The purchase of physical gold: an interesting option for long-term investments

There has always been talk of the possibility of investing in gold as a refuge in adverse situations.

In economic crises such as that of 2008, the price of an ounce skyrocketed to reach 1,837 dollars. Specifically, he achieved it on July 25, 2011.

With the COVID-19 crisis, the possibility that this precious metal could function as a shield against the stock market storm is once again raised.

So much so that private banking entities such as Bank of America consider that it could be listed at $3,000 throughout 2021. An escalation that may represent protection against the environment.

Following this example and if you want to bet on gold, you can do it through different products: Futures, ETFs linked to the price of the gold metal or mining companies... However, there is another option that many savers do not resort to and that It is as valid or more valid than the previous ones, as well as tangible: the purchase of physical gold.

In a way, it is a reality that the gold metal can be considered the international currency par excellence. Especially in turbulent economic times. Wherever you go with an ounce of physical gold, a gold bar, a gold coin or a gold bar, you can exchange it in the local currency, in an accredited establishment for the sale of precious metals.

It must also be taken into account that, in periods of crisis, it tends to attract capital flows that cause its price to skyrocket progressively. Somehow, anyone in the world recognizes a piece of gold as real money.

Tomás Epeldegui, director in Spain of Degussa, a company dedicated to the commercialization of physical investment gold and other precious metals, affirms that, in this context, "it is when having a part of the investments in physical gold, It allows you to have immediate liquidity, in addition to the fact that it can make a difference when it comes to solving any problem”.

Where and how can you buy gold

One of the main drawbacks of investing in the precious metal is that you need to know which site to go to so that it offers the necessary guarantees, is certified, and does not rip you off. Quality influences a lot and it is important that they do not sell you a piece well below the market price.

In this sense, there are establishments such as Degussa, Dinoro, or Auvesta, where gold can be purchased with all possible security and guarantees. In addition, it is essential that you know that the gold formats in which you can invest are exempt from VAT, although this does not happen with jewelry or collector's items.

In addition, it is convenient that you focus on establishments with pieces for sale, that follow the standards of the London Bullion Market Association (LBMA), and that have the Good Delivery certification. But, with everything and with this, there are fake products, so it is always convenient that you turn to a specialist.

Some factors that influence the price of physical gold

Before you decide to invest in this asset, it is important that you know some variables that influence its price. First of all is the decision regarding interest rates by central banks. When entities such as the US Federal Reserve or the European Central Bank lower the official price of money, the returns of more traditional investment instruments are reduced, which leads investors "to take refuge in alternative options", including gold. physical, and, as in the previous case, "causes purchases and prices to increase. The reverse occurs when interest rates rise”, describes Epeldegui.

On the other hand, its production. It must be taken into account that precious metals, and gold is one of them, are limited resources, whose production cannot be increased on demand. Some 187,000 tons have been extracted since ancient times, according to the World Gold Council.

The United States Geological Survey estimates that some 52,000 tons of the earth's crust still remain to be extracted. Most of the mined gold continues to circulate. Mining only achieves an average of 5 grams of gold per ton of extracted material. For this reason, recycling is so important, which covers almost a third of the world's demand for gold.

Another point is the need for liquidity of investors. Gold is insurance that protects the rest of the investments in a diversified portfolio. From what has been seen recently, as in previous occasions of big falls in the financial markets, investors "resort to the liquidity that gold gives them to be able to cover the losses that their other investments generate," says Epeldegui. . It is a long-term store of value that "covers the risks that are run with other investments," he adds.

How you can invest in physical gold

The most common are gold bars or coins with face value. Investing in gold bars is more bizarre and complex. In this way, the advantage of the bars is that it allows the use of small quantities and they are easier to transport or store.

Also, there is another alternative that is to do it with jewelry. However, it must be borne in mind that with this formula, profit margin is lost because, in addition to VAT, the cost of its transformation must be added to the cost.

Finally, you can try to focus on some financial asset referenced to physical gold. A gold ETF, gold certificate of deposit, or something similar, such as mutual fund shares that invest in gold-related companies.