The gold price ended last week with a bang, breaking through US$2,400 per ounce for the first time ever.
Although it retreated below that level this week, the yellow metal remains historically high.
I've asked a number of experts about what's behind gold's big move, and while their opinions differ on the specifics, they all agree that it still has plenty of room to run. Jordan Roy-Byrne, CMT, MFTA, of the Daily Gold may have put it best — he said that we're reaching the point where hyperbolic statements about the gold price can actually come true.
Of course, gold stocks continue to underperform compared to the metal itself, partially due to a lack of investor interest. And this week brought news that may further dampen participation in the sector, at least in Canada.
Released on Tuesday (April 16), the federal government's 2024 budget proposes an increase in the capital gains inclusion rate — it would boost taxation on capital gains of over C$250,000 from one-half to two-thirds, meaning corporations, trusts and individuals that receive over C$250,000 in capital gains in a year will be taxed on two-thirds of their earnings.
Various mining industry groups have weighed in on the change, explaining how it's likely to create headwinds in Canada's resource sector, especially for exploration-stage companies working to advance projects.
"Such an increase (to the capital gains inclusion rate) will reduce the amount of available capital for junior exploration and development companies and create major headwinds for investment into Canadian industry more broadly," the Prospectors & Developers Association of Canada said in a statement released on Wednesday (April 17).
For its part, the Mining Association of Canada welcomed the proposed new threshold for the Clean Technology Manufacturing Investment Tax Credit, but said changes to the capital gains tax could hurt exploration financing.
The Canadian government has said only 0.13 percent of Canadians are expected to pay more in personal income tax on their capital gains. Conservative and Bloc Québécois leaders have already said they won't vote in favor of the budget; it remains to be seen whether the NDP will side with Prime Minister Justin Trudeau's Liberals.
Bullet briefing — Arrests made in gold heist, another deficit for silver
Toronto airport gold heist culprits arrested
Police have laid charges and made arrests in connection with what's being described as Canada's largest gold heist.
The news comes a full year after thieves stole $22.5 million worth of gold and other valuables from Toronto's Pearson International Airport. In total, 6,600 gold bars weighing 400 kilograms were taken.
In an Wednesday press conference, law enforcement said two Air Canada (TSX:AC,OTCQX:ACDF) employees helped pull off the heist, and noted that the investigation also uncovered a "large quantity of firearms" headed for Canada.
"This story is a sensational one, and one which probably, we jokingly say, belongs in a Netflix series" — Nishan Duraiappah, Peel Regional Police
Warrants are still out for a number of people connected to the incident, and most of the stolen goods haven't been found.
Silver market records third consecutive deficit
The Silver Institute released its latest report on the white metal, saying that industrial demand rose 11 percent year-on-year to hit a record 654.4 million ounces in 2023. The increase was driven green economy applications.
According to the organization, overall demand exceeded supply last year, creating a deficit of 184.3 million ounces. Last year's deficit was the third in a row for silver, and the Silver Institute is calling for a fourth in 2024 — it's projecting a shortfall of 215.3 million ounces, which would be the second largest in over 20 years.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
