Final Word from Thursday, December 1, 2005
Gold has been in the headlines because of two major events: The weakening of the inverse correlation with the dollar, and a jump in the gold price to above $500. Bohumil Stud˘nka, who recently published a gold guide ("Zlato") with Jan Stru?, said that the abolition in the CR last year of the VAT on investment gold opens up new possibilities. Gold had a huge competitive disadvantage in the CR for a decade, because of the high VAT rate. Gold coins were available VAT-free at banks on practically any street corner in Austria or Germany, but otherwise honest Czech investors who wanted competitive prices had to smuggle bars or coins in from across the border. Few apparently decided to take the risk, although VAT fraud was very attractive to organized crime. For the CR to develop any kind of gold culture, it would take a big investment from a major player. Some of them, we hear, have been sniffing around a bit. [Czech Republic value-added tax]