Differences between gold leaf and physical gold

Investing in gold is open to anyone who wants to invest money in a physical product. Whether directly (physically) or indirectly (paper gold), investing in gold offers real opportunities:

• Gold allows you to diversify your savings;
• Taxes linked to the sale of gold: capital gain or flat-rate tax, you can opt for one or the other. Taxes on capital gains decrease depending on the number of years of ownership;
• An accessible investment solution: there are different sizes and weights of gold bars or coins;
• Gold can be transmitted: gift or inheritance, investment gold is then subject to the usual reductions;
• A safe haven.

Unlike life insurance or traditional savings products, gold benefits from an independent listing, outside the stock market cycle. It is the LBMA which sets the price of gold twice a day according to supply and demand. In fact, in the event of a geopolitical or financial crisis, the price of gold remains stable and you reduce the risk of capital loss.

Investing in gold requires knowing the different products. Physical gold, unlike paper gold, is an object that you buy and own.

Physical gold: what is it ?

Physical gold means gold processed for the purpose of creating bars, gold bars or modern gold coins and coins investment gold. The bars must contain at least 99.5% pure gold. As for coins, for them to be considered investment products, certain criteria must be respected:

• They must have been printed after 1800;
• They must contain at least 90% pure gold;
• The premium of the coin must not exceed 80%;
• The coin is or was legal tender.

If these conditions are met, you can invest in gold coins. Otherwise you risk buying a collectible gold coin subject to specific legislation.

Advantages and disadvantages of physical gold

The advantages of holding physical gold are numerous:

• You hold the gold yourself: there is no intermediary between your investment and you;
• The value of gold cannot disappear: certain premiums can increase the value of a gold coin, but if this is not the case, you can resell your gold at the price of course ;
• A safe haven that allows you to preserve your assets and protect your money during periods of monetary devaluation.

In return, physical gold, due to its nature, has disadvantages that should not be underestimated:

• Storage: this is the main difficulty linked to the possession of physical gold. Gold bars require a suitable storage location, just like gold coins.
• The risks of home detention: theft, burglaries, or excessive handling (gold is a fragile and ductile metal which deteriorates easily);
• The cost: storage at home, in a bank or in private companies, renting or purchasing a safe can cost several thousand euros. To this you will have to add the price of insurance.

The purchase of paper gold amounts to holding a financial product which can, in certain cases, be transformed into a physical equivalent. There are many possibilities for purchasing paper gold which we will detail here.

Investing in stocks

You can invest in shares of mining companies. The money invested allows you to own shares in the company. This type of investment does not guarantee any profit and may cause you to lose capital. Indeed, the economic situation and the good financial health of the company may vary, leading to variations in the share price. You therefore do not hold any physical gold product. It is a solution to diversify your assets or your stock market portfolio.

ETFs

ETFs (exchange trade funds) are bought and sold like stocks. These are funds that base their values ​​on the price of precious metals. ETFs correspond to a specific quantity of physical gold. You indirectly own the gold. You are thus betting on the increase or decrease in the price of gold. The main advantages of ETFs are as follows:

• No physical storage;
• They follow the price of gold;
• Cost: you can invest small amounts if you wish;
• Ease of purchase and resale.

Futures contracts

This is a particular gold purchasing model, halfway between paper and physical. Futures contracts (or gold futures) connect a buyer and a seller of physical gold. The buyer expresses the desire to purchase physical gold at a later date. The seller, for his part, undertakes to sell the desired quantity of gold on this date. You first hold paper gold (via the contract), before taking possession of physical gold.

Investing in paper gold and physical gold depends on your short, medium and long term vision. Paper gold allows you to obtain profits quickly. It is more exposed to the risk of capital loss because paper gold is bought and sold via the stock market. You must know the product before embarking on the acquisition of paper gold. Do not hesitate to get help if necessary.

Physical gold is a long-term investment. Gold bars and coins protect your assets against financial hazards.

However, nothing prevents you from investing in both physical gold and paper gold. Your portfolio diversifies and you limit the risk of capital loss.

Gold Union offers you a wide range of bullion bars, ingots and investment gold coins. To find out more, contact Gold Union agencies or advisors via the e-commerce site.