Investing in gold bars

For investing money, there are many tools that allow you to save and increase your capital: investments in bank deposits, stocks, bonds, mutual funds. With such investments, there is a risk of losing your money or the income received will be depreciated by inflation.

But there is such an investment option that has shown its strength over the years – this is investing in gold, or rather, in gold bars. These investments can become your “personal pension fund” or capital that you pass on by inheritance. Today, this is not the most common option for saving savings among our population.

Investing in gold bars
Investing in gold bars

Before you buy gold bars
First, you must determine for yourself the amount that you are willing to invest.
Secondly, you need to determine how much of this free money you are ready to invest for a short period – up to 1 year, and how much – for a longer one. What amount are you ready to “forget” for several years, and maybe even decades.
Experts advise that no more than 15% of your capital should be invested in gold bars.

There are several options for investing in gold on the precious metals market: bullion, coins and depersonalized metal accounts.

Each option has its pros and cons.

Consider the benefits of investing in gold bars:

Gold is always, in all countries, a value . It does not become cheaper, but during periods of crisis, on the contrary, it rises in price. Demand for this precious metal exceeds supply. Therefore, gold retains and even increases its value, despite any events in the world economy.
Gold is valued all over the world, because. it is a rare metal. Its reserves in the world are not very large. Not as much gold is mined as it might seem. For the entire period of gold mining, mankind has mined no more than 135 thousand tons of yellow metal. If it were possible to fuse it into one cube, then the edge of this cube would be no more than 18 meters. Gold in all countries of the world is a means of payment throughout history in the Central Bank of developed countries have revised the role of gold and stopped selling it. China and Russia buy the most gold in order to reduce their dependence on the US dollar. Russia buys an average of 18.6 tons of gold per month. Having a gold reserve can help balance a country’s financial system.
Gold – does not corrode, does not lose its properties over time, does not interact with other chemicals, beautiful, reliable metal . Pure gold is a very soft material that can be easily deformed, most commonly used in the jewelry industry.
Gold is widely used in many areas of our lives, especially in dentistry (for making dentures). The advantage of gold products is that they are completely harmless to humans.
The combination of these properties allowed gold to become a material that is so highly valued around the world.

Gold bullion is a profitable investment option. By itself, it is a commodity, it must have a sample, depending on which its value is set. Today, the price of gold is declining slightly, but as history shows, it will start to rise again over time. Gold will never depreciate, and this fact should be decisive for the decision to invest in gold bars.

An ingot of banking gold can become not only a profitable investment option. When buying a gold bar, you can sell it, donate it, or pass it on by inheritance. The advantage of investing in this precious metal over investing in securities is that you get rid of the need to monitor stock quotes on the stock exchange every day. But this is only if you invest seriously and for a long time.

The advantage over deposits – investing in gold bars will allow you to save savings from inflation and financial crises, and get income. But at the same time, you need to keep in mind that buying a gold bar will not give you a quick income. The price of gold fluctuates constantly, but not as much as, for example, exchange rates or the value of securities.

As confirmation, we present data on the dynamics of gold prices for the period 2000-2017 (in dollars per troy ounce):
Year Minimum Maximum Medium Growth of the average price in % compared to the previous year

Pricing Factors
The cost of a gold bar depends on the price of gold per 1 gram, the weight of the bar and its technical condition.
The price of gold per 1 gram in our country is set by the Central Bank. It is known as the discount price.
Gold quotes of the Central Bank of the Russian Federation reflect the price of pure gold 999 per 1 gram . The accounting prices for gold are set by the Central Bank of the Russian Federation on a daily basis.
The cost of one gram of gold is based on the world price per ounce.

The term “ounce of gold” in the modern world means a troy ounce of gold weighing 31.1034807 grams. The historical name ” troy ounce” comes from the French city of Troyes (fr. Troyes ), located in the province of Champagne, in which international trade fairs were held in the 12th-14th centuries.

The official world price of gold worldwide is expressed in US dollars per troy ounce. A fixed price per troy ounce of gold is set on the London Metal Exchange twice a day. This is the so-called London fixing, which sets the price of gold.

It is held by representatives of the five largest banks in the UK – players in the precious metals market. The price is set depending on supply and demand, in three currencies: dollars, euros and pounds sterling.

When calculating the discount price of the Central Bank of the Russian Federation, the value determined by the London fixing is converted from dollars per ounce to rubles per gram by dividing by 31.1034807 (the number of grams in one troy ounce), and then multiplied by the officially established ruble to US dollar exchange rate in effect on the day following after the date of setting the discount price. At the same time, the accounting price of the Central Bank of the Russian Federation is not the basis for purchase and sale transactions.

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The cost of a troit ounce in the gold market depends on various factors.
Basically, these are two main groups of factors: economic and political.

Economic:

the level of the state of the world economy,
economic crises in individual countries,
behavior of large consumers of the yellow metal.
Political:

political crises in individual countries,
general international situation, the presence of political and military conflicts,
politics of large states.
At present, the change in the price of gold is influenced by military conflicts in Ukraine and the Middle East (in particular, Syria, Iran).

Economic factors, in turn, are divided into exchange and over-the-counter.

Stock factors include:

gold and foreign exchange reserves of countries that influence the world economy (how much gold the national bank of a particular country sold or bought in the previous period);
speculative transactions in the gold market;
change in the value of shares of gold mining enterprises;
investor expectations;
the value of the US dollar.
OTC factors:

world gold production volumes (a shortage of production causes an increase in demand, which increases the demand for gold and its price);
the cost of gold mining (in recent years, the cost of exploration of gold-bearing regions in Africa has increased several times, in Latin America, for example, 4 times);
volumes of world consumption of gold;
interest in the jewelry industry (during the financial crisis, the demand for gold is declining, followed by prices);
seasonality (different consumption of gold during the year).
All these factors together lead to price hikes not only for raw materials, gas, oil, but also for precious metals.
Since the beginning of the current 2018, the price of gold has been above the psychologically important level of $1,300 per ounce. Over the past few weeks, the price of gold has tried to get out of the level of 1350-1360 dollars, but it did not work out.

Military conflicts usually have only a short-term impact on gold price dynamics. Financial and political problems in the world have a much more stable influence on the formation of gold prices. Under these conditions, the price of gold is steadily growing.
The ongoing conflict in Syria can lead to an increase in the price of gold only if it negatively affects the entire global economy.

The cost of a precious metal ingot, in addition to the price per 1 gram, also depends on its weight and technical condition.
It can be excellent or satisfactory, an additional charge is taken for packaging.
Gold bars can have different values ​​even if they contain the same amount of precious metal.

In addition to the global reasons that affect the price of gold described above, the cost of gold bars is affected by:

Ingot production technology. There is a price difference between stamped, cast and powdered ingots. The former are the most expensive, while the latter are the cheapest.
Availability of relevant certificates. Gold bars are always accompanied by a certificate, which contains the most important parameters of the bar. If the certificate is lost, no bank in the world will buy such a precious metal. In such cases, the only way to sell a gold bar is to sell it to pawnshops.
Ingot manufacturer. Only a refinery can make it. Such enterprises are located in some regions of Russia, as well as in many other countries. In the event that the name of the manufacturer is unknown or unreliable for the buyer, the price of the gold bar can be reduced.
The London Bullion Market Association (LBMA) has accredited 63 refiners. They annually produce approximately 150,000 gold bars (each weighing 400 ounces) with a total value of 102 billion US dollars.

In world practice, certain quality standards for precious metals have been adopted. They are approved by the London Bullion Market Association (LBMA) and are known worldwide as the London good delivery standard.
Each ingot must have a certificate.

The requirements for a bar with a London good delivery certificate are as follows:
The weight of each bar is expressed in troy ounces and is a multiple of 0.025 ounce. Pure gold makes up a mass of 350 to 450 troy ounces (10,886 g to 13,754 g).

The most important indicator is the purity of the metal. It must contain at least 995 parts of chemically pure gold for every 1000 parts of the ligature mass.
They must be indicated: serial number, manufacturer’s mark, assay and year of manufacture (for ingots produced since 1988). The surface should be flat, smooth, and its shape should be convenient for carrying/transportation and storage.

Where to buy gold bars
Any citizen can buy gold in gold bars on the territory of our country.
The most reliable way to buy gold bars is from a bank that has a special license to deal with precious metals.
Banks carry out the purchase and sale of gold bars, the storage of precious metals in the bank’s vault under an agreement, and the repurchase of bars.
The Central Bank of Russia has issued licenses to a number of commercial banks that give them the right to operate in precious metals. Only in such banks (there are more than one hundred and fifty of them in the Russian Federation) you can buy gold bars.
In fact, not all banks that can do this are engaged in the sale of gold bars.

Banks that carry out operations for the sale and purchase of gold bars today are Sberbank, Gazprombank, Rosselkhozbank, VTB Bank, SMP-Bank, Lanta-Bank, MDM-Bank and some others. The undisputed leader is Sberbank.
To buy a gold bar, you need to call a specific bank and find out in which bank branch you can carry out this operation.

Each bank sets the prices for gold bars independently, but starts from the prices set by the Central Bank of the Russian Federation.
Since gold undergoes special processing, there are certain costs involved in making a bar, and the cost of a 1 gram gold bar will be slightly higher than bank quotes today.

To find out how much a gold bar costs in a bank, you need to find out the price per gram on the official website of the bank or in other sources on the Internet. The heavier the bar, the cheaper the price per gram will be. It is most advisable to purchase ingots of the middle weight category, from 10 to 100 grams. Small bars are relatively cheap, very large ones are expensive.

If you are going to invest in a gold bar for the long term, then it is better to buy an average weight bar. The price per gram will be cheaper than a small ingot, but it will also be cheaper than one that weighs heavier.

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In Russia, measured gold bars weighing 1, 5, 10, 20, 50, 100, 250, 500 grams are produced and more than others are in demand. You can buy standard, small ones weighing 1 gram, 5 grams, 10 grams and 1 ounce, as well as large ones – from 11 to 13.3 kg.
Abroad, the weight of ingots is from 1 gram of gold to 10 kg. In troy ounces – from 1/31 to 400 troy ounces.

The procedure for the sale of precious metals in Russia was initially carried out on the basis of Decree of the Government of the Russian Federation No. 772 dated June 30, 1997 “On Approval of the Rules for Banks to Make Transactions for the Purchase and Sale of Precious Metal Bullions”, and is currently regulated by the Regulation of the Bank of Russia No. 50 dated November 1, 1996 “On the Conduct by Credit Institutions of Operations with Precious Metals in the Territory of the Russian Federation and the Procedure for Conducting Banking Operations with Precious Metals” (subject to additions and amendments – Instructions of the Central Bank of the Russian Federation of 09.04.1998 N 209-U, of 11.04.2000 N 776-U) .

According to the manufacturing technology, gold bars are divided into cast, stamped, powder. Forged bars are more expensive in terms of production method and are in great demand, weighing up to 500 grams. Cast ingots are obtained by casting into finished molds, so their weight is usually more than 500 grams. Powder ingots are obtained by electrolytic method from powder, the cheapest ones, but they are not provided for by Russian standards.

By type, gold bars are measured and standard. Measured gold bars can be cast and stamped, while standard bars can only be cast. Banks sell mainly measured stamped ingots.

– Measured ingots are manufactured according to the Russian standard GOST R 51572-2000 and are bars weighing up to 1 kg, have a fineness of 999.9. Such ingots are necessarily marked by weight and manufacturer, and are used for the purchase and storage of gold by the population.

The requirements for measured ingots relate to parameters, shape, size, and marking. On ingots there should be no pollution, scratches. Ingot deformation is allowed, because gold is a soft metal. On the surface of a standard ingot, polished areas up to 1 mm deep are possible.

Mandatory markings on domestic ingots: this is the name “Russia”, the weight in numbers, the name of the metal – “Gold”, a sample or fraction, the manufacturer’s mark, the registration number of the ingot.

Table of gold bars according to GOST R 51572-2000
Ingot designation Mass, g Dimensions, mm
Denomination Limit deviations Length Width
SShZ 1 one +0.03 12.0-15.0 7.0-9.0
SS3 5 five +0.04 22.0-25.0 13.0-15.0
SShZ 10 10 +0.05 24.0-29.0 13.5-17.0
SShZ 20 twenty +0.05 29.0-33.0 15.0-19.0
SLZ 20 twenty +0.05 23.5-27.0 11.5-13.0
SShZ 50 fifty +0.06 36.0-48.0 21.0-28.0
SLZ 50 fifty +0.06 30.5-32.0 16.0-17.0
SShZ 100 one hundred +0.06 54.0-56.0 31.0-33.0
SLZ 100 one hundred +0.06 40.0-43.0 20.0-23.0
SShZ 250 250 +0.08 79.0-81.0 46.5-48.0
SLZ 250 250 +0.08 52.0-64.0 29.0-32.0
SShZ 500 500 +0.10 98.5-102.0 58.5-60.0
SLZ 500 500 +0.10 80.0-86.0 35.0-38.0
SLZ 1000 1000 +0.10 105.0-116.0 48.0-52.0
The letters “Sh” and “L” in the designation of ingots reflect the method of their manufacture.
The thickness of ingots is not standardized by GOST. GOST allows the production of ingots and other sizes as agreed between the manufacturer and the customer.
— Standard ingots are produced in accordance with Russian GOST 28058-8. They are used in industries for melting into other items: wire, jewelry, parts, microcircuits. Standard gold bars come in weights from 11 to 13.3 kilograms. The requirements for standard ingots are less stringent: parameters (by agreement), shape (truncated pyramid), flaws up to 5 mm deep are allowed. But there should also be no dirt or scratches on the ingots. The marking is present on the lower base of the ingot pyramid and includes: gold grade, registration number, ingot weight, sample number, manufacturer’s identifier, year of manufacture.

To purchase gold bars, you need any of the identity documents: incl. passport of a citizen of the Russian Federation; passport of a citizen of another country; identification; military ID (while on military service); refugee certificate; sailor’s passport

When buying ingots, documents for the purchase of an ingot are necessarily drawn up, incl. the buyer receives a manufacturer’s certificate. For example, when buying a gold bar weighing 50 grams, the certificate will contain information about the metal, its sample, weight, date of manufacture and the name of the manufacturer.

Please note that in order to avoid problems when selling a bar, it is better to buy gold bars from recognized gold producers with a certificate, receipt and without “distinctive bank marks”.

Purchased gold can be stored both at home and in the bank itself.
The bar certificate must be kept as securely as the gold itself. Otherwise, if the certificate is lost, the bank may refuse to buy back the gold, and in pawnshops or on the black market, the price of such an ingot will be significantly lower.

In banks, gold is given out in special containers; it is not recommended to touch it, so as not to leave marks on the ingot, which are very difficult to remove.

We also advise you to pay attention to the appearance of the metal so that it is free of scratches and other damage, as this directly affects its value.
It is important to remember that the certificate must be stored with the same responsibility as the bar itself, since if it is lost, the bank has the legal right to refuse to buy back the gold.

It is also important to protect it from possible damage, as in this case the bank can reduce the cost of redeeming the bar due to defects in the certificate.
The presence of a unique number allows you to trace the movement of each ingot from the manufacturer to the end user at any time. In case of loss of the certificate, the ingot still bears the brand (trademark) of the manufacturer.
In addition, the manufacturer can use their own bar numbering. For example, “NV” means that the manufacturer is the Novosibirsk Refinery, “Kr” – to the Krasnoyarsk Non-Ferrous Metals Plant, “Ek” – the Yekaterinburg Plant.

Comparative sales quotes for gold bars (from bank websites):
Ingot weight, gr. Quotations for the sale of measured bars on the Sberbank website as of 17:50
(Moscow time) 04/16/2018, including VAT Quotes for the sale of measured bars on the website of the Russian Agricultural Bank at 18:10 (Moscow time) on April 18, 2018

with VAT Quotes for the sale of measured bars on the Gazprombank website at 18:10 (Moscow time) 04/18/2018, with VAT Quotations for the sale of measured bars on the website of Otkritie Financial Corporation Bank at 10:40 (Moscow time) on April 17, 2018, with VAT
one 3,704.00 3 720.00 4,259.48 4019.00
five 17,458.00 17 100.00 18,478.65 17,065.00
10 34 680.00 33 850.00 36,017.70 33,491.00
twenty 69,006.00 67 200.00 69,529.80 66,026.00
fifty 171 631.00 167 000.00 169 126.50 162 673.00
one hundred 342 200.00 332 000.00 335 121.00 324 707.00
250 853 789.00 825 000.00 829 972.50 807 780.00
500 1,706,516.00 1 647 000.00 1 652 115.00 1,613,965.00
1000 3,411,734.00 3 283 000.00 3,297,640.20 3 221 550.00
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But, like any type of investment, buying gold bars has its own nuances. Under Russian law, a gold bar is a commodity, and its purchase price is increased by the amount of VAT (18%). In addition, banks may set a fee for the issuance of gold in the form of bullion.
Storage of gold bars
Even before buying an ingot, you need to decide where and how you will store it.
It is better to store gold bars with a certificate in the bank where they bought it, and, without taking it out of storage, conclude a safe deposit box lease agreement. The ingot itself is accounted for on a metal account for safekeeping, and is located in a specialized storage. In this case, you will save on paying VAT (18%).

A safekeeping metal account is a customer account for accounting for precious metals transferred to the bank for storage, with the preservation of individual characteristics (name, number of valuables, sample, manufacturer, serial number, etc.).
But if the storage period is long, then the amount of the commission can be significant. Unlike VAT, which will need to be paid immediately, commission payments can be made under the contract during the storage period.

If you still decide to store at home, then keep in mind that the bar must be stored in the package, along with the certificate. The place of storage should reliably protect the precious metal from its possible damage and contamination. Any scratches and even fingerprints can reduce its value. The same requirements apply to storing the certificate.

Sale of gold bars
There are special rules for the purchase and sale of precious metal bullion by banks from the public.
Each bank has the right to establish its own rules for the purchase of bullion from individuals, but all of them must comply with the law of the Russian Federation and the following conditions must be met:

All precious metal ingots must comply with accepted standards;
All operations for the sale or purchase of bullion must be carried out in the presence of the client,
When weighing gold bars, the accuracy should not be lower than 0.01 grams;
Scales must be located so that the customer buying or selling bars can see the information and confirm the correct weighing;
All transactions of purchase and sale are made out by cash documents. These documents must contain information on the number of ingots, weight, name, cost, date of conclusion and the total amount of the transaction.
If you plan to sell gold, we advise you to find out all the conditions for its redemption immediately upon purchase. The fact is that not every bank that sells bullion is engaged in their repurchase. And if it does, it is only through certain branches of the bank. For example, Sberbank buys gold in the capital and in several other large cities.

If you are selling gold that you bought from another bank, then you may be required to examine the bar. But usually ingots with a certificate from another bank are rated lower than “native” ones by recognizing the condition of the ingot and the certificate as not excellent, but satisfactory. This happens if the bank that sold them left its “identification marks” on the ingots and on the certificates: a brand, a stamp.

VAT paid by you upon purchase (since the ingot is in your hands), no one will reimburse you.
Therefore, it is better to choose a bank where you can both buy and sell bullion.

There is also another significant nuance: if you sell an ingot that you bought less than 3 years ago, then you are required to pay personal income tax (PIT) in the amount of 13% on the profit received.

To date, this service is ready to be provided to you, first of all, by Sberbank, as well as by FC Otkritie Bank, the regional bank Chelyabinvestbank is ready to buy bullion. Information on this issue can be found on the website of a particular bank.

For comparison, here are the redemption prices for gold bars for two banks.
Purchase prices of measured gold bars in Sberbank as of 17:50 (Moscow time) on 04/16/2018

Metal / Denomination, g Purchase price of measured bars, rub.
/ingot
Satisfactory quality excellent quality
one 2505.00 2,525.00
five 12 525.00 12,565.00
10 25,050.00 25 120.00
twenty 50 100.00 50 200.00
fifty 125 250.00 125 370.00
one hundred 250 500.00 250 650.00
250 626 250.00 626 450.00
500 1 252 500.00 1 252 870.00
1000 2,505,000.00 2 505 600.00
Purchase prices of measured gold bars at Otkritie Financial Corporation Bank as of 10:40 am (Moscow time) on 04/17/2018
Metal / Denomination, g Purchase price of measured bars, rub./bar
one 2,571.00
five 12 856.00
10 25,712.00
twenty 51 425.00
fifty 128 562.00
one hundred 257 124.00
250 642 810.00
500 1,285,620.00
1000 2 571 240.00
How else can you sell gold bullion? You can hand it over to jewelers in a jewelry workshop, hand it over on bail to a pawnshop and not redeem it, you can sell gold bars to another individual. But here, risks and additional problems can arise everywhere: the cost of expertise, fraudulent actions on the other hand, etc. You can not sell gold bars, but give them to loved ones or pass them on by inheritance. Ultimately, it’s up to you to decide.
conclusions
Gold bars are a profitable investment, but only for a long-term period of time, at least 3 years. Buying bullion saves savings primarily from inflation. The cost of gold generally increases over the years, but the purchase of bullion brings a significant income to the investor when investing in significant amounts of gold or when investing in bullion for a long period of time.

Currency and government risks do not threaten investments in gold bars.

The physical storage of the bars should be entrusted to the bank where the bars were bought, so that the gold retains its technical characteristics and does not lose its value. The purchase and sale of gold bars should be made only through one bank.

In order to save on the payment of value added tax, immediately after purchase, transfer gold bars to the bank’s vault, but at the same time, you must be prepared for additional costs for security and payment for a cell in the bank’s vault.