Gold as a Defense Against Financial Transaction Taxes

You may have heard about Bernie Sanders’ latest idea to raise money. As part of his campaign for President he is floating the idea of taxing various financial transactions in order to raise money for the federal government. The money raised would be earmarked to fund free college tuition and reduce student debt levels that continue to climb.

The tax rates Sanders has floated are 0.5% for stock trades, 0.1% for bonds, and 0.005% for derivatives. It’s somewhat ironic that the lowest-taxed trades are those that are mostly engaged in by professional traders, but that’s really beside the point. Also somewhat beside the point is whether Sanders will actually gain as much revenue as he hopes to. What is clear is that financial transactions are coming under fire.

Proposals of this sort aren’t new in Congress. Former Congressman Chaka Fattah, now serving 130 years in prison for committing various federal crimes, was one of the foremost sponsors of these types of financial transaction taxes in previous years. But with the focus of Sanders’ transaction tax mostly on financial assets, there’s one asset that sticks out as not being subject to the tax: gold.

Perhaps that’s because Sanders, like most in Congress, doesn’t have gold on his radar screen. Or perhaps it’s because there are so few gold transactions in comparison to stock trades that taxing gold purchases wouldn’t raise much money. Whatever the reason, if such a plan were to be signed into law it would give investors even more incentive to invest in gold.

Gold is already a solid asset that performs far better than stock markets, more than doubling the performance of stock markets over the past 20 years. And by investing in gold through a gold IRA, investors can gain the same tax advantages as they can through a traditional IRA. With the prospect of stock, bond, and derivatives transactions being subject to future taxation, that makes gold an even more attractive investment option.