I started investing in bullion coins in 2006. I bought my first coin, the “Sower” chervonets, in mid-2006 at a price of 4,650 rubles. Now I can sell it for 41,000 rubles. Over 15 years, Sower has grown by 782% (52% per year).
I made one of the last transactions to purchase coins - “St. George the Victorious” - in August 2021. I bought a coin for 26,000 rubles. Now I can sell it for 38,500 rubles. The profitability for a year and a half of ownership was 48.07%.
In total, I bought 10 gold investment coins, spending 260,000 rubles on it, if today I decide to sell them, then my total income will be 125,000 rubles (48.07%).
My experience clearly shows that over the long term you can make good money on investment coins.
Commemorative coin
Investment coin “St. George the Victorious”
What types of coins are there?
Bullion coins include high-grade gold, silver, and sometimes platinum coins. As a rule, most gold coins have a fineness of at least 900 (90% pure gold in the item) or higher. Example: gold “St. George the Victorious” has 999 fineness. It is issued by the Central Bank of Russia. The authenticity of the weight of the precious metal in the bullion coin is guaranteed by the state.
Coins are legal tender and have a denomination (10, 50, etc. ₽). The face value does not reflect their real value, since the market valuation is influenced by the purity of the metal, weight, existing defects and other indicators. For example, the face value of “St. George the Victorious” is 50 ₽, but you can buy it for at least 38,000 ₽. You can freely pay with this coin in a store, but, unfortunately, it will be accepted at face value (50 ₽).
It is necessary to distinguish investment coins from commemorative coins made of precious metals. Investment coins do not have complex artistic images and are produced in large quantities using simple minting technology (in 2021, the circulation of the gold “George the Victorious” was 500,000 coins). Their main task is to be a means of preserving savings.
Commemorative coins are issued for some event, and they cannot be found in circulation; they are sold in banks or numismatic stores. The cost of commemorative coins does not depend on the weight of the precious metal, but on the artistic value and minting limit. They can have a value many times higher than the nominal value.
Demand for gold has led to a shortage of coins in Russia
Against the background of the pandemic crisis and turmoil in financial markets, Russians began to look for new instruments for investment. Wealthier Russians are increasing their investments in exchange-traded gold – in other words, shares of specialized “gold” funds.
Those who have little understanding of exchange instruments or do not have brokerage accounts also actively transfer their savings into gold. Thus, at Promsvyazbank in the spring-summer period, the influx of funds into unallocated metal accounts (OMA) increased by 15%, and the demand for gold coins even jumped by 20%, reports the Prime agency.
The interest of Russians in gold can be understood: six months ago, gold futures on the stock exchange
was only $1687, and is now $1904.
This is despite the fact that at the peak in August, quotes
exceeded $2,060.
Analysts interviewed by Gazeta.Ru noted that, in general, you should always have gold savings, so in a broad sense there are no ideal or bad moments for buying precious metals. And this applies not only to gold.
Alexander Osin, an analyst at the department of trading operations on the Russian stock market at Freedom Finance, notes that the demand for gold and gold assets will continue to grow in the coming years. The current increase in prices and demand for gold and gold assets appears to be a stable trend, due to the soft or ultra-soft monetary policy of the leading countries of the world over the past 12 years.
“From the point of view of estimates based on the dynamics of indicators reflecting the dynamics of the commodity and money supply, the target level of gold prices for the next one to two years is $2,500 per ounce in the base scenario,” the analyst said. “The positive and negative scenario options for the gold market within this assessment system for the next year with a 60% probability are $1,700 and $3,150 per ounce, respectively.”
Gazeta.Ru’s interlocutor from Alpari Gold also agreed with the expert’s opinion. A company representative noted that about 10-15% of savings should be stored in physical gold, and primarily in gold coins.
“Coins have a lot of advantages: no VAT for legal tender. Coins are more liquid compared to bullion. They can be sold to a wide range of individuals and legal entities. Losing a certificate for an ingot threatens the loss of the opportunity to sell it,”
– explains the representative of Alpari Gold.
At the same time, the interlocutor of Gazeta.Ru noted that, in fact, there is now a kind of shortage on the market for coins made of precious metals.
“In March 2021, Alpari Gold sold out all gold and silver coins. “There has never been such rushing demand in the four years the company has been operating on the Russian market,” a company representative marvels. “The gold coins “St. George the Victorious” (Russia), “Philharmoniker” (Austria), “Britain” (Great Britain), all weighing one troy ounce (31.1 grams) are in particularly high demand.”
There are cheaper options
In a conversation with Gazeta.Ru, a representative of Alpari Gold said that gold, in his opinion, is quite expensive today, so silver coins are also a very interesting way to protect part of the funds from negative trends in the economy.
The fact is that now gold to silver in dollars is quoted at 1 to 79 - this is a fairly high gap, and it will be reduced to 1 to 50.
“The world’s silver reserves will last for 30 years. This metal is facing a very serious rise in price,” explains the expert.
However, Alexander Osin from Freedom Finance pointed out some risks associated with physical gold. According to the expert,
The main advantage of precious metal, in the form of coins, is ease of purchase. However, when selling, the buyer may request an independent examination of the coins. Of course, it's not free.
“In addition, the markup reflecting the artistic and numismatic value of the coins is relatively high. The cost of coins is approximately 10% to several tens of percent higher than the cost of the precious metals from which they are made,” added Alexander Osin, clarifying that the presence of artistic and numismatic value represents an additional risk for the investor.
Inflation protection
Overall, both experts agreed that gold coins provide a form of inflation protection.
“Gold and silver will rise in the long term. Any risks in the global economy will again push precious metals prices up. Dollars, euros and rubles can always be printed, but supplies of gold and silver are limited,”
– noted the representative of Alpari Gold.
Alexander Osin from Freedom Finance nevertheless noted that gold prices react in their dynamics not so much to inflation itself, but to factors that predetermine the dynamics of consumer and production prices in the economy.
“The real average year-on-year increase in the price of gold in US dollars since 1968 is 6%. But over these 52 years, there were quite long periods when gold grew in price slower than inflation, adjusting certain technical or fundamental factors with its price dynamics,” explains the expert.
So, in fact, the main advice for those who decide to transfer their funds to gold is not to transfer all their available funds into it. A much more intelligent solution would be to create a “basket” of investments to protect against economic risks in general.
Investment strategy
Earnings from investing in investment coins are made up of the difference between the purchase and sale prices.
When investing part of your savings in coins, it is worth remembering that tangible returns on investments can only be obtained with long-term investing. The longer the term, the more profit you can get. It is better to invest in it for at least 5 years, and better - from 20 years.
For those who expect to make quick money, this investment instrument is not suitable. In addition, the presence of a spread (the difference between the purchase and sale prices), sometimes reaching 10%, significantly reduces profits. That is, if you buy a coin today for 10 thousand rubles, tomorrow you can sell it at best for 9 thousand rubles. It's like buying a car at a car dealership - as soon as you drive it out, the car immediately loses value. All this should be taken into account before you start investing.
I invest about 20% of my savings in gold coins. They are one of the financial instruments with which I create capital for the education of my children and for my retirement. In the future, I think that the coins set aside for children's education will, if necessary, be redeemed from my pension fund.
Read on topic: Gold: investment instructions
Austrian Philharmonic
Philharmonic gold coins are among the most popular in continental Europe. They are produced by the Austrian Mint (Münze Österreich) in various sizes from 1/10 ounce to 1 ounce.
The Austrian Philharmonic (sometimes called the golden Vienna Philharmonic) quickly spread throughout the world market after its debut in 1989. These are the only coins on the list with a Euro denomination.
The design of the coin, like its name, pays tribute to the historical prosperity of the musical arts in the Austrian capital of Vienna. The obverse of the coin depicts a set of orchestral instruments. On the reverse is a large organ in the famous music hall, where the Vienna Philharmonic Orchestra often performs. The same design has graced the silver coin since 2008.
Pros and cons of gold bullion coins
➕ Investment coins are an asset that steadily grows in price over time.
➕ This is a protective asset in times when the economy is down.
➕ Over the long term, you can earn from 40% on gold investment coins.
➕ Investment coins, unlike gold bars, are exempt from paying 20% VAT.
➕ Investment coins have good liquidity and are sold with a small premium to the market price of gold.
➖ This is not an asset that will allow you to earn money quickly. You need to invest in it for at least 5 years.
➖ Investment coins must be carefully stored for many years. Any scratches or marks on them will result in a reduction in price.
➖ Income from the sale of investment coins is subject to taxation at a rate of 13%. The investor must independently submit a declaration to the Federal Tax Service.
Maple Leaf
Country: Canada
Issued by: Royal Canadian Mint
Start of production : since 1979
Sample: 916.7 (24 carats)
Obverse of the coin
On the obverse is the profile of Queen Elizabeth II - the head of Canada, the denomination and year of issue of the coin.
Reverse
The reverse of the coin depicts the symbol of Canada - the maple leaf, the name of the issuing country, the fineness and weight of gold in the coin, as well as the inscription "pure gold" in English and French.
The gold Maple Leaf coin was issued in 1979 as a replacement for the South African bullion Krugerrand coin, which had become unavailable due to the economic boycott of South Africa due to apartheid, an official racist policy.
Interestingly, the portrait of Queen Elizabeth II on the coin has changed over time. At first there was an image of the 39-year-old queen, from 1990 - 64-year-old, from 2005 - 79-year-old. To increase the security of the Maple Leaf coin, since 2013, a small maple leaf with the year of issue in the center has been added to the reverse, and since 2015, radial lines have been added on both sides of the coin.
At first, the gold purity was 0.999, and the coin weighed only 1 ounce. From 1982 to the present, coins have been produced with a purity of 0.9999, which makes them very fragile. Coins currently available are 1 oz, 1/2 oz, 1/4 oz, 1⁄10 oz and 1/20 oz.
How to choose and buy investment coins
Now the most popular gold coins in Russia are the gold chervonets “Sower” and “George the Victorious”. I buy them.
Coins can be purchased:
- in banks (Sberbank, Rosselkhozbank, Transstroibank and others);
- from specialized coin dealers (TradingGold, Auris Precious Metals, Gold Reserve, etc.);
- from private companies selling them in stores (ShopCoins.ru, MONETNIK.ru, NUMIZMAT.ru, etc.);
- through websites (AVITO, Yula, Flea Market).
To protect yourself from buying a fake, it is better to buy coins in banks. This guarantees authenticity.
Each seller sets their own price, and often the price for the same coin can differ by 1000–2000 rubles.
Once a seller has been selected, it would be a good idea to call and check the sales price directly with a bank employee. In the summer of 2019, when gold prices began to rise, the selling price of coins increased almost daily. One bank offered me to “freeze” the price for three days, which was a pleasant surprise for me and allowed me to buy a gold “St. George the Victorious” at a price that suited me.
When purchasing “St. George the Victorious,” you need to know some features: coins are produced by both the Moscow Mint and the St. Petersburg Mint. The prices of “George the Victorious” from the Moscow courtyard are higher than those of its counterpart from the northern capital. There is an explanation for this: in 2008–2013, diffuse contamination of coins with gold particles was encountered at the St. Petersburg Mint, as a result of which they rusted. Although this problem has been resolved, there is no guarantee that purchased coins will not become rusty.
Before purchasing a coin, it is better to check its condition. To do this, you need to carefully open the protective capsule and carefully examine the coin on both sides. The coin should not have any scratches, abrasions or other defects.
British Sovereigns
There are few coins in the world as famous as the British Sovereign. This gold coin, minted by the Royal Mint (UK) in 1817, has a face value of one pound sterling. It was initially issued for circulation, although in subsequent years it was used only for trading and investment purposes.
The obverse of this iconic gold coin features the reigning monarch, Queen Elizabeth II. The reverse features Benedetto Pistrucci's classic design of St. George and the dragon. They are slightly larger than a US nickel.
More recently the mint produced Sovereigns for investors along with the modern Britannia gold coin. It's no surprise that the British Sovereign appears in many precious metals portfolios.
However, this classic British gold coin has long been a favorite collector's coin for many. It attracts numismatists who want to create sets of different issues. Many Sovereigns, even vintage ones, trade at prices slightly above their intrinsic value. This makes them an affordable gold coin for many investors.
How to store investment coins
A purchased coin can be sold at a good price in the future only if it has no mechanical or chemical damage.
The coin must be reliably protected from exposure to direct sunlight, aggressive substances and temperature fluctuations. All this can damage her. It is better not to remove the coin from the transparent capsule in which it is sold, since the latter protects it from dents, scratches, chips and abrasions. You should not take the coin out of the capsule and touch it with your hands - there will be a fingerprint that cannot be removed. This will reduce the value of the coin.
Since coins will have to be stored for many years, it is better to use a safe for this. I recommend a burglar-resistant safe with a small mechanical or electronic combination lock. The price for such safes starts from 4000 ₽.
Read on topic: How to choose a safe for your home?
Nugget/Kangaroo
Original title: Australian Gold Nugget
Country: Australia
Issued by: Perth Mint
Start of production : since 1986
Purity: 999.9 (24 carats)
Obverse
On the obverse of the coin is the name of the coin, an image of a kangaroo, the year of issue, fineness and gold content.
Reverse
The reverse depicts Queen Elizabeth II, the current monarch of Australia, the denomination of the coin and the inscriptions in English: “Elizabeth II” and “Australia”.
One of the most interesting bullion gold coins in the world is the Australian Nugget/Kangaroo. It is one of the few coins that changes the image on the obverse every year. The coin has a double name, since it first featured a nugget. From 1989 to the present, the symbol of Australia, the kangaroo, began to be depicted on it. Every year the appearance of the kangaroo changes, which increases the numismatic value of the coin. There may be several kangaroos, the background also changes annually. The circulation of the coin is limited.
Australian Nugget coins, 1986
The Nugget/Kangaroo coin was introduced in Australia due to a ban on the import of the Krugerrand bullion coin. The coin was originally called the "Australian Nugget" because of the nugget depicted on it, with a different nugget depicted each year. This included the “Welcome Stranger,” the largest gold nugget found in the Australian town of Moliagul in 1869, weighing 72 kg.
In 1989, the coin began featuring a kangaroo and was renamed the Australian Nugget/Kangaroo. It is from this moment that the coin begins to gain popularity.
“Kangaroo” is available in various weight categories, including generally accepted sizes: 1 ounce, 1/2 ounce, 1/4, 1/10 and such exotic ones as 2 ounces, 10 ounces and 1 kilogram.
How to sell investment coins
Coins can be sold through a bank, coin dealer, or numismatic stores. Every day, the Central Bank of Russia sets quotes for precious metals. This price affects the value of investment coins. Following the Central Bank, based on its quotes, commercial banks also set their purchase and sale prices for coins, setting a small percentage of the margin. The price for purchasing a coin from each bank may vary. In addition, some banks only sell investment coins, but do not buy them back.
Most banks buy investment coins, but they do this only in certain branches; it’s just that not all branches have appraisers. The appraiser examines the coin, determines its authenticity and condition. He looks for defects: scratches, dents, stains on the surface. Many defects are not a deal breaker, but you need to know that they reduce the redemption value of the coin. Some banks only buy coins in perfect condition.
Before selling, you need to call the call center of a particular bank and find out if they are engaged in buying back investment coins. If yes, then you need to find out which branch you can go to.
For example, Sberbank redeems coins in Moscow only in two branches (on Tverskaya, 22 and Vavilova, 19). Rosselkhozbank can only accept coins in four Moscow branches.
To get the maximum price for a coin, it must be in perfect condition.
To sell investment coins through a bank, an individual will need a passport. During the transaction, the bank will issue incoming and outgoing orders.
Selling coins through a coin dealer or numismatic store is similar to selling through a bank. It is necessary to pre-arrange a meeting with the responsible employee. He will inspect the coin, assess its authenticity and set a price. If agreed, the transaction will be formalized as a purchase and sale agreement between an individual and a legal entity.
Unfortunately, I cannot yet share my experience of selling gold coins. I invest in them for a very long time. So I won’t be able to tell you how and for how much I’ll be able to sell the coins until I retire.
Put your earned money into a deposit with a high rate
Eagle
Original title: American Gold Eagle
Country: USA
Issued by: United States Mint
Start of production : since 1986
Sample: 916.7 (22 carats)
Obverse
On the obverse is a full-length figure of Lady Liberty, with a raised torch in one hand and an olive branch in the other, in the rays of the rising sun. The coin also features the inscription “Liberty,” the year of issue, 50 stars representing the number of states, and the Washington Capitol building.
Reverse
The reverse features an eagle with an olive branch flying to a nest with an eagle and chicks, and the inscriptions: “In God We Trust”, “UNITED STATES OF AMERICA” and “FINE GOLD”.
The obverse of the gold American Eagle follows the design of the most beautiful coin in the United States, the Saint-Gaudens gold double eagle. It is considered one of the most expensive coins in the world. The design of the double-headed eagle was created in 1906 by the famous sculptor Augustus Saint-Gaudens, commissioned by President Theodore Roosevelt.
It is interesting that at first, in 1986–1991, the year of issue on gold Eagles was minted in Roman numerals, then they switched to Arabic. Eagles come in 1 oz, 1/2 oz, 1/4 oz and 1⁄10 oz weights.
What taxes do you need to pay?
Bullion coins are property. Therefore, profits received from their sale are subject to personal income tax at the rate of 13%. If you bought a coin, sold it and made a profit, then you will need to report it on your tax return for the year. For example, in 2021 you sold a coin, you will need to file a return and indicate this income by April 30, 2022. The tax itself will need to be paid by July 15, 2022.
But if you own a coin for more than three years, then you no longer need to pay tax after selling it (clause 17.1 of Article 217 of the Tax Code of the Russian Federation). In this case, the date of purchase of the coin must be documented, otherwise tax may be charged on the full cost.
Read on topic: Who needs to pay taxes and how much in 2021
My advice to those who want to invest in gold bullion coins
1.
It is necessary to buy investment coins for a period of at least 5 years.
2.
To avoid becoming a victim of fraud, it is better to buy investment coins from a bank.
3.
Each bank sets its own prices for selling coins. It is better to study their offers and choose the most profitable one.
4.
Investment coins must be carefully stored and protected from mechanical and chemical damage. The better the condition of the coin, the more favorable the price it can be sold.
5.
You must keep all documents confirming the purchase of coins. This will help you avoid paying tax in the future when you sell them.
