How to buy gold?
Reading time 13 min
In this article, we will discuss the questions one might ask before investing in gold.
- Should you invest in gold?
- How to buy gold?
- Investment coins (exchangeable coins)
- Taxation of precious metals
- Premium on exchangeable coins
- The special case of investment tokens
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Should you invest in gold?
Financial investment advice is regulated, so the purpose of this paragraph is not to encourage you to invest in gold or not. We will simply review the motivations that could push you to invest in the famous yellow metal.
First of all a little bit of history, the first coins are attributed to the Greeks, and more specifically to the kingdom of Lydia, in the 7th century BC. At that time, it was the weight of the metal that gave the value of the currency. This system will last for 2 millennia and will only end very late.
These days, the motivations for investing in gold are diverse:
- Prepare for a stock market crash or an economic crisis. Investing in gold is indeed an excellent way to diversify your savings.
- Avoid having your savings melt away as inflation returns. At a time when the Livret A no longer pays anything, and with visions of a return of inflation beginning to emerge, owning gold in place of savings is an excellent way to avoid seeing it melt away like snow in the sun.
- The loss of confidence in the banking system. No bank is immune to a banking failure. Rather than storing everything in an account, some people will store some of their savings at home. Gold is still an excellent way to store a large amount of money.
- The loss of confidence in central banks. Monetary creations whether American This is because there have never been so many of them, which should lead to a loss in value of our currencies.
- A profitable investment. Gold can be an excellent investment in certain periods. Over 10 years, it has gone from $900/ounce to $1,800/ounce.
In conclusion, the majority of people who invest in gold do so because they see it as a safe haven in times of uncertainty, but some also see it as a profitable investment opportunity.
How to buy gold?
Buy paper gold
First of all, let us look at paper gold. The advantage of this one lies in its liquidity and in its storage. You will indeed be able to simply sell all or part of your holdings, without having to manage the constraint of storage. The counter party is obviously not to physically own the gold, with all the risks that go with it (default of the holding company).
There are several ways to invest in paper gold:
- Buy shares of gold companies
- Buy specialised funds invested in gold companies
- Buying rights products (trackers, ETCs or ETFs) whose price tracks the price of gold
Buying physical gold
If you want to invest in gold as a safe haven (and not for short-term speculative purposes), then physical gold is the way to go.
You should not, however, underestimate the risk associated with detention. At home, you will need to Secure storage to protect you from the risk of burglary.
To buy physical gold, there are several options available to you:
- By a bank: This is one of the simplest solutions, but your bank will charge you an additional fee and safe deposit box storage over long periods can be expensive.
- By individuals : It is also possible to buy gold coins directly from individuals. This solution gives you the advantage of finding the lowest prices, but the risk is considerable (counterfeit money, lack of invoice, lack of seal bags)
- By a site of reference : Gold is not bought just anywhere. There are fake gold bars and coins. Choose a reputable expert with a good reputation. For example, we can mention the Maison Godot & Fils, a specialist in precious metals and a recent partner of CollecOnline. If you would like to speak to an advisor before making a transaction, we invite you to contact them:
Investment currencies (tradable coins)
In an investment context, it is interesting to look at exchangeable currencies. To be considered as such, they must have the following characteristics:
- Have been legal tender in their country of origin
- Be in a perfect state of preservation (no wear and tear)
- Not be produced today
In order to benefit from the advantages of exchangeable coins, in particular in order to be able to apply a capital gains tax, it is essential that these coins are purchased from professionals and kept in their original bag.
In this table, you will find the main investment coins:
 |
20 Francs Ou Napoléon | 6,45 g | 900‰ | Buy |
 |
10 Francs Ou Napoléon | 3,23 g | 900‰ | Buy |
 |
20 Francs Or Suisse | 6,45 g | 900‰ | Buy |
 |
Union Latine Or | 6,45 g | 900‰ | Buy |
 |
Souverain d'Or | 7,99 g | 917‰ | Buy |
 |
Demi Souverain d'Or | 3,99 g | 917‰ | Buy |
 |
50 Pesos Or | 41,66 g | 900‰ | Buy |
 |
20 Dollars Ou US | 33,44 g | 900‰ | Buy |
 |
10 Dollars Or US | 16,72 g | 900‰ | Buy |
 |
5 Dollars Ou US | 8,36 g | 900‰ | Buy |
 |
Krugerrand | 33,93 g | 917‰ | Buy |
 |
10 Florins Or | 6,72 g | 900‰ | Buy |
 |
20 Reichsmarks Ou | 7,97 g | 900‰ | Buy |
 |
20 Francs Marianne Or | 6,45 g | 900‰ | Buy |
 |
Lingotin 1 Once Or | 31,104 g | 999,90 ‰ | Buy |
 |
Lingot 50g Or | 50 g | 999.9 ‰ | Buy |
 |
Lingot 100g Or | 100 g | 999.9 ‰ | Buy |
 |
Lingot 250g Or | 250 g | 999.9 ‰ | Buy |
You will be able to tell the difference between a redeemable gold coin and a non-redeemable one by looking at the condition of the coin (it must be perfect, with no wear or scratches). These are usually 10 Francs or 20 Francs coins, minted between 1852 and 1914. The term Napol d'or is commonly used to group this type of coin.
Precious tax rates
Taxation on gold and silver purchases
In France, the purchase of gold coins is exempt from VAT, which is not the case when purchasing silver (silver coins, silver bullion…), on which 20% VAT is applied at the time of purchase. This difference in treatment between gold and silver will naturally encourage buyers to turn to gold.
To be considered investment gold, gold coins must have a purity grade of at least 900 thousandths. These must also meet the following criteria:
- Have been after 1800
- Have had a légal course in their country of origin
- The selling price of should not exceed 80% of the selling price of gold at current prices
Taxation on the sale of gold and silver
When selling gold or silver coins, or more generally precious metals, you can opt for 2 different types of taxation:
- The flat-rate tax on meters (TMP), which has been 11.5% of the selling price since 1 January 2018.
- The capital gains tax is 36.2%. Please note that a deduction of 5% per year is applied from the third year of ownership, so that you will be fully exempt after 22 years. In order to prove this period of tenure, however, you will need to be able to show proof of acquisition by name as well as possessing a still sealed bag.
Paper gold is also taxed in 2 ways depending on your choice:
- To the Forfaitaire Unique (PFU / Flat Tax) up to 30% on the capital gain.
- According to the progressive income tax scale + 17.2% social security contributions.
You will need to do some calculations to choose the most advantageous taxation.
The premium for exchangeable coins
A premium is applied to the sale price of exchangeable parts. This premium corresponds to the difference between the weight of gold contained in the coin and its market price. This premium will vary depending on several factors:
- Making money (size, mint quality, country of issue)
- Market demand for gold coins
- The state of conservation
This premium generally varies from 0-5% of the sale price. But during certain periods, this premium can rise considerably. During the crisis of 2008, it reached a peak of 65% of the selling price! This can be explained quite simply, in times of great crisis, many individuals seek to invest in physical gold in order to protect themselves. The number of gold coins available for sale is then not sufficient to meet the demand, which causes the premium to soar.
And conversely, it also happens at the end of a crisis to find negative premiums when supply becomes much higher than demand.
The special case of investment tokens
There is a certain grey area around investment in what could be called "investment tokens".
Take the case of the 20 franc Marianne Coq coins known as "refrappe Pinay". The original coins were minted from 1898 to 1914. But the French government decided in 1950 to re-stamp more than 37 million of these coins with the 1907 to 1914 vintages.
The obverse of the 20 Franc Marianne Coq. On the left, the Pinay "1909" mintmark, on the right, the 20F Coq 1909. Photo: Yannick Colleu
These refrappes are generally distinguished from the original coins by their high quality (not having circulated) and by a very characteristic reddish tint.
The composition of the refrappes is also different, with a slightly lower gold content than the original coins. The reason for this is that they contain slightly more than 3% silver.
These objects that have never circulated cannot, therefore, be considered as coins, but rather as investment tokens! And in this case, the taxation of precious metals should not be applied, but that of "Jewellery and similar items".
Nowadays, there are many investment products with a cash-like appearance that fall into the advantageous category of jewellery and similar products.
For such products, there is no tax for transactions below €5,000. And above €5,000, the following applies, depending on your choice:
- A flat-rate tax of 6.5% of the sale price
- A tax on the capital gain of 36.2%, with an allowance of 5% per year from the 2nd year onwards (i.e. a total exemption after 22 years)
In order to prove a period of ownership, you can rely on an invoice, an inheritance inventory, an insurance policy, etc. We invite you to read the article Proofs of Ownership: securing your collection, which will tell you more about the various proofs of ownership that will enable you to calculate your allowance and benefit from the most advantageous taxation.
Note that this type of property is taxed the same as your collectables, hence the importance of having a complete, dated and indisputable inventory!
Loïc, from CollecOnline
