What is investing in gold?
This is the purchase of gold, or securities associated with transactions for the purchase and sale of gold in order to preserve one’s own capital and make a profit from its investment. Recently, this type of investment has become increasingly popular not only among individuals. Entire states prefer to increase the share of precious metal, including physical metal, in their reserve funds.
This type of investment is most attractive as a long-term investment. Any of the chosen options for investing in gold in a short period of time will bring losses rather than profits. Therefore, it is most profitable if you have free capital, or if you need to save a certain large amount over several years.
Savings options
Gold reserves created by individuals can have several visual expressions.
The most important of them are presented in the table:
| Gold bank coins or bars | The purchase is made through impersonal bank accounts. Thanks to them, accounting for the movement of valuables is achieved. |
| Investments in a trading fund | Purchasing shares of funds that invest in precious metals and securities. |
| Investing in private projects | Investing in private projects that attract electronic funds in the form of precious metal. |
| Forex | Brokerage investment for the acquisition of gold units in electronic form. |
Types of Gold Investments
The methods that can be used to invest in gold are quite varied and each has its own advantages and disadvantages. You should choose based on the goals, timing and amount of the intended investment.
Shares of gold mining companies
It would be a stretch to call this an investment in gold. But, their liquidity, like any shares, will be higher than transactions directly with gold. Plus, the price of a company’s shares directly depends on the exchange price of the precious metal, and usually their value grows faster and decreases slower than market prices other than gold.
Bullions and coins
This method involves purchasing physical gold. The main profit lies in increasing its market value.
The disadvantages of such an investment include high associated costs - bank commissions, VAT and storage costs. Physical gold should not be left at home. For coins, it is wise to rent a safe deposit box. In addition, the price of a coin includes its so-called artistic value, which may increase over the years, but will most likely be canceled upon sale.
Bank gold bullion is an even less attractive object. Loss of the certificate or damage to the ingot puts an end to attempts to hand over the precious metal to the bank. It will only be accepted at a pawnshop or purchase, at a “scrap” price.
Decorations
Expert opinion
Lyudmila Pestereva
Our most experienced gold investor
Ask a Question
A completely unattractive option from the point of view of receiving passive income. The cost of gold in a piece of jewelry can be 1/5 of its price. This is the amount you can count on when selling, the rest cannot be returned. I allow exceptions if we are talking about a unique piece of art, and not an ordinary gold trinket for every day.
Exchange trading
Considering gold prices in recent years, this method can bring significant income, but any game on the stock exchange is associated with great risks. Only 5% of all traders manage to make consistent money in the market.
Anonymized metal account
This is an analogue of a current account, only in non-cash gold. The service involves opening a bank account and converting rubles into grams of virtual gold. You can do this from your personal account without wasting time going to the bank. Reverse conversion and withdrawal of funds are also carried out online. The downside is the fees for opening and closing an account.
Unallocated gold on MICEX
Trading gold on the Moscow Exchange provides high liquidity, low commission costs with high investment reliability. Since the price of gold here corresponds to the market price, the investor will also not be insured against falling prices and a decrease in his capital.
The downside is that you have to delve into the details: look for a broker, figure out how to open a brokerage account, master the trading terminal yourself. And the entrance fee of 30 thousand will not be available to everyone. Profit from such an investment is subject to standard personal income tax, and you will have to file a return with the tax office yourself.
Gold funds (mutual fund and ETF)
These are funds created with the financial participation of various individuals, the total funds of which are used to purchase gold or shares of other funds that trade in the precious metal. We must pay tribute - not a single case of bankruptcy of such an organization is known yet, so the investment is quite reliable. The relatively low entry price allows almost anyone to invest their money, but there are pitfalls here too:
- An ETF is a fund whose shares are traded on an exchange like other securities. It conducts transactions with physical gold, dealing not only with trading, but also with transportation and storage. The fund's commission is minimal and usually does not exceed 0.6% of the transaction amount. The entry price is low - about 10 thousand rubles. High liquidity and reliability, which is expressed by diversification of investments, is an indisputable plus.
- Mutual investment fund - such a contribution is not subject to VAT, but the costs associated with its activities can amount to up to 10% of the deposits, often this is almost the entire profit from the asset. In addition, the mutual fund does not invest in physical metal trading, but purchases the same ETF shares, being a costly intermediary.
Which method is better and why
The question is subjective and depends on capabilities and goals. If you want to invest your free finances in a reliable asset, protecting them from inflation, then compulsory health insurance is an excellent option, opened and forgotten for several years. If the main goal is to make money, then I would choose to work with ETFs, since this option allows you to get the maximum profit from trading gold without unnecessary intermediaries and commissions.
Receiving a profit
Investing in jewelry is the least profitable way. When purchasing a product, you overpay for the work of the jeweler, advertising, etc. If in the future you want to take the precious metal to a pawnshop, you will receive 40-50% less for it than when purchasing it.
Buying gold bars and storing them at home is also unprofitable. They are taxed and the investor will have to pay a lot of extra money for the “physical” metal. Such a gold deposit, as it turns out, is not the most profitable.
An unallocated metal account is not taxed, so you won’t have to pay extra. This option is considered the most profitable, since there are practically no disadvantages. The client who owns this account has the right to buy or sell gold at bank quotes at any time.
There are certain benefits to buying investment coins. The price for them never falls, but only rises.
Please note that if you buy a 1 kg bar. it will cost slightly less than 2*500 gr. For wholesale purchases of 10 pcs. Even banks give discounts.
As a result, it becomes clear - I’m thinking about choosing a gold deposit, it’s better to give preference to compulsory medical insurance.
Profitability of gold deposits
Most banks have stopped offering the service of opening time deposits in gold, replacing this product with unallocated metal accounts. But there is no significant difference - interest rates on such deposits have always been the lowest. And the main income of deposits in metals was not in annual interest, but was based on forecasts of an increase in the price of gold and the positive difference in this price at the beginning and end of the deposit period.
Today, the yield is almost completely consistent with London quotes:
XAUUSD chart courtesy of TradingView
What is the maximum income you can expect?
Whatever method you choose for yourself, it will be closely related to stock quotes. And in the game on the stock exchange, as you know, you can quickly get rich, but also quickly go bankrupt. It all depends on the player’s talent, but if we consider the price of gold over the past 10 years, then during this time, gold account holders have increased their investments by more than 4 times, totaling 40% per year.
Is investing profitable?
About two and a half tons of gold are mined annually in the world. Its prices are gradually rising. It all depends on the level of supply and demand. Experts unanimously say that long-term investments are an ideal prospect for the future. However, you should not expect income right away. You need to wait 2-3 years.
Experts believe that the most reasonable contribution is from 5 to 25% of your assets. Expert Stanislav Kochetkov advises: “It is advisable to invest for the long term. This will be more effective. It is risky and unsafe to invest up to a year. If clients are worried about their finances, then it is better to spread out the investments. Invest one part of the finances for one year, and the second for 2-3 years.”
What details should you carefully study when choosing a bank to deposit in gold?
The main thing is the reliability of the financial organization. And it, as a rule, is inversely proportional to the level of income from cooperation. The most tempting conditions will always be offered by less reliable and smaller companies, which I do not recommend contacting.
Interest rates on gold deposits
No interest is paid on such accounts. Income from investments consists of two components - the increase in the price of gold and profits from successful transactions in the purchase and sale of metal.
Which bank is better for investing in gold?
As I already said, it is better to choose a reliable financial institution. In terms of tariffs and profitability of such an account, the conditions for clients in most banks are almost the same: the account is open-ended, the commission is minimal or absent. The bank will receive its main income from exchange rate differences in metal transactions.
Pros and cons of investing in gold at Sberbank
The positive points include:
- Reliability of the organization;
- The ability to carry out account transactions without restrictions on the number and amount of transactions;
- High profit potential;
- Maximum liquidity of funds.
Negative aspects of the investment:
- Deposits are not subject to the law on state deposit insurance Federal Law No. 177-FZ;
- The income received is subject to taxation and is subject to independent declaration;
- There is no interest, as when placing funds on a deposit;
- Depositing into compulsory medical insurance and issuing physical metal from it is not carried out.
How to open compulsory medical insurance in Sberbank
Gold deposits are opened both in Sberbank branches and online.
In the office
It should be taken into account that not all offices have the necessary equipment to provide the client with the opening of compulsory medical insurance. As a rule, these are the same branches where gold coins and bars are sold.
We recommend:
- call Sberbank at 900
