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Golden moment spoiled by taxes

“Brace yourselves, it’s Friday” could be a new imperative if market swings on the last two of them are any guide.

We were down sharply last week and up sharply the week before. The net result is to be in virtually the same place. Gold was $1,716 when I checked the Kitco website. Silver was $33.64.

Markets can be crazy.

It has long been said that fear and greed move the gold, silver and other financial markets. At this time of year these two primal motives are joined by taxes, which is probably responsible for much of the current craziness.

A perfect tax system according to economists is one that raises sufficient revenue for government needs without distorting the behavior of individuals and firms who comprise the economy.

It hardly seems possible for the United States to be further away from tax perfection than where we happen to be now.

With the fiscal cliff’s tax hikes and federal spending cuts ready to kick in when we all shout “Happy New Year,” I think it can be said safely that taxes are definitely affecting behavior.

Those who have gains in precious metals in exchange traded funds have to consider whether they would be better off selling now and paying taxes this year when tax rates are presumably lower than they will be come 2013.

That selling inspired by fear of a tax hike can push prices down.

Those who believe that gold and silver are set to rise dramatically, want to buy.

That greed, or to put it more politely, that desire for gain can push prices up.

For those who are simply holding precious metals in coin form as an investment to help preserve their assets over the long term, these price swings should be ignored.

But in a 24/7 news cycle, it is so easy to get caught up in the drama of the moment.

The best advice is simply to stick to long-term goals. That isn’t very exciting, but you are likely to make fewer mistakes that way.

Wow, what time is it?

I haven’t checked the Kitco website in at least five minutes. Gotta run.

Buzz blogger Dave Harper is editor of the weekly newspaper "Numismatic News."