Coins, ingots, bullion, certificates, shares, trackers… Here are the different ways to bet on gold, a thousand-year-old investment that has proven itself over time.
Gold is as old as the world. “Its rarity, brilliance and durability have made it the most prestigious precious metal. Some veins are up to two and a half billion years old. The Egyptians were the first to draw gold from the Nile and to exploit open-pit deposits. They were the ones who created the first mines, 3,000 years before our era, by building galleries at tens of metres deep,” recalls CPoR Currencies, a specialist in foreign exchange and the buying and selling of gold coins, ingots and bars. In Antiquity, the yellow metal was unavoidable. It was even mentioned 400 times in the Bible. Afterwards, it aroused many covetous desires… Let’s mention the myth of el dorado during the colonization of Latin America by the Spanish and Portuguese, or the gold rush in California in the 19th century…
“For centuries, gold has been associated with the coinage of states: kingdoms, empires and republics. In particular, it was chosen as a standard by England at the beginning of the 19th century, then by Germany in 1873”, reports CPoR Currencies. Gold is a thousand-year-old investment, which has proved its worth over time and provides immunity against inflation over a very long period. Traditionally a safe haven in times of stress on the equity markets, it also has the advantage of being a tangible asset, which is nobody’s debt (unlike government bonds). Coins, ingots, bullion, certificates, shares, trackers… Here’s how you can bet on gold.
How to buy physical gold?
The easiest way to invest in gold is to buy it in physical form (coins, bullion, or bullion ingots), for example from players like CPoR Currencies, BullionVault, the Comptoir National de l’Or, or your local bank… “Gold bullion coins are priced at a premium to the value of the gold contained in the coin at the day’s price. This premium evolves according to supply and demand and we are observing that there are fewer and fewer coins available because many are destroyed and recycled,” says Laurent Schwartz, director of the Comptoir National de l’Or.
It is better to favour the most liquid coins. “In France, these are the coins that are quoted daily, with of course first and foremost the 20 Francs Napoleon,” stresses François de Lassus, of CPoR Devises. “However, the following coins are also very common and highly prized by our buyers: the Swiss Cross 20 Francs, the Krugerrand, the 50 Pesos, the Sovereign (Georges V) and the 20 Dollars,” adds Laurent Schwartz. These coins have a titration of 900%° or 916%° (i.e. 90% or 91.6% gold). They have the advantage of being “highly liquid and accessible from 250 euros. We present the coins in sealed sachets that guarantee their bloatability,” says the expert.
Certain precautions are required before buying coins. “It is better to buy them under seal, with the associated number on the invoice, for tax reasons (it is better to have proof of the date of purchase of the gold, NDLR) and practical reasons (the seal avoids scratches, which cause discounts, NDLR),” says Laurent Schwartz. “It is preferable to have coins packaged in sealed bags, which guarantees future recovery without examination. In addition, the sealed bag must be sufficiently identified with the invoice number so that the link between it and the purchase invoice is obvious. This, in order to be able to exercise the option of taxation on the real capital gain (which taxes you on the gain made, NDLR). This option is more advantageous than the TFMP (financial tax on precious metals) of 11.5%, which applies to the total value of the property sold (even if the sale generates a loss!, NDLR)”, adds François de Lassus. Finally, the expert recommends to contact well-established professionals, such as banking networks.
As regards ingots (1 kg) and ingots (10 to 500 grams), “they must be accompanied by their test bulletin, on which appear the number of the ingot or ingot as well as the name of the foundryman tester. In the case of ingots, the blister pack serves as the test report. It is also necessary to keep the purchase invoice, on which must appear the number of the ingot or ingot, in order to be able to exercise the option of the tax on the real capital gain on resale”, underlines François de Lassus. The ingots exist under various formats, more accessible than the ingots of one kilo: “10, 20, 31,1 (the weight of one ounce, NDLR), 50, 100, 250 and 500 grams”, reports Laurent Schwartz. Ingots are preferred by those who only want to invest in the yellow metal”without depending on a possible variation in supply and demand for the product, since the latter is not rare – unlike gold coins,” says the expert.
How to buy gold by other means?
You can also bet on indexation products, such as the Gold Bullion Securities certificate (ISIN code GB00B00FHZ82), a listed certificate that is not hedged against exchange rate risk, which replicates the evolution of the price of the yellow metal (in euros). Those who wish to invest in a diversified way in precious metals, whether gold, silver, platinum or palladium, may be interested in the OFI Precious Metals Fund (ISIN code FR0011170182). Informed and reactive speculators may consider betting on gold – upwards or even downwards! – via derivatives: warrants or unlimited turbochargers. Beware, these last products have a leverage effect, sometimes very important: enough to make very important gains, but also massive losses…
How can we capitalize on gold mining values?
For those who want to invest in gold mining stocks (listed companies in the gold mining sector), it is better to use funds rather than buying shares directly, in order to smooth out the risks. Funds such as Amundi Funds CPR Global Gold Mines (ISIN code LU0568608433, CPR AM), BGF World Gold (ISIN code LU0171305526, Blackrock), CM-CIC Global Gold (ISIN code FR0007390174, CM-CIC Asset Management), Global Gold and Precious (ISIN code FR0007047527, Finance SA), Edmond de Rothschild Goldsphere (FR0010664086, Edmond de Rothschild Asset Management) are thus of interest…
Investors preferring trackers (passive management products, but which nevertheless have the advantage of not charging an entry fee, while the annual fee is limited) may opt for the Lyxor MSCI ACWI Gold (ISIN code LU0854423687) or the VanEck Vectors Gold Miners ETF (ISIN code US92189F1066).