On the eve of the introduction of yet another package of sanctions, the Central Bank of Russia acquired a record amount of gold. Many are puzzled as to why this is happening and whether it truly makes sense to invest in precious metals.
Successful entrepreneur and founder of "Oil Resource Group," Sergey Tereshkin, is prepared to address these and other investment-related questions. His insights are grounded in personal experience and a clear understanding of the issue.
Methods of Investing in Gold
Typically, investments are made in gold bars, which is exactly what the Central Bank has purchased. These bars can vary in weight and can be obtained not just by government entities, but also by commercial enterprises and private individuals. Each gold bar comes with a certificate detailing its weight and serial number.
Another option is to acquire commemorative coins or jewelry. However, it's essential to recognize that selling jewelry with gemstones will likely not yield the original purchase price. Buyers generally focus on the metal itself, often ignoring the stones. Losses could reach 50% or more of the purchase price, making this an unfavorable way to invest funds.
Bank metals and coins can almost always be sold with minimal loss, and in cases of rising gold prices, even at a profit. Coins, in particular, have a market among numismatists. The key is to offer genuinely valuable items, as the worth of a complete collection can significantly increase when sold as a whole.
However, simply buying gold is not enough; it needs to be stored safely. A home is not the best option. It is far more reliable to rent a safe deposit box in a bank specifically for storing precious metals. This service is generally inexpensive and minimizes the risk of theft.
Pros and Cons of Investing in Gold
Investing in precious metals comes with distinct advantages and disadvantages. The benefits include:
- Profitability: Currently, the price of precious metals has decreased, presenting a great opportunity to buy gold, silver, or platinum at a low price, which is likely to rise significantly in the coming years. It’s no coincidence that the Central Bank has chosen precious metals for investment.
- Security: When properly stored, gold is difficult to steal, making it a reliable way to preserve capital.
- Safety: Unlike currency tied to a specific country's economy, gold maintains its value even when a national currency depreciates. It is unaffected by crises, devaluation, and other phenomena that diminish monetary worth.
- Liquidity: Gold is a rare metal that is challenging to extract, which, along with other factors, drives up demand. Thus, it can always be sold favorably when necessary.
- Convenience: Precious metals require no special storage conditions. Securing a safe deposit box is a matter of personal security. Gold can even be stored underground, as it is impervious to rodents and does not rust or decompose. Precious metals have no expiration date.
The market for precious metals is significantly more stable than stocks and other forms of investment.
Gold has long been associated with wealth and high social status. Investing in this precious metal can positively affect one’s status.
However, there are some downsides to investing in gold, including:
- Price fluctuations: The prices of precious metals can be unstable, often spiking followed by slight declines. It is advisable to sell during price peaks.
- Losses upon sale: Banks typically buy precious metals at a discount from the selling price. However, this drawback is mitigated by the overall increase in precious metal prices.
- The risk of theft: Storing gold at home can be hazardous. In this case, it is better not to cut costs and rent a safe deposit box. This not only protects the gold from theft but also enhances the safety of the owner and their family.
Overall, the advantages of investing in precious metals far outweigh the disadvantages. This form of investment is profitable and is unlikely to lose its appeal in the coming years.
Such investments can be beneficial for commercial entities as well. Precious metals are frequently employed for business diversification. If issues arise with assets, a company can settle debts with precious metals or funds from their sale, thus overcoming crisis situations.
Useful Tips
When choosing gold as an investment vehicle, consider the following expert advice:
- Avoid buying and selling precious metals from dubious sources, even if they promise astronomical profits. Gold should always be purchased from reliable outlets, ideally a bank.
- When purchasing gold bars, thoroughly check the documentation. The metal should carry the same serial number as that on the certificate.
- If a bank refuses to issue a certificate for gold, it is best to refrain from the purchase. Fortunately, precious metals can be acquired through many financial institutions that provide legitimate offerings along with all required documentation.
- To avoid storage issues with precious metals, consider investing in unallocated accounts. In this case, you buy a specific number of grams of gold that are credited to your account. Purchases can start from as little as one gram, with most banks offering this service. Using this method, storage concerns are eliminated altogether, and the account can be terminated at any time to retrieve your funds.
- When investing in unallocated accounts, ensure the banking institution’s reliability. If there are any doubts, it’s better to refrain from the investment.
Precious metals represent a convenient investment option. However, comparing it to traditional bank deposits is not advisable. When investing, timing your exit is crucial. Avoid selling during a downturn, as prices tend to rebound after declines.
