As gold pushes $1,800 an ounce, Nevada policymakers steadfastly oblivious

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Image by Steve Bidmead from Pixabay
shiny
Image by Steve Bidmead from Pixabay

The price of gold slumped a little earlier this month — if you can call a brief dip below $1,700 an ounce a slump.

But it’s come back since, the spot price closing at $1,770 Tuesday. Futures prices topped $1,786. Both the spot and futures prices are hitting highs not seen for eight years. 

After peaking during the last great economic collapse, the price of gold spent most of the last decade in the roughly $1,200 range.

Fears of recession started driving the price up late last year — the worse the economy, the more attractive gold is to investors seeking safe haven. Covid-19 and accompanying economic havoc pushed the price above $1,600 by mid-February, and it spent the spring more or less hovering around $1,700.

Now the price is rising again amid rising covid cases and resumed fears.

The psychology of gold investing is … well, there’s a lot going on there. But as one analyst noted, an intriguing thing happened while the price was sort of stuck around $1,700: people didn’t sell gold. Nor did they sell gold funds, or gold mining company stock, both of which have been rising apace with the price of the metal. People were buying.

And now even as prices are hitting eight-year highs, investors, including institutional investors, are still buying. Whatever psychological resistance might have been thwarting gold’s rise for a few weeks has apparently been broken.

This week analysts have resumed what they were doing so regularly – and rightly, as it happens – earlier this year: projecting the price of gold to continue to rise. In that earlier round of bullishness, by the way, both Bank of America and Merrill Lynch wrote reports predicting the price could hit $3,000 as early as next year.

The price of gold can be super volatile. It could drop like a more common rock at any time. And if past performance is any indication of future results, at some point, it will. I’m not an investment expert by any stretch anyway, so I would never suggest people buy gold.

I just want Nevada to tax it.

I’ve explained Nevada’s world-class, outsized role in the global gold mining industry and Nevada’s recklessly irresponsible mining tax policy before, multiple times. With numbers. So I won’t do it now. Suffice it to say the state’s mining industry is raking it in, and the state’s tax policy is a farce which humiliates the state and its people.

School districts nationwide are “overwhelmed by the potential expenses that would come with operating under social distancing guidelines: protective equipment, staff for smaller classes and additional transportation to keep students spread out on bus rides,” The Associated Press reported Tuesday.

A separate story from the AP in Nevada reported teachers and administrators in the state fear even as schools get hammered by the extra costs of dealing with covid, education budgets will be cut.

Education is just one example of public programs vital to Nevadans that will see increased expenses coupled with growing demand, yet less money.

Big as it is, mining can’t protect all those programs from cuts. But a more responsible mining tax policy could at least protect some programs and services from some cuts. Given the crisis we’re in, what appears to be a refusal on the part of Gov. Steve “Beep the Horn” Sisolak and state lawmakers to even acknowledge the mining industry has any public obligations beyond campaign contributions and lobbyists’ hospitality is inexcusable, and a disgrace.

Nevada’s serial neglect with respect to mining tax policy is doubly damning now, as gold prices skyrocket. Every day the state continues under current policy is another day money that could be used to help Nevadans when they need help most just flies out of the state to enrich the aforementioned investors in mining company stocks.

Nice work everyone.

Hugh Jackson
Editor | Hugh Jackson has been writing about Nevada policy and politics for more than 20 years. He was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and wrote the then-groundbreaking Las Vegas Gleaner, which among other things was the only independent political blog from Nevada that was credentialed at the 2008 Democratic National Convention. He spent a few years as a senior energy and environmental policy analyst for Public Citizen, and has occasionally worked as a consultant on mining, taxation, education and other issues for Nevada labor and public interest organizations. His freelance work has been published in outlets ranging from the Guardian to Desert Companion to In These Times to the Oil & Gas Journal. For several years he also taught U.S. History courses at UNLV. Prior to moving to Las Vegas, he was a reporter and then assistant managing editor at the Casper Star-Tribune, Wyoming’s largest newspaper.