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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: goldsheet who wrote (68577)	5/2/2001 8:08:01 AM
From: E. Charters	Read Replies (2) \| Respond to of 116764

All exploration crashed in Canada, which does a great percentage of exploration worldwide. The VSE went from 1700 index to 400 index in one year about 3 years ago. Despite that many gold companies had good years for the next couple as they were still selling forward at advantageous prices, all the while unwittingly? creating downward pressure on gold by their massive cumulative shorting. However this has set the stage for a drought of exploration capital. All that is left are the majors and the odd junior exploring for platinum and diamonds in the NWT and Ontario. Despite this there has been a market scourge where people are just not interested in market investments because of having been burnt at least twice by the metal and tech markets not to mention such debacles as IPMCF and Bre-X. Canada has a device called flow-through once tried before by Britain in the fifties to encourage investment in the former colonies. Basically it gives a tax deduction to the investor who invests in a mining exploration venture whether on the exchange or not. The US has never tried this device but it is worthwhile in downturns in the industry. The Canadian model used to and Quebec model still does give an accelerated tax break to this investment, up to 166% of the stock's price. Flow-through season is very popular in Quebec and would explain its much healthier mining exploration industry in comparison to Ontario. Quebec's stocks however are traditionally dormant and heavily discounted well before any announcements or issuing. (There have been recent major discovery announcements of nickel in Northern Quebec if anyone cares. (Quebec 7). ) Ontario flow through is set at even money with the stock's price. The complaint about it and other flow-through is that instead of just giving you the break for the risk, the gov't decides to tax you on capital gains when you sell the stock, and valuate that tax amount as if you bought the stock for zero dollars! In other words you pay tax as if you gained 100% of the stocks selling price. You add that to your capital gains or losses for the year. Hardly fair. If you are in the 50% bracket you get back 50% on income tax and if the stock goes nowhere you still pay whatever rate capital gains tax on 100% when you sell it. I could see it if they calculated the tax on the basis of what you paid in your bracket after the flow through calc deduction, or if you got a 150% deduction, but with the present Ontario system all it amounts to is a tax deferral often. Goverments are greedy. They put a golden goose in the pasture for the kids to play with and then they shoot it in the egg layer. Gov't always wring their hands when they are asked for tax breaks. Oh we will never get the money we need to waste on our friends if we let Joe keep it! Criminy! The money gets spent on goods and services, wealth grows, jobs grow, and people pay taxes on it all. It all comes back. Idiots in legislature can't see this? Depressions, as we are about to see for the next seven or 8 years, make cigar smoking pontificating politicians feel good. They can vote themselves more money (usually do when everyone else is starving - Canadian MP's did recently) and look superciliously at people losing jobs and just say tsk! tsk! and talk about economic cyles, deadbeat dads and tax cheats. As Keynes pointed out they (gov't) alone have the power to do something about it and 99% of the time they just tighten the noose. (Wilson's austerity of the 30's and the Bank foreclosures of 1929.) EC<:-}