Final Word from Thursday, June 5, 2003

It's a universal truth that most small investors buy high and sell low, especially when it comes to commodities. It's the pros who end up making most of the money. Czechs hoping to take advantage of the sharp rise in the price of gold have faced an especially difficult situation. Gold has risen by 14% in the past year in dollar terms, but figures from Jiří Štastný of Colosseum brokers show that the spot rate has fallen by 8% over the period in crown terms. Furthermore, Czechs must pay VAT on purchases of physical gold. Futures can be used to circumvent VAT, Štastný said, but they aren't for the average investor. Distribution of gold coins is also very weak, boosting the margins small investors must pay. Again, the requirement to pay VAT is the main obstacle. In short, any small Czech investor hoping to make a few crowns on a Philharmonic, Maple Leaf or Kruggerand will need to have the Midas touch.


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