The Wealthy Are Hoarding Physical Gold


11-12-19 06:51:00,


The world’s rich are hoarding gold – this according to data buried in a recent Goldman Sachs note to clients.

In the note published over the weekend, Goldman recommended diversifying long-term bond holdings with gold, citing “fear-driven demand” for the yellow metal.

Hedge funds and other large speculators boosted their bullish bets on gold by 8.9% through the week ended Dec. 3, according to government data released last Friday. That represents the biggest gain since the end of September.

The Goldman note cited political uncertainty and recession fears as the catalyst for the move toward gold. It also mentioned worries about a wealth tax, increasing interest in Modern Monetary Theory (essentially money-printing) and the current loose central bank monetary policy.

Data buried in the note also revealed that owning physical gold appears to be the preferred method to “hedge against tail events” by the rich.

“Since the end of 2016 the implied build in non-transparent gold investment has been much larger than the build in visible gold ETFs.”

Goldman said the data is consistent with reports that vault demand is surging globally.

Trade data implies that gold in storage has increased far more rapidly than is reflected by financial market instruments, indicating a widespread preference for physical gold instead of gold-linked financial assets … Political risks, in our view, help explain this because if an individual is trying to minimize the risks of sanctions or wealth taxes, then buying physical gold bars and storing them in a vault, where it is more difficult for governments to reach them, makes sense.

“Finally, this build can also reflect hedges by global high net worth individuals against tail economic and political risk scenarios in which they do not want to have any financial entity intermediating their gold positions due to the counter-party credit risk involved.”

As a writer for Yahoo Finance put it.

“This means that for those including gold in their end-of-the-world trade, owning gold bullion is a must.”

You don’t have to be super-rich to invest in gold.

 » Lees verder

China’s Uber Wealthy Are Preparing For $24 Trillion Tax Raid


10-01-19 10:20:00,

People like to complain that China has abandoned its Communist values in favor of state-directed capitalism. But in at least one way, the rulers of the world’s second-largest economy are adhering to the prescriptions of Karl Marx – with a burdensome progressive income tax.


And as the CPC has imposed new tax cuts to try and pump more fiscal stimulus into the economy to help revive its flagging growth. But wealthy Chinese are worried that the state will expect them to cover the revenue shortfall (particularly as the trade war threatens to sap the Chinese economy of badly needed FDI).

In a country where personal wealth has swelled to $24 trillion since the days of Deng Xiaoping – $1 trillion of which is held abroad – these changes to China’s tax regime could have a resounding impact on asset markets around the world (Vancouver comes to mind).


The changes, which took effect on Jan. 1, have already prompted wealthy Chinese to look into creating overseas trusts that could help them protect their wealth from the state, as China’s decision to embrace the Common Reporting Standard, an international data-sharing agreement that allows governments to more easily track the overseas wealth of their citizens.

Here’s a rundown of how China’s new tax rules might impact wealthy Chinese, and how that in turn might reverberate around the world (text courtesy of Bloomberg):

Crackdown on Havens

Under the new rules, owners of offshore companies will not only pay taxes on dividends they receive but will also face levies of as much as 20 percent on corporate profits, from as low as zero previously. This has triggered a flood of rich families seeking refuge via trusts, which often shield wealthy owners from having to pay taxes unless the trusts hand out dividends. Overseas buildings or shell companies are also becoming easier to track for authorities as China embraces an international data-sharing agreement known as the Common Reporting Standard, or CRS.

It’s not clear how the government will utilize CRS data, especially in early 2019, but authorities may grant amnesty for a certain period for a stable transition or focus on penalizing the biggest offenders,

 » Lees verder