In times of crisis, many investors rely on gold as an investment. To do this, they buy the precious metal in the form of coins or bars. But there are a few things to consider. An overview.
Gold has always attracted people’s enthusiasm. It is not for nothing that most adventure stories are about a huge gold treasure to be found.
Nowadays you don’t have to go to a desert island or fight pirates for coins or gold bars. Because you can easily order physical gold on the Internet, for example.
But does that make sense? What will this cost me? t-online.de answers the most important questions about buying gold.
Fine weight and fineness
The Fine weight of gold, i.e. the weight of the precious metal part of a coin or bar, is usually given in the unit troy ounce or ounce, abbreviated with “oz”. One troy ounce is equivalent to 31.103477 grams.
The Fineness indicates how pure a coin is – more precisely: how high the proportion of the most valuable precious metal is. The fineness is given in per mille, i.e. one thousandth. An almost completely pure gold bar has a fineness of 999.99 – so it is almost 100 percent gold.
What are the advantages of buying gold?
Gold is considered a “safe haven”, a currency in crisis. The reason is obvious: the gold deposits are finite, so the supply is naturally limited. In addition, unlike money, for example, gold cannot be reproduced.
This is how gold has an “intrinsic value”. That is why the precious metal is also considered a protection against inflation, i.e. currency devaluation. Investors rely on gold, especially in times of crisis.
But unlike buying stocks, for example, investors can only get a return on gold if the price of the gold rises and they sell their gold. In the case of shares, dividends are usually paid out, i.e. a portion of the company’s profits that can be of importance to investors.
Where can I buy gold?
You can buy gold in the form of coins or bars either locally from a precious metal dealer or on the Internet. When buying online, you should note that you usually have to pay in advance. So there is the – not very likely – danger that you will lose your money if the provider goes bankrupt.
You should definitely compare several providers online to find the best deal.
Should I buy gold in coins or bars?
You can buy gold in either coins or bars. Buying gold as jewelry is not advisable for investors because it is difficult to sell.
Whether you choose gold bars or gold coins depends on your needs.
Common sizes of investment coins are 1/25, 1/20, 1/10, 1/4, 1/2 and 1 troy ounce. An overview:
It is not advisable to buy coins that are too small, such as an ounce of less than 10 grams. Because here the spread, i.e. the difference between the buying and selling price, can be very high – and with it the risk of losing money.
In any case, be sure to buy internationally recognized gold coins. Well-known examples are the South African “Krugerrand“, the “Wiener Philharmoniker“, the “Maple Leaf“from Canada or the”China panda“. With these Investment coins make sure that they will be bought from you again.
It looks different, however Collector coins out. These differ from investment coins in that they are usually not internationally recognized and are therefore difficult to sell. The price of collector coins is also difficult to determine. Experts therefore advise against collecting coins as an investment.
Coins are especially suitable for those who do not want to invest too much money in physical gold. You also remain more flexible with coins than with bars.
There are gold bars for private investors in various sizes – these can sometimes weigh a kilogram or more. In the case of gold bars, private investors should pay particular attention to the so-called fineness. This ultimately shows how pure a gold bar is (see above). Here investors should only buy gold with a purity of at least 999.9 – everything else can be expensive to sell.
In addition, you should only buy gold bars that are gold-stamped by a dealer or an institution certified by the London Gold Exchange, the London Bullion Market Association (LBMA). Well-known institutions are about Heraeus, Umicore, Valcambi or Perth Mint.
Gold bars are especially suitable for investors who want to invest a lot of money in gold. However, you are less flexible with gold bars than with coins. Because you can only sell a bar as a whole. By the way: Small bars are comparatively more expensive than large bars.
tip: If you decide to invest in gold, it can be worthwhile to distribute the money, i.e. to put it in both bars and coins.
What are the costs of buying gold?
When buying gold – be it bars or coins – there are on the one hand the cost of the gold. How expensive the gold is depends on the world price of gold – and how much you buy. The gold price is usually given per troy ounce and in US dollars, so you may have to convert into euros.
In addition, precious metal dealers – on site or on the Internet – charge a fee for their service. Here you should definitely compare several offers with each other (see above).
Note the cost of a safe or safe deposit box
Also, if you buy physical gold as an investment, you should buy a vault in which the gold can be stored. This should be installed in such a way that it cannot be taken away so quickly by possible intruders.
Alternatively, you can also store the gold in a safe deposit box. This can cost up to several hundred euros annually.
Is It Worth Buying Gold?
There is no general answer to this. The following applies: How the price of gold will develop cannot be predicted. In general, the price is very volatile, i.e. prone to fluctuations. You can also see this from the following graphic:
If you decide to invest some of your assets in gold, you should definitely keep your nerve if the price falls.
Furthermore: Unlike fixed-term deposit accounts that yield interest or stocks that allow you to receive dividend payments, your return on gold is merely a higher selling price. Here are some things to keep in mind when looking to buy gold.
Experts generally advise not to invest more than ten percent of the invested assets in gold.
These are the alternatives to physical gold
If you want to invest in gold but don’t want to buy physical gold, you can buy special gold stocks. These are called gold ETCs and they replicate the performance of gold.
You can also invest in shares in gold mines, so you basically become a co-owner of such a mine. But: This is fraught with high risks – and rather not suitable for private investors.
The general rule is: never bet everything on just one share. Spread your money – and so your risk.
What taxes are there when selling gold?
None. If you sell your bullion or coins and make a profit, you will not have to pay any taxes on them. The prerequisite for this is that you have held the gold for at least a year.
When selling securities such as shares, however, the so-called final withholding tax may apply. However, if you sell your physical gold and make a loss, you cannot claim it for tax purposes.