinum and palladium within an IRA.

In an environment where conventional paper assets begin to underperform amid rising political risks, physical precious metals shielded from taxes could be among the few true safe havens.

By Mike Gleason

MoneyMetals.com

Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Mike Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in