What are the prospects of such investments, and is it advisable to invest in gold at this time?
These and other questions regarding investing in precious metals can be answered by successful entrepreneur and founder of "Oil Resource Group," Sergey Tereshkin. Information about his activities can be found on the website oilresurs.ru (oilresurs.ru).
The Advantages of Investing in Gold
Despite the lull in the precious metals market, it would be unwise to completely dismiss this avenue. Many globally recognized experts believe in the high potential of gold. Investing in gold offers numerous benefits:
- Liquidity. Precious metals can always be quickly sold if necessary. Many banks can buy bars within minutes.
- Independence. Gold is not tied to the economic situation of any particular country. This means that crises do not impact its value. Historically, the metal serves as a standard for currency backing.
- Longevity. Precious metals can be stored for decades without the need for special conditions.
Investing in gold helps protect capital from inflationary pressures and financial crises.
Currently, the market remains stable, with demand for gold fully balanced by supply.
What Denominations Are Most Popular
According to Sergey Tereshkin, the most popular denominations range from 5 grams to 1 ounce. These are purchased not only for investment purposes but also as gifts. The purchase of bank metals as presents is notably popular, particularly among entrepreneurs. They are also frequently acquired for bribes to politicians and officials.
The transfer of metal from one person to another is difficult to monitor, making it a useful tool in corrupt schemes.
For capital preservation, bars weighing 50 grams or more are typically acquired. Jewelers also buy these bars to create jewelry due to the metal's high purity, with bank bars boasting a grade of 999.9.
Small-scale investors generally prefer coins. These are small cylindrical bars bearing special markings. Importantly, such coins do not possess numismatic value; they are intended solely for the acquisition of precious metals in small volumes. Another advantage of coins is that no VAT is charged upon their sale, meaning investors do not have to overpay. However, the seller must still pay income tax.
Ways to Earn on Precious Metals
The difference between the buying and selling prices of precious metals is generally low, with taxes effectively consuming most of the profit. However, this does not mean that it is impossible to earn from gold. There are ways in which even short-term investments can yield returns.
These include futures contracts for precious metals, which are traded on exchanges. Profit arises from fluctuations in world market prices, as the investor buys the metal at a lower price and sells it at a higher one.
In this case, the investor does not purchase gold in the conventional sense. It cannot be physically handled or touched; it is merely a financial instrument.
Trading futures in precious metals is a popular hedging method. It allows investors to diversify risks and achieve profits from buying and subsequently selling gold.
This requires entering into an agreement with a specialized company or an individual broker. This arrangement offers the convenience of standardized contracts and the ease of managing associated documentation. Investors do not need to rent a bank safe for storing physical metal and can avoid the risk of theft by criminals.
Disadvantages
Like any other form of earning, trading in precious metal futures has its drawbacks. These include:
- The need for experience. Without specialized knowledge and skills, there is a chance of missing a profitable moment and incurring losses. In such cases, even working with a knowledgeable trader may not rectify the situation. It is crucial to independently monitor market changes and promptly instruct the trader to buy or sell futures.
- Speculative nature of the work. This approach resembles speculation more than investment in the conventional sense that many people associate with the term. For this reason, this method may not be suitable for those who resent such a working style.
- Risk. Trading on the exchange always carries the risk of losses. The price of precious metals can plummet, resulting in significant capital loss for the investor.
In the event of a decline in precious metal prices, it is often more effective to delay selling. However, funds will be tied up for an extended period, making it impossible to quickly recover invested capital. The individual must wait until prices rise again, which may take weeks or even months.
