Gold as an investment
Gold as an investment is an asset class in the commodities area dar. Gold is a precious metal and is used for millennia also a store of value.
According to Thomson Reuters GFMS end of 2011 were held about 32,500 tonnes of gold as investments. The market value of this gold was approximately 1.3 billion euros in May 2012.
In addition to private and institutional investors and countries or their central banks hold large stocks of gold as reserves. Thus, the Federal Republic of Germany held to the end of April 2012, more than 72 % of their foreign exchange reserves amounting to almost € 190 billion, ie about 137 billion euros in gold and gold receivables.
- 5.1 Income Tax
- 5.2 VAT
History
From ancient times to the early 20th century for the production of gold coins was used for payment transactions. Owners of gold was often granted by law the right to exchange their medals at the desired state Münzprägestellen or central banks in price -performance money. As starting material for monetary gold filled, therefore, a store of value function, as is now the case with bills and account balances. An investment in gold thus meant in the time of metal currencies a safe investment in cash. Accordingly, she was spread among individuals and merchants. Even after the progressive loss of importance of gold as coinage in the world wars, the traditional use of gold as an investment remained.
The took place in March 1968 termination of the international gold price maintenance for individuals in the amount of 35 U.S. dollars per troy ounce changed the character of a gold investment. Since the prices of the precious metal since fluctuate freely, continually speculative gains and losses are possible with an investment in gold. Gold investments were especially popular in the 1970s due to the then high inflation. Your loss of significance in the next two decades is explained by the higher attractiveness of other asset classes such as equities. With the outbreak of the financial and economic crisis from about 2007 Gold experienced especially in the Anglo-Saxon and German-speaking countries a renaissance as an investment. Traditionally important markets for investment gold are beyond the Arab States and Asia.
Motives for Gold Investment
Private and institutional investors typically invest in gold because they rely on a rising gold price and want to benefit from this or for the purpose of hedging and value preserving their investments. Here, the concern play an important role against inflation and deflation.
An investment in gold provides a diversification of investment funds through another asset class. When not completely positive correlation of gold with other asset classes, the addition of gold in an investment portfolio in the context of asset allocation or portfolio management can lead to risk reduction and a smaller range of variation of the total value of the investment portfolio.
About investment instruments such as certificates or derivatives, investors may also participate in rising, falling or remain flat in gold prices.
Forms of investment
The various forms of capital investment in gold can be divided into three groups:
- Physical gold
- Exchange traded gold products
- Shares in gold mining companies
Physical gold
Investors who wish to purchase directly physical gold is basically open to the acquisition of so-called investment gold in the form of gold bars and bullion coins or purchase of gold jewelry and collectible coins. But jewelry and gold collectible coins generally have a substantial premium over the actual material value and therefore usually are not suitable for investors who wish to participate only in the development of the gold price.
According to a 2011 carried out by the Steinbeis Research Center for Financial Services, representative study prefer 88 % of German private gold bullion or coins as a form of investment in gold, while only 12% of gold -related securities would in the case of an investment choose as an investment.
Investors who want to purchase physical gold as an investment, there are various possibilities of storage: The private storage, for example in a safe in the home, the safekeeping in a deposit box or safekeeping in the central high -security vaults of security companies or banks. In the case of the central depository of investment gold one also speaks of vaulted gold.
Definition
According to the official summary of the EU Directive 98/80/EG1 investment gold is defined as follows:
" Gold in bar or plate form with a language accepted by the bullion markets, weight and purity of 995 thousandths ( bars or wafers of a weight of 1g, Member States may derogate from the rules exempt ) or gold coins having a purity of 900 thousandths, minted after 1800, in their country of origin are legal tender or were and are normally sold at a price that exceed the open market value of their gold content not more than 80% "
Investment opportunities into investment gold
The most commonly used form of investment in gold investment is the physical purchase of gold bullion or gold coins, ie so-called bullion coins.
The direct purchase of investment gold is possible in addition also for the purchase of vaulted gold. With vaulted gold is held in custody in high security safes physical gold, investors acquire the legal ownership.
In addition to the possibilities described the direct acquisition of fixed gold investors can also purchase exchange-traded gold products such as gold ETC. In this case, however, no direct investor acquires ownership of physical gold, but depending on the product includes a covered or uncovered legal entitlement against the issuer of the product or a share in a fund, the gold.
Exchange traded gold products
For exchange- traded gold products are gold-price -related securities that are typically traded on one or more stock exchanges. Investment instruments such as mutual funds or exchange-traded funds can be (part of) their investment funds invest in physical gold. In Germany for public distribution approved Funds may hold in physical gold only to a maximum of 30% of the investment volume. Therefore, gold ETF - unlike, for example, in Switzerland or the United States - usually on the German market is not available. So-called Gold Exchange Traded Commodities (ETC), such as Xetra-Gold, up to 100 % to be invested in gold. It is, however, bearer bonds.
In addition to these (partly) covered by gold bullion forms of exchange-traded gold products, there are also many not covered by physical gold instruments such as certificates on the price of gold or other derivatives.
Shares of gold mining companies
Shares of gold mining companies, also sometimes referred to as gold stocks, allow indirect participation in rising gold prices. Investor acquires shares of gold mining company shares in the mining companies. The mining companies usually have manufacturing and / or mining rights for gold production.
Comparison of different forms of gold investment from various viewpoints
Taxation
Income Tax
In principle, subject to income realized from gold -related securities and exchange-traded gold products in Germany for the flat tax. In contrast, subject to direct investments in physical gold and thus direct investments into investment gold not for the flat tax. In the event of a sale within one year of acquisition, capital gains, however, are taxed at the personal income tax rate. After this one-year period, however, realized gains are tax free. This is also true for unallocated in central high security safes vault gold.
VAT
In implementation of Directive 98/80/EC of 12 October 1998 supplementing the common system of VAT investment gold in the European Union are exempt from VAT, with the aim to promote gold as a financial instrument.
Risks of Gold Investment
Investors who invest in gold, in principle, bear the market risk, ie the risk of a loss in the event of a declining gold price. Depending on the type of investment, investors can also wear different high additional risks, such as a property risk due to storage or even a counterparty risk with respect to a product provider.
As the gold price quoted in dollars, there are investors who live outside of the U.S. dollar currency area, also a currency risk.
In case of purchase of shares of gold mining companies, investors also carry various strategic and operational business risks that may result for example from the inadequate management or inadequate risk management.
Criticism
Investments in gold are exposed to criticism on several occasions. Some investors like Warren Buffett criticize the investment in gold is that gold does not generate profits and is therefore a dead plant.
Other voices criticize the price risk of gold investment, particularly as a result of a possible bubble. It is also cited as a counter-argument to a gold investment, the price of gold is still often stronger than expected positive correlation with other asset classes and so the round will be portfolio diversification through the enclosure of gold smaller than hoped.
Probably as a result of the historically relatively high price of gold and the strong interest based thereon wider group of investors to gold piling up also reports of fraud and over-priced offers of investments in gold. It should also play a role that physical gold in Germany is not treated as a financial product and therefore no strict regulation is subject. This circumstance frequently make use of so-called multi - level marketing retailers that distribute in pyramid schemes physical gold products and savings plans, without being obliged to produce a license or special qualification for the distribution of financial products.