Investment gold

Why choose investment gold?

One of the most popular ways to save in gold is through physical gold investment specifically, what is known as investment gold. It is traded worldwide and can be converted into cash very quickly, making it a highly liquid investment.

In Europe and many countries outside it, investment gold coins and bars are exempt from VAT, ensuring their value remains as close as possible to the global spot price of the precious metal. To ensure transparency, reputable dealers keep their “buy” and “sell” prices constantly updated and publicly available.

In the long run, investment gold has proven to be one of the safest assets during times of crisis, successfully preserving the value of people’s money (and labor) during periods of inflation. For context, over the past 13 years, the Romanian leu has lost nearly half of its purchasing power regarding real goods and services.

During the same period, the price of gold in euros rose by 253%. As a safe long-term investment, this is one of the reasons why interest in gold bars and coins has increased in Romania as well.

Among the most popular gold coins in Romania are the Vienna Philharmonic, the Austrian Ducat, the Canadian Maple Leaf, and the Australian Kangaroo.

The Tavex gold bar alongside the larger 10, 20, 50, and 100 gram bars produced by Swiss refineries Valcambi Suisse, Argor Heraeus, and PAMP also attracts significant interest.

Investment gold – what exactly does it mean?

We are accustomed to thinking of gold as money from the past. Yet, investment gold still functions as currency today, because modern coins have legal tender status in the countries where they are minted.

However, not all gold coins fall into this category. For a product to be classified as investment gold, it must meet certain criteria. First, it must be a gold coin, ingot, or bar. Different investment products have their own specific characteristics.

A gold coin may be considered investment gold if:

• has a purity of at least 21.6 karats (a purity of over 90%)
• it was produced after 1800
• was or continues to be legal tender in the country of origin
• it’s price does not exceed the international price of the gold it contains by more than 80%

For investment gold bars the criteria are simpler. To be considered an investment asset, they must have a high gold content specifically, a minimum of 23.88 karats (.995). Additionally, most of these products should bear the manufacturer’s name and a serial number.

What do we need to know when considering investment gold?

Investing in gold is associated with low risk and is viewed as a hedge against currency depreciation caused by inflation. It’s price often moves independently of, or inversely to other financial instruments, making it along with other popular precious metals an effective tool for portfolio diversification.

This is also one of the reasons why it is purchased by major institutional investors and central banks.

The absence of VAT, long-term security, portfolio diversification and protection against inflation are not the only reasons to save in investment gold. Historically, it has served it’s holders well during periods of geopolitical and financial uncertainty and demand for investment gold has grown over time.

The wide variety of investment gold bars and coins can offer holders significant financial flexibility. If there is an urgent need for a small amount of cash, lower-weight items can be sold. This is a factor worth considering when building an investment gold portfolio.

Given the vast size of the investment-grade gold market, price changes do not usually occur rapidly. Consequently, the precious metal is not suitable for speculative investors. It should also be noted that physical products do not generate passive income.

Last but not least, when it comes to investment gold, issues regarding storage and protection arise. Factory-encapsulated products should not be removed from their protective packaging, as doing so will result in a drop in their value. In the case of investment gold bars, the protective packaging also serves as a certificate of authenticity.

Modern gold investment coins should be free of any damage. Historical coins must also be protected against punctures, scratches, bending and other damage, including to the rim. However, in their case, one cannot expect them to look as if they had just been minted, since they served as legal tender in the past.