Pros and cons of storing money in gold. Is it worth investing in precious metals? How to invest money in bank gold
Is gold still a reliable means of storing funds? How to invest in gold? What risks exist? Who determines the value of the dollar? What role does Shanghai play in the gold market? The vice-president of the Golden Coin House, Alexey Vyazovsky, answers these questions on the site.
Why is Russia investing in gold?
Gold jumps in price a lot
-What is the gold market like in terms of demand? After all, as far as I know, part of the gold goes into industry, primarily into electronics, part of the gold goes into the jewelry industry, part of the gold goes into coins, and part of the gold goes into bars.
This market is divided approximately in half. Half is investment gold, which consists of bars and gold coins, and the other half is jewelry gold. And the largest consumers of jewelry gold are traditionally Asia, India and China. And approximately only 10 percent of the market is industrial. That is, as you correctly said, there are all sorts of boards and so on.
- Gold jumps in price, and jumps quite strongly. Let's figure out what the world price of gold is, because literally until last month it was generally accepted that the price of gold was determined in London on the stock exchange.
The exchange is too loud a name, it's all gold fixing. The six largest banks, the so-called “gold bugs,” get together and agree on the spot price of gold in twice-daily telephone calls. This happened literally six months ago, since then fixing has been slightly reformed.
- But at the same time they collect applications? Or do they take it for themselves?
But no one knows. The problem with gold fixing is that no one knows what volumes are behind the dealers of the largest banks, or whether they are at all. In fact, this caused many scandals and still does. Just last month, Deutsche Bank, the largest German gold dealer, was accused by American investors of manipulating gold prices in America, and it went to the world with them. That is, he agreed to hand over the cartel members, he has already signed it.
This news aroused great interest among investors. We are now watching with great interest how he will testify against the members of the gold cartel. Let's see what happens.
New Gold Center
- They won’t kill now, will they?
No, they won't kill. New centers of power will emerge, particularly in Shanghai. The Chinese were very unhappy with the current situation, and China is one of the largest consumers of gold in the world, primarily for jewelry and investment gold.
And for a very long time they did not understand how fixing occurs, what volumes and turnover are behind it, whether there is any and how this manipulation occurs, because many investors believe that gold prices are artificially low.
And just recently, its own gold fixing was created on the Shanghai Exchange. Both Western banks and Chinese state-owned banks, which are very strong, are participating there, so the Central Bank does not need to participate. They post their quotes, their volumes. And I can say that the market has become more transparent and understandable.
Little gold left
- From the demand side it is understandable, but there is also supply. What happens to the loot?
Our production is stagnating, growth is about 3-4 percent, based on the results of many years. The gold that was easily mined around the world, loose, has already been mined. What remains is heavy ore gold, which requires complex technologies, machines, leaching, and so on. And such gold is mined through large investments.
If prices rise, then investments become profitable; if prices fall, our gold mining companies freeze some projects, in particular expensive ones. Therefore, gold mining companies benefit when prices rise. And now they are growing. And our Russian gold mining companies are generally in chocolate due to the fact that their main buyer is the Central Bank. 65 percent of all gold mined in Russia is sold to the Central Bank.
- And this goes to the state reserve?
Yes, to the reserve, to the gold and foreign exchange reserve. Now the bars are stored in huge basements on Neglinnaya Street, and transactions take place through authorized banks. Our Central Bank buys such large volumes for several reasons.
Firstly, we are still under sanctions. There is a risk, and it is still being calculated, that some of the Central Bank's holdings, which are invested in US government treasury bonds, in British or German securities, could either be seized or frozen. Various options are being calculated.
Therefore, when you buy, you have it on Neglinnaya Street, and you are in control of the situation. When you buy US government bonds, you have no control.
- How much gold is there?
Now 1400 tons.
- Is there Russian gold, either from the Central Bank, or the government, or private investors, that lies in Fort Knox?
No. Russia does not have such gold, but Germany and the Netherlands do, and this, by the way, is a painful situation for the Germans. They tried to return their gold, which was stored at the Federal Bank of New York, and the US government, in fact, refused to even conduct an audit.
Savings in gold
- It's clear. And if a person got rich, sold his business, received a lot of money and decided to invest in gold, what should he do: buy coins, bars or gold mining companies?
If this is a person who lives in Russia, then he has three ways to invest in gold. These are impersonal metal accounts in banks - these are bullions, these are coins. Unallocated metal accounts are bad because they are not covered by the deposit insurance system. If the bank collapses, the state does not return anything to you.
Ingots - good way investment, but in Russia it charges 18 percent VAT on the transaction. That is, your price per gram or ounce of gold will be 18 percent higher. The bank will simply keep everything in the transaction. By law, gold investment coins are not subject to VAT, so this is the most profitable method among those that exist.
We have several types of coins. This is the Victorious, the most common gold quarter ounce coin. In general, the world standard is an ounce, 31 grams. Everything is traded in ounces. Unfortunately, we went our own way and began to mint a quarter-ounce coin; this coin weighs approximately 7.7 grams of pure gold. Therefore, this is our most common coin. It costs about 20 thousand rubles or a little more. I bought it at the beginning of 2000 for 4 thousand. That is, the price increases in rubles and dollars.
Most popular foreign coin- this is an “Australian kangaroo”, a kangaroo is drawn on it, and it costs about 91 thousand now. This is an ounce coin, purity 9999. Since the beginning of the year, it has risen in price by 20 percent. And we also have a unique coin, it has now only come to Russia - it’s a “grizzly bear”, minted by Canadians, it’s five-ninths pure. It is a little more expensive, about 93-94 thousand.
- Let's go back to the cost of gold. It grows for six months. Is this a trend or is it part of an upward sine wave?
It seems to me that this is an upward trend. If we look at the global gold price chart over the last 50 years, there have been periods when gold fell in price, and they were quite long. But, in general, the graph is directed upward. If we remember the abolition of the gold standard, there an ounce cost 35 dollars, 30 dollars, then, at the time of the global financial crisis, it reached 1,800, but rolled back down, and now it has started to climb back up. There are several reasons for this.
The first reason is that the problems of global finance have not been solved. Moreover, they became more complicated, and the American national debt exceeded $13 million. And although they convince us that they owe themselves more than half of the debt, and this is true, nevertheless, the second half must be repaid.
And in addition to the huge emissions carried out by the world's central banks, some currencies began to develop. Citizens see that central banks are continuing their stimulating policies - printing unbacked money, and this money has led to negative interest rates in Europe and Japan.
For rich people this is big problem- where to invest money. For example, you sold a business and you have a large amount of money. Where should I put them? If you buy bonds, the face value may decrease. You can deposit it in Swiss banks, but Swiss banks have already imposed negative interest rates on their clients. Only gold remains.
Gold from the bottom of the sea
- Now the Japanese are threatening to start extracting from the sea. Is this a plausible statement?
You can mine, there are complex heavy filters that do all this. But the cost of such gold is off the charts. That is, the cheapest gold we have now is loose gold. There, the cost per ounce reaches $400.
But a long time ago all these deposits, where they could be bought cheaply, were bought, mostly developed, and now our gold mining companies and African ones are also faced with the fact that they require huge investments to continue development.
- Is it possible that there will be some kind of technological breakthrough, that there will be more gold than there is now??
It is possible to do some kind of cheap nuclear fusion of gold. I can note two main trends. The first is that printers have appeared that print gold, 3D printers. Each of us, sooner or later, can buy such a printer, prices are high now, but they tend to fall, and will be able to mint such coins. But this is not the near future. This is the first trend.
The second trend is that perhaps some cryptocurrencies, such as bitcoins, will be linked to gold. This will be a gold standard at a new level, because a return to the previous gold standard is, of course, impossible.
- So, is gold worth buying?
Certainly. I'm a supporter simple solution, that with every income, you need to buy. They paid you a bonus, and if it is small, then you bought a coin for 20 thousand. When more money appeared, we bought an ounce coin.
- Are they liquid, can you always sell them?
Yes, absolutely.
Prepared for publication by Maria Snytkova
The easiest way to save - deposits - is known to everyone. Many banks offer clients to become investors and buy bullions made of precious metals - gold, silver, palladium and platinum. But it is necessary to keep in mind that gold bars are legally recognized as property, and, therefore, when sold they are subject to value added tax, that is, when buying them from a bank, you will have to pay an additional 18% of the nominal value of the metal. And if you are going to sell your bullion to a bank, then you will have to pay another 13% income tax on the income received. Bullion is usually used as a way to save for the long term.
There are two types of precious coins - commemorative and investment. Commemorative coins typically sell for more than their face value, and the benefit of using them as an investment vehicle can depend on a variety of factors.
Purchase investment coins It’s convenient because many banks now work with them, which, along with selling coins, can offer the population a buyback. The price is set by the bank based mainly on the value of the metal at the time of redemption. The cost of investment coins may increase significantly from the moment they are released into circulation.
Metal accounts allow you to purchase precious metals both in impersonal form and in physical metal. The main advantage of an impersonal metal account is the ability to close it at any time. That is, the investor has the opportunity to quickly respond to the current market situation: if prices fall, get rid of metal assets that have become problematic, and if prices rise sharply, close the precious deposit profitably and receive income.
It is also important that the cost of an impersonal precious metal does not include the costs associated with the production of bars, their storage and transportation, and in conditions of relative stability, cashing out a metal account is much easier than selling bars (there is no need to check their authenticity).
There are two types of unallocated metal accounts: current (on demand) and urgent (deposit). A current account makes it possible to earn money on the growth of metal quotes. For example, if you bought a thousand grams of gold, and after a month the cost per gram of metal has increased, then you can contact the bank where the metal account is opened, arrange a sale transaction and receive income. A fixed-term account assumes that virtual grams of metal will be stored in the bank for a certain time, and therefore, in addition to the increase in the value of the asset, you as a depositor will also receive interest income.
But it is necessary to remember that metal accounts are not subject to the law on deposit insurance; accordingly, they are not covered by the guarantees of the deposit insurance system.
Hello dear readers. I’m willing to bet that each of you is interested in the question of how to preserve your capital as reliably as possible in conditions of rapid inflation.
Here you don’t need to be a financial analyst to understand the need to withdraw funds from a rapidly depreciating monetary form into stable tangible assets, for example, precious metals.
Let's talk about how to store money in gold and whether it is effective in terms of generating income.
This metal, unlike any national currency, is capable of not losing its value for many centuries. This is due to its small global reserves and the complex and expensive extraction process.
Our ancestors also widely used gold coins as a means of payment. Even then, the presence of this metal determined a person’s status and opened up wide life opportunities for him.
They looked for gold, they died and killed for it. Later, the irrationality of using expensive goods to buy cheap goods became clear, and gradually they began to be withdrawn from monetary circulation.
Nevertheless, today gold remains a stable means of payment, allowing not only to preserve capital, but also to increase it. This trend is especially justified during economic times, when the national currency is rapidly losing its purchasing power.
At this time, not only private investors turn their attention to this metal, but also the governments of entire states seek to replenish the country's gold reserves as a reserve currency.
According to quotes over the past decade, the price of a gram of gold bullion has increased by almost 300%. It is not surprising that long-term investment in gold promises excellent prospects.
What alternatives are there for a potential investor?
Having decided to invest your capital in this precious metal, you have several options:
Buying jewelry
Their acquisition helps to emphasize status, and in many eastern countries it is considered a mandatory manifestation of feelings for one’s spouse.
Is investing in jewelry profitable in terms of investment value? Definitely not. The thing is that their high price is determined not so much by the cost of the metal, but by the work of the craftsman.
If he is not a world-famous designer, this will not be taken into account when selling the jewelry, which will go for the price of ordinary scrap.
It is precisely because of the significant difference between sales and purchase prices that jewelry should be considered as an investment only in the event of a sharp devaluation of the currency and the absence of other alternatives for investing capital.
This does not apply to collectible or antique jewelry. They are considered rare and antique items, whose price is determined by their uniqueness, and not by their actual value.
Investments in gold shares
This method, like investing money in ordinary securities, is impossible without the mediation of an investment company and involves two ways:
- Buying shares of gold mining enterprises for the long term. The goal is to receive dividends and profits from the subsequent sale of securities that have increased in price.
- Obtaining speculative income from the growth of quotations of “golden” shares in the short term. This option requires the ability to analyze the current situation on the stock exchange and cannot be recommended to the general public.
Given that the volume of paper gold far exceeds its physical quantity, playing with stocks can be quite risky.
Buying gold coins
Any banking institution is ready to offer its clients to purchase gold coins, which can be:
- investment;
- memorable.
Investment coins are issued in large quantities by the Central Bank of the Russian Federation. Thanks to the simplified minting technology, their value is almost equal to the price of gold itself and does not in any way correlate with the indicated denomination.
The purchase of coins is not subject to tax, while when selling, you will have to pay income tax on personal income.
You can sell coins to a bank, pawnshop, private individual or jewelers who buy them as raw materials.
When considering this option as an investment, you should remember that it can only bring benefits in the long term, since the difference between the purchase and sale prices is at least 20%. Therefore, it is worth waiting for the price of gold to rise.
Commemorative coins are produced in limited editions and require a more complex production algorithm. This, as in the manufacture of jewelry, leads to an overestimation of the cost of coins compared to the price of the metal used. Therefore, they are usually of interest only to numismatists.
Purchasing bank bullion
The purchase and sale transaction is completed at the bank if you have a passport or other document proving your identity. In this case, you must make sure that the ingot has a stamp indicating the sample and manufacturer.
Also, the ingot must be accompanied by a cashier's receipt, passport and manufacturer's certificate.
When purchasing a bank bullion, you should consider the following points:
- It is more profitable to purchase small bars, since the price of a gram of gold in them is higher. Therefore, if you need to buy a kilogram of metal, break it into several ingots.
- You will have to pay VAT of 18%. You can avoid this by purchasing gold abroad. In the UAE, for example, bullion is sold simply in street vending machines. But then it’s worth taking care of storing them there, because you can import an ingot duty-free into the territory of the Russian Federation no more than once a month and in a monetary equivalent corresponding to a weight of less than 100 grams.
- It is also worth taking care of storage options for the ingot, since putting it under the mattress at home is unwise. You will have to draw up a safe deposit box, a safekeeping agreement, or purchase a safe for personal use.
As for the return on your investment, I would recommend selling bullion no earlier than after their value has risen by one and a half times. This is explained by the fact that banks buy bullion with a spread between purchase and sale reaching up to 40%.
You will also need to pay for an examination to determine the authenticity and quality of the ingot. Therefore, from the point of view of payback, this gold investment belongs to the long-term category.
You can try to gain a little in price by selling bullion to jewelers who have the necessary permission. But transactions between individuals are prohibited (But no one can stop you from giving your friend a bullion for his birthday, and a little later receiving free financial assistance from him).
Opening a metal account
In essence, this is a deposit with gold as its currency. Moreover, you are buying not a physical, but an impersonal form of metal at its current value on the world market.
The advantages of this method of investing are:
- low entry threshold: an account can be opened even for a gram of gold;
- no need to pay VAT;
- no need to worry about storing the actual precious metal;
- ease of exchange for cash.
There are two types of metal accounts:
- Term deposits – allow you to receive interest when the value of gold rises and at the end of the term to withdraw your deposit in the form of an ingot or cash equivalent. If you prefer bullion, remember to pay VAT.
- Current – give you the opportunity to sell your unallocated gold at any time at the current bank rate. This allows you to receive speculative income from exchange rate changes.
Please note that you should open metal accounts only in a reliable bank, preferably with a share of state ownership.
This is due to the fact that gold deposits are not subject to compulsory state insurance, so if the financial institution is liquidated, you will lose your money.
As you can see, there are plenty of options for storing savings in gold. But which one to choose is determined by many factors, ranging from the amount of cash available to the time during which you are willing to expect profit.
I wish you to make the right choice that will improve your financial well-being. Now I say goodbye to you and invite you to join the ranks of my subscribers.
P.S. By the way, now it is possible to buy shares and other assets without leaving home through, as well as open an individual investment account (IIA) remotely.
To buy a small block of shares for testing, you can use the button below:
Buy shares online
Global crises make us think about investing in something permanent and practically unchangeable. A person wants to be confident in the safety of his funds at the moment and for the future. What options exist for making such an investment and how good they are, let's judge together.
Introduction
A person with a lot of money will always care about its safety and value. Therefore, very often he invests money in any projects, developments, or promotions. With such investments, he still remains uncertain about the future. The project may fail, or something may simply go wrong, so we can safely say that such investments are unreliable. And here a logical question arises: “What to do, what to invest money in, so as not to remain in the red after years?” The answer is simple: investing in gold and other precious metals will help.
Precious metals: which one to invest in?
There are many different investment options available these days. But no one knows whether they will be reliable for years or even decades. One thing humanity knows for sure: precious metals and stones will always remain in value. For example, gold or silver. These metals have constant and unchanging physical properties - this is what distinguishes them from money. Metals cannot completely depreciate, and currency can become mere paper in a matter of seconds.
And as we already guessed, investments in gold and silver are the most popular and accessible in our time. History shows that these two metals have always been in value. Investing in gold has a lot of advantages:
- The money invested can always be returned.
- Gold cannot lose its value.
- Gold cannot deteriorate (for example, burn or get wet).
Thus, by choosing to invest in, you can be confident in the future and not be afraid of crises at all. Investing in gold will not leave you in the red. However, it is worth understanding that such an investment is long-term. And if an investor wants to make money, he needs to play on the difference between the purchase price and the sale price of his gold.
Gold as the main currency of the past
The past shows that gold has been quite popular. This is proven by all sorts of “gold rushes” in the Wild West. Works have even been published on this subject. Nathan Lewis wrote the book Gold: Money Once and Future. It talks about the instability of a currency like the dollar and the ever-solid and unwavering value of gold, and the impact of crises and decades on these two currencies.
It is impossible not to agree with the author’s main idea, since gold is now much more reliable than currency. After all, it is the yellow precious metal that has always been valued, is valued and will continue to be valued - only the equivalent value will change.
The past can also boast of gold coins, which were in use in most rich countries for quite a long time. However, over time, people realized that it was unwise to use such an expensive metal to value cheap things, and began to replace gold with cheaper options.
Where can you buy gold?
Today, in almost every good bank you can buy gold or, more correctly, invest money in gold. Sberbank of Russia, for example, can easily sell you this precious metal in several forms:
- Gold bars. They come in different weights: from the smallest to huge kilogram bars.
- Gold coins. Most often, such coins are also collectible. Therefore, collectors pay special attention to them. However, if you are rich, you can give a nice birthday gift to a friend by buying him gold coin as a gift.
- And the third type of investment in precious metal is buying gold jewelry. If you buy gold for your beloved wife, it will not only be a luxurious gift, but also a good investment in case of a collapse of the world economy.
Sberbank sells gold to almost everyone. Of course, the buyer must be of a certain age. In addition, to purchase it you still need desire and money. Thus, it becomes obvious that investing in gold is available to everyone who has the opportunity.
Trends in the popularity of gold and silver for a given year
This year, 2014, “gold investors” were able to make good money on the difference between buying and selling gold. This is primarily due to the fact that in past years gold was slightly cheaper based on the price per gram. This year there is an increase in gold prices by approximately 7 percent from the value of 2013. Looking at this percentage, we can congratulate investors who have relatively large gold reserves - they have become a little richer compared to the past.
It is worth noting that fractions of a percent of the cost are constantly increasing, and so far there are no prerequisites for stopping this growth, much less reducing this percentage. But here’s some advice for those who have not yet started investing in gold: it’s better to hold on to your money. This is due to the high cost of metal at the moment. By investing money now, you can simply lose a certain part of your funds due to a fall in the price of gold in the future.
Storing gold investments
Many people have a question: “Where to store gold?” At its core, it is very correct and problematic. In modern world conditions, with an increase in the criminogenic component of society, most human habitats are unreliable for storing large quantity values. Therefore, investors look for more protected places and keep their gold there. One of them is a bank with special storage facilities.
For example, Sberbank stores gold in special premises that are protected with the latest technology. Neither thieves nor swindlers can get there, and only the owner will be able to look at his wealth. In addition to banks, in Europe there are special private money vaults that keep any material assets safe and secret from everyone.
If you think that all these options are unreliable, you can organize your own storage by purchasing and installing a modern safe in your home, which is very difficult to break into, much less take away. Investments in gold require special storage conditions for it.
Buying gold bars as an investment
Gold bars are probably the most boring way to invest in gold. They cannot be looked at like coins, they cannot be worn like jewelry, but they can be stored in very large quantities, and this is the biggest advantage of this type of investment. The weight of gold bars can reach 1 kilogram.
Sberbank sells gold in bars of various sizes, starting from 2 grams. Thus, anyone can come and invest their money in metal currency. Having purchased this metal in this form, you can immediately open a gold account, which will contain your grams or kilograms. When purchasing, it is very important to choose a reliable bank for this business. For example, some state-owned or the most traded one in the country. Having done this, you can safely invest money when the gold rate falls.
Buying gold as an investment
It has long been known to everyone that gold coins are also an investment item. Those who are bored with storing gold bars can buy it in coins. This, in our opinion, is more interesting, and there is always some variety.
Buying gold coins is very simple. First you need to find a bank that sells them. Information about this should be known to any employee at the bank. Having learned that such products are being sold, we approach a competent employee and express a desire to buy. If you are lucky, the bank will be able to offer several types of coins and set a price for them. And then you yourself will choose one or another option and buy it. Investments in gold through the purchase of coins are very developed in the countries of America, Europe, and more recently they have begun to develop in our country.
If you plan to sell gold coins in the future, it is best to take them to private collections or pawn shops. It is possible that the price for buying gold in these places will be slightly higher than at the bank where you bought it. And this is worth thinking about. After all, the main purpose of investment is to save money, not spend it.
Investing in Gold: Jewelry
Investing in gold, or more precisely, in gold jewelry, is the most difficult option for making a profit. However, this type of investment is the most enjoyable for you. Now we will explain why. Bullions and coins are, of course, good, but products made from these precious metals show your material status. A person who has beautiful, weighty gold jewelry is always perceived as rich. In addition, it is much more pleasant to give your wife a gift in the form of gold jewelry and thereby, perhaps, secure a future for your family.
This investment option is the least profitable, since, in addition to weight, money is also taken for the work done - for the manufacture and sale of the product. On the other hand, it will become the most pleasant for you. However, as always, the choice is yours. As they say, how many people, so many opinions.
Conclusion
Having considered the concept of investing in investments and how to properly make a profit from it, we can say that this type of investment is reliable and promising. By choosing gold, you will protect yourself by almost 95 percent from any global crisis, because it will always remain in price. History proves this to us - yes, a centuries-old history in which this metal has always had enormous value.
In order for your financial balance to always be positive, you need not only to be able to store money correctly, but to be able to make it work for you. Today, the most effective financial instruments are stocks, currencies and precious metals. Of the precious metals, gold is considered the most popular. It is really profitable to invest money in it, but you need to understand that this is a long-term investment, so you should not expect profit in the near future. It would also be a mistake to purchase gold with your last money. Experts advise buying gold for a period of ten years or more. The precious metal should become that emergency reserve that will always be in your financial portfolio. Its share can average from 5 to 10%.
Benefits of gold savings
The main feature of gold is that it has long periods of volatility. For example, in the 80s, the price of the precious metal fell for almost ten years. Only after reaching the peak point did the price begin to slowly creep up. That is why there is no point in counting on quick profits when dealing with gold. Now many are starting to buy metal in the hope of making money on exchange rate fluctuations. However, in this situation, only speculators participating in investment trading can benefit. Those who buy gold “for the future” should be patient and wait, without trying to sell it at the slightest increase in its value.How to open an account
In Russia, customers most often enter the gold market by purchasing gold bars. But there are several problems here:- in our country, a person purchasing precious metal must pay a tax fee of 18%;
- ingots begin to “work” after at least ten years or more. Only in the long term can we expect the value of gold to increase relative to other currencies.