(P) What is investment gold?

Gold is starting to become an increasingly common investment globally. In April this year, the price of the yellow metal exceeded all expectations, reaching the highest level in history – 2431 dollars per troy ounce, about 78 dollars per gram.

The reason for such a high level of interest is that gold is defined as a “safe haven investment”. In periods of geopolitical uncertainty, economic crises or high inflation, gold prevails as a symbol of value. The price of gold depends on all these factors. And now, central banks, financial institutions and ordinary people are turning to gold.

But not everyone knows these aspects. It is difficult to distinguish between investment gold and gold for jewelry. Also, gold is seen as an investment that only the rich can afford. For all these reasons, let’s see what investment gold is.

How do we define investment gold?

Investment gold is established by law. It requires gold bars and coins that have certain characteristics to be considered investment gold products. These conditions provide a minimum threshold as a benchmark for mints and refiners regarding the production of investment gold products.

Gold investment coins

To be considered gold investment products, a gold coin must meet the following conditions:

• To be produced after 1800,

• Have a gold content of at least 90% (21.6 carats),

• Be or have been a legal means of payment in the producing country,

• Not to have a final price 80% higher than the price of the contained gold.

Coins produced before 1800 are considered goods of historical and cultural value. They can be traded as numismatic gold if they present the necessary documentation.

The most famous gold coin in Romania is the Austrian ducat. This represents the former Emperor of Austria-Hungary, Franz Joseph. The coin is produced by the Austrian Mint, keeping the same style as the coins produced until 1915.

A good example of a gold coin as legal tender is the Vienna Philharmonic. Coin weighing one troy ounce (31.1 grams) has a nominal value of one hundred euros. This means that the currency can be used to make payments up to one hundred euros.

However, the value of the coin is incomparably greater as investment gold than as a means of payment. At the time of writing this article, the one-ounce Vienna Philharmonic coin has a price of approximately 11,300 lei.

Investment gold bars or slabs

Investment gold bars and slabs are produced by laser cutting, pressing or casting, depending on the weight of the bar and the manufacturer’s preferences.

The purity of one gold bar investment must be at least 99.5% (or 23.88 carats). Although this percentage is the legal minimum that gold bars must present, the vast majority of bars on the retail market are 99.99% or 24 karat purity.

Another aspect that these products must present in order to be considered investment instruments is the engraving of certain characteristics (such as weight, purity, serial number and manufacturer) on the surface of the ingot. Bullion comes in weights varying from one gram to 12.5 kilograms, the latter being used for interbank transactions.

Ingots weighing less than one hundred grams are placed in vacuumed plastic packaging. These packages constitute their certificates of authenticity. Thus, it is very important that these packages remain as intact as possible.

Long term gold

Gold investment products, whether we are talking about gold coins or gold bars, come in a variety of weights. This makes them accessible to all as methods of preserving purchasing power in times of high uncertainty.

The conditions imposed at the industry level allow gold investment products to be very liquid. Thus, a gold bar, produced by a recognized refinery, can be bought in Romania and sold in any other country in the world, at an authorized precious metals dealer.

In the long term, gold really shows its power to preserve value, being the only investment that has existed for thousands of years.

photo source: unsplash.com