Investing in gold

Return on investment in Russia

• Return on investment in Russia

Why they invest in gold

As of November 01, 2011, US gold reserves in the amount of 8,133 tons of gold make up no more than 25% of the total dollar mass. And this means that if the gold standard was in effect at that time, and the US dollar was backed by gold, then the price of gold would skyrocket 4 times.

From 2008 to 2015, the total amount of assets managed by financial institutions grew by 43% - an incredible figure.

Unlike the virtual financial matrix, the gold market is not dimensionless, and, therefore, a lot of restrictions are imposed on the capacity and liquidity of the market. Precious metals cannot be a global cache parking space due to their negligible size compared to global financial assets.

The share of gold in relation to all assets in the global financial market at the end of 2015 is at a negligible level - only 0.58%. For comparison, in 1970 this figure was at around 5%^[1].

In the event of a financial storm, the physical gold market can accept no more than 1,200 tons per year, that is, about $42 billion at prices for mid-2015, which is literally a drop in the ocean.

Global gold production for 2022 averages 4.7 thousand tons per year and has limited space to increase supply. The demand for gold is distributed in the following proportion: 2.2-2.3 thousand tons in jewelry, 300-340 tons in industry and a little more than two tons remain, which are absorbed into investment demand.

Among the investment demand for medals, coins and bullion accounts for about 1.1 thousand tons and remains on average 1 thousand tons, which is "discharged" into the financial system (ETF, Central banks and OTC market).

At current prices, this is only $68 billion per year for the entire world financial system + demand from the Central Bank. It's nothing! The global money market of all countries of the world (cash + deposits) is estimated at $110 trillion.

In the event of a financial storm, prices can multiply - tens and hundreds of times on the trajectory of finding a new reliable currency. On the other hand, it may take a long time to crystallize the alternative to reserve currencies in terms of capacity, liquidity and convertibility.

Gold investment risks

Manipulation of the monetary authorities of Western countries

As of 2015, it is generally accepted that Western monetary authorities, with the help of investment banks, are actively manipulating the price of gold in order to maintain the value of the dollar^[2].

2022: Ex-head of precious metals unit JPMorgan Chase and his trader convicted of manipulating gold market for years

In August 2022, the former head of the precious metals division of JPMorgan Chase & Co. and his leading gold trader were [1] convicted by a federal jury in Chicago on charges of market manipulation (spoofing/spoofing) for years.

The case was the largest in U.S. Justice Department history to allege that JPMorgan's precious metals business was organized as a criminal enterprise. Novak, the managing director in charge of that department, and Smith, his chief trader, were convicted of fraud, forgery and market manipulation.

"They had the power to move the market, the power to manipulate the global price of gold," prosecutor Avi Perry said during closing arguments.

Bitcoin gold competitor

Main article: Bitcoin (Bitcoin) Cryptocurrency

In February 2021, the flow of funds from gold to bitcoin was already talked about more definitely.

2024: Bitcoin market capitalization is 8.4% of gold capitalization

The market capitalization of Bitcoin by the end of May 2024 is 8.4% of the market capitalization of gold.

• Bitcoin is valued at $1.4 trillion.
• Gold is valued at $16 trillion.

Unlike gold, bitcoin has a fixed reserve: 94% of 21 million coins have already been mined (19.7 million in circulation).

Gold supply continues to grow and is projected to reach 250,000 tonnes by 2030.

Who buys gold

2022: China has increased the import of gold from Russia

After the entry into force of the Western embargo on imports of Russian gold associated with the conflict in Ukraine, China sharply increased purchases of this metal in Russia. In July 2022, the country imported Russian gold for $109 million - 8.6 times more than in June, follows from the data of the PRC.

2021

For 2021, the demand for gold amounted to 4,021 tons, largely winning back losses for 2020. This was announced by the World Gold Council in its annual report.

Jewelry production for 2021 increased by 67% and reached 2221 tons. Demand from the sector increased by 52% to 2124 tons, returning to 2019.

Gold ETF stocks fell 173 tons in 2021, after a record growth of 874 tons in 2020.

Investment in bullion and coins remained positive, jumping 31% to an eight-year high of 1,180 tons.

Central banks in 2021 purchased 463 tons of gold, which is 82% more than a year earlier. Thanks to this, gold reserves are at their highest mark in 30 years. At the same time, in the second half of the year, the pace of procurement decreased significantly: in the 4th quarter of 2021, central banks bought 22% less than in the fourth quarter of 2020.

Demand from the technology sector rose 9% to a three-year high of 330 tonnes.

2019

The largest sources of annual global gold demand: ��

1. Jewelry: 2107 tons ⠀

2. Investments (total in bullion and coins): 870.6 tons

3. Central banks and other institutions: 650.3 tons

4. Investment funds (ETFs and similar): 401.1 tons

5. Industry: 326.6t ⠀

Central banks of the world

• Gold reserves of Russia
• Gold and foreign exchange reserves of China
• Gold reserves of countries of the world

Banks

2023: Russian banks may have sold gold for euros and dollars in the UAE and Turkey

Some Russian banks could exchange gold for dollars, according to a study by a financial intelligence company. Data published by Bloomberg in February 2024

Some Russian banks seem to be circumventing the ban on the import of dollars euro and into the country by trading gold UAE in and. Turkey

2022: Gold reserves in Russian banks after the outbreak of the conflict in Ukraine decreased to 43.8 tons

Gold reserves in banks in Russia in February-March 2022 decreased by 20%, to 43.8 tons.

2020

VTB gold reserve is larger than that of many countries

According to the results of April 2020, VTB Bank acquired another 4.4 tons of gold, increasing the total volume of precious metal owned to 51 tons.

• As of May 1, the second largest bank on the balance sheet had twice as much gold as all other banks combined (23.4 tons).

• VTB's gold reserve is already comparable to the reserves of the central bank of not the smallest economies: for example, Finland in ZVR - 49.1 tons of gold, Qatar - 42.2 tons, Malaysia - 38.9 tons.

• In 54 out of 100 countries of the world, statistics on which are kept by the IMF, gold reserves in ZVR are inferior to the volume that VTB managed to accumulate.

The bank became the only major bank that continued to replenish storage facilities in March and April, when the Central Bank of the Russian Federation stopped purchasing precious metal into reserves, encouraging bankers to sell metal abroad to compensate for the lack of oil dollar revenues.

The rise of gold sales from Russian banks abroad

The export of gold from Russia has accelerated sharply, follows from the statistics of the Federal Customs Service. In January-February 2020, 17 tons of precious metal worth $854 million crossed the Russian border for sale abroad.

Gold exports soared 7 times compared to the same period last year. The main direction remains London - the world's largest center for trading in physical ingots. In the first two months of 2020, 15.4 tons worth $775 million were exported to the British capital.

State-owned banks joined the active sales of gold, which during 2019 bought precious metal and tripled its reserves in storage facilities.

VTB became the largest seller: in January-February, 9 tons of gold went from the storage facilities of the second largest state bank in Russia, including 2.2 tons in February.

Sberbank sold gold from November 2019 to January 2020 - 5.5 tons in total in three months.

Gazprombank's reserves fell by 2.2 tons of tons in February and 5.8 tons in the previous three months.

PSB sold gold in November-January (4.6 tons), after which it paused operations. Otkritie, which sold 4 tons at the end of 2019, began to purchase, adding 0.7 tons to the storage facilities.

In total, in January-February, banks sold 9 tons of gold from reserves, the volume of which in 2019 soared from 38 to 92 tons.

The moment for the sale of gold cannot be called unsuccessful: the coronavirus pandemic and the collapse of markets sharply offset the demand for precious metal, and the shutdown of mines in South Africa and Peru and refineries in Switzerland, multiplied by the collapse of transport, gave rise to its shortage in certain markets. Since August 2018, gold has risen in price by 44%, to $1,694 per ounce.

At the end of May, US bankers faced problems, who were ready to offer a price $100 higher than fixing in London to get physical metal.

On the New York Exchange NYMEX, gold futures were trading at a premium of $70 to London prices. March 8, 2020, against the background of the collapse of markets, the price reached $1704.3 per troy ounce - the maximum since December 2012.

2019: The rise of gold purchases from Promsvyazbank to 8.3 tons

2018: Russian banks purchased 195 tonnes (-4.5%)

In 2018, Russian banks entered into contracts with mining companies for the purchase of 195.85 tons (6.297 million ounces) of gold from them, which is 4.5% less than in 2017 (205.155 tons), which is approximately 69% of all gold mined in Russia for the year, a source in the Ministry of Finance told RIA Novosti.

"At the same time, at the end of 2016, domestic banks entered into contracts for the purchase/sale of gold for the same volumes - by 195.89 tons. The leaders are still: VTB, Gazprombank, Sberbank and FC Otkritie, the department noted. - This is a good business for banks. They lend to subsoil users, who are then calculated by mined gold, which they sell mainly to the Central Bank[3]

According to the Ministry of Finance, the first place in gold purchases in 2018 is:

• VTB - 61.28 tons, in 2017 - 63.9 tons,
• further Gazprombank - in 2018 - 44.14 tons, in 2017 - 38.1 tons,
• Sberbank - in 2018 - 34.78 tons, in 2017 - 43 tons,
• FC Otkritie - in 2018 - 20.86 tons, in 2017 - 20.4 tons,
• Asia-Pacific Bank - in 2018 - 8.02 tons, in 2017 - 8.30 tons.

In 2014, Russian banks entered into contracts for the purchase of 195.5 tons of gold from mining companies, in 2013 contracts were concluded for the purchase of 181.4 tons of gold, in 2012 - 167.5 tons of gold, in 2011 - 156.2 tons, in 2010 - 148.8 tons, in 2009 - 148.7 tons.

2016

Chinese authorities limit gold imports to banks

In December 2016, some Chinese banks with licenses had difficulty obtaining gold import permits. This is due to the attempt by the Chinese authorities to stop the weakening of the yuan by reducing the outflow of dollars,^[4] bankers China ^[4] currency].

Russian banks doubled gold reserves in six months

Gold reserves in the storages of Russian banks in the first half of 2016 increased by 92.4%, or 29.9 tons. According to the reports of Russian banks on the website of the Central Bank of the Russian Federation as of August 1, 2016, the gold reserve of banks reached 62.2 tons.

The largest increase in absolute terms occurred in July 2016 - the gold reserve increased by 18.2 tons, or 41.3%, RIA Novosti reported.

VTB made the greatest contribution to the growth of gold reserves in seven months - its precious metal reserves increased 1.7 times (by 13.7 tons) - to 33.1 tons.

In second place Sberbank with an increase of 2.5 times (by 9.8 tons) - up to 16.13 tons.

FC Otkritie closed the top three with an increase of 2.6 times (by 4.4 tons) - up to 7.1 tons.

At the same time, for the whole of 2016, Russian banks entered into contracts with mining companies for the purchase of 195.9 tons (6.298 million ounces) of gold from them, which is 3% less than in 2015 (201.64 tons), which is 66% of all gold produced in Russia for the year, according to the Ministry of Finance.

"At the same time, according to the results of 2014, domestic banks concluded contracts for the purchase/sale of gold for exactly the same amount - 195.9 tons, only their volumes have changed slightly. This is a good business for banks. They lend to subsoil users, who then settle with them the mined gold, which banks sell to the Central Bank, "the department noted

.

Gold mined in Russia has been bought by Russian banks and the Central Bank of the Russian Federation in recent years.

Coin and bullion sales in Russia

2023

Purchase of 95 tons of gold in bullion by Russians

In 2023, individuals in Russia purchased about 95 tons of gold in bullion. A year earlier, this figure was measured at 100 tons, according to data from the Ministry of Finance of the Russian Federation, published on February 1, 2024.

According to Russian Deputy Finance Minister Alexei Moiseev, the purchase of gold by individuals was systematically reduced throughout 2023 and then increased sharply in the fourth quarter. According to the deputy head of the Ministry of Finance, in 2024 the demand for gold will grow, though not at such an explosive pace.

Individuals in Russia purchased about 95 tons of gold in bullion

When the president and the government decided to abolish VAT on gold, [he had] several reasons [including] the replacement of citizens' cups. In one of the periods, the demand for bank cells exceeded supply. We see a gradual phased replacement, we do not know what is in these cells, but we see that the demand for gold to some extent replaces the demand for dollars. The demand for gold will grow, there will be no such strong bursts in this market as it was, but it will develop progressively. Gold was, is and will be, - said Alexey Moiseev.

According to him, the Ministry of Finance suspected that the export of gold by individuals could be a way to bypass the "exchange rate" duty and offered to limit its volumes. Moiseev noted that the Russians began to export gold from the country in their pockets so as not to pay a 7% duty.

At the end of 2023, a number of Russian banks noted that wealthy Russians maintain a consistently high demand for gold bars. Demand growth was recorded despite an increase in the price per ounce of precious metal from the beginning of the year by 9.8% to $2003.9 on December 8, 2023. Senior analyst at Gazprombank Vladimir Pantyushin in a gold market review predicted further gold growth, up to $2,300 per troy ounce by the end of 2024.^[5]

"Goznak" launched an application for investment in gold

On February 16, 2023, Goznak announced the launch of a mobile application for gold investments. The service allows the user to remotely buy, sell and store gold and silver investment coins. Goznak is engaged in the sale of coins to investors, their repurchase and storage. Read more here.

2022

Russians bought a record amount of physical gold - 75 tons

Russians in 2022 bought a record number of gold bars in banks. Five of the 13 systemically important banks sold a total of 57 tons of precious metal. In addition, according to analysts, in just a year the Russians acquired about 64-67 tons of physical gold, Vedomosti writes in the issue of January 12, 2023.

Later in March 2023, it became known that the Russians bought 75 tons of investment gold in bullion in 2022. In 2020-2021, the volume of purchases was about 5 tons of gold per year.

According to the publication, the demand for gold in banks has grown many times, for example, in Sberbank - at 18, in Rosselkhozbank - at 16. The demand for precious metal, according to Mikhail Vasiliev, chief analyst at Sovcombank, will be supported by three factors: the rise in the dollar and ruble price of gold, increased uncertainty in the world and Russian economies, as well as the toxicity of the currencies of unfriendly countries. At VTB, the volume of transactions has grown by about 20% every month since July 2022.

Banks do not disclose proceeds from the sale of gold bars. However, the weighted average price of 1 g of gold for 2022, according to the Central Bank of the Russian Federation, amounted to 3983 rubles. Based on these data, Vedomosti calculated that five surveyed banks could sell gold bars for about 200 billion rubles.

High demand for gold began in 2022, when the authorities in March exempted private investors from paying VAT, and in July - individuals until the end of this from personal income tax when buying precious metal. After the introduction of indulgences, banks faced a shortage of gold for several months, when the population's demand for physical gold increased.

In the spring of 2022, refineries that produce gold bars had to reorient production to a more "investment" size - less than 100 grams, which is why banks faced a shortage of this precious metal for several months. In November, a high demand for ingots was again recorded, but then it was possible to satisfy the demand of buyers.^[6]

Growth in sales to the population by 10 times to a record 50 tons

In 2022, Russians bought gold 10 times more than a year earlier. At the end of the year, private demand will be more than 50 tons, this is a record for the entire post-Soviet history.

Sberbank customers increased purchases of precious metals by 4 times

From the beginning of the year to mid-May 2022, the Russians purchased 10 tons of precious metal ingots from Sberbank, including 7 tons of gold, the bank said.

In 2021, over the same period, customers bought 2.6 tons of bullion precious metals from Sberbank, that is, purchases increased almost 4 times. The sharply increased demand for precious metals in ingots is due, among other things, to the abolition of VAT on the purchase of physical metal, the bank notes.

"We see a logical increase in interest in bullion, because this is an opportunity to preserve funds from inflation. Now we are actively working with suppliers to ensure the availability of ingots of different sizes in our offices, "said Sergei Shirokov, director of the Borrow and Save division of Sberbank

.

2020: More than 200 thousand coins and over a ton of bullion precious metals were purchased by Muscovites at Sberbank. 3x growth

Residents of Moscow in 2020 purchased 205,917 investment and commemorative coins from Sberbank, their total weight exceeded 2.5 tons, and the total cost at the time of acquisition amounted to about 6.5 billion rubles. This is almost 3 times more than in 2019, when customers spent 2.3 billion rubles on the purchase of coins. The greatest demand among Muscovites was the gold and silver investment coins "Victorious." They were sold about 160 thousand pieces and 12.5 thousand pieces, respectively, in the amount of 6 billion rubles.

Sberbank's clients actively invested in 2020 in precious metals, the sale of which is carried out in the form of ingots from one gram to several tens of kilograms. Residents of the capital invested the most in 2020

• in gold - more than 6 thousand ingots with a total weight of 389 kg. value of RUB 1.89 billion;
• in second place is silver (2.4 thousand ingots with a total weight of 759 kg. by 51.3 million rubles),
• then - platinum (338 ingots with a total weight of 13 kg. by 36.4 million rubles) and
• palladium (11 ingots with a total weight of 180 gr. per 1.1 million rubles).

In total, Muscovites purchased 8,879 bullion of precious metals for the year with a total weight of 1,162 kg. in the amount of over 1 billion 975 million rubles. This is 2.5 times more than was spent in 2019 (777 million rubles).

2016: Launch of coin trading on RTS Board

In May 2016, it became known that the RTS Board trading system launched a new sector of the over-the-counter market - Bullion Coins, which brings together large sellers of investment and commemorative coins, credit and non-credit organizations, as well as private investors. Previously, these tools could only be purchased from banks or private dealers.

More than 200 issues of investment and commemorative coins are available on the RTS Board OTC market - divided into various mints. They include all investment coins issued by the Russian Central Bank, including the gold and silver "George the Victorious" in denominations of 50 and 3 rubles. respectively, gold coins "Sochi 2014" in denominations of 50 and 100 rubles, as well as the silver coin "Sochi 2014" (3 rubles).

In addition, the new section of the RTS Board has the opportunity to purchase foreign coins - the American Buffalo, the Canadian Maple Leaf, the Australian Kangaroo, the South African Krugerrand, the Austrian Philharmoniker, as well as the Belarusian Slavyanka and Kazakhstan Bars. RTS Board explains the small number of foreign coins by the fact that the organizers of the auction have not yet obtained from officials a reduction in the barrage import duty for such instruments. However, in the future, the site plans to increase the number of traded issues to at least 1.5 thousand, a significant part of which will fall on foreign coins.

The investor receives the coin purchased in the RTS Board trading system directly from the dealer with whom he made the deal. All investment coins are sold in special plastic protective capsules or in blisters of several pieces, which protect them from damage, allowing them to maintain investment value. According to Konstantin Kuteinikov, an expert at the Over-the-Counter Market Development Department of the NP RTS Association, RTS Board is working to create a centralized coin storage system - a depository from which an investor can pick up his purchase at any time.

Six large participants from Moscow and St. Petersburg joined the trading in the new RTS Board market - coin dealers Derzhava, Finance Architecture and Golden Reserve, RIAL-Credit Bank, investment company Eltra and trading company Yarus. According to RTS Board, Otkritie Bank, Lanta Bank and Bank Russia may soon join them. Derzhava analyst Roman Taltanchik notes that the trading platform will help unite a large number of market participants on one platform, which will contribute to an increase in the volume of transactions with investment coins and, as a result, reduce the difference between purchase^[7] prices^[7].

Now on the most common investment coin on the Russian market - the golden "George the Victorious" with a face value of 50 rubles. - the spread when sold in banks varies from 4 to 35%. Coin dealers, including those trading in the coin section of the RTS Board, have spreads in the 2.2% to 4% range. Kuteynikov adds that a client can put up an application for the sale or purchase of a coin with his price, therefore, theoretically, the terms of the transaction can be even more profitable.

First half of 2013: Growth in demand for coins for 30%

In the first half of 2013, citizens purchased coins from precious metals from banks for 4.2 billion rubles, almost a third higher than in the same period in 2012^[8].

Exchange-traded funds and other investors

2024: Record Q3 demand - more than $100 billion - thanks to rising purchases by Western investors

In the third quarter of 2024, global gold demand grew by about 5%, setting a record for this period and for the first time exceeding the $100 billion mark.

The increase to 1,313 tonnes was driven by increased investment flows from the West, including an increase in the number of wealthy individuals, which helped offset a weakening appetite in Asia.

Shallow price pullbacks suggest a "sharp sign of FOMO shopping."

2022: Germans continue to increase gold investment

2021

Individuals in Germany bought a record volume of bullion since 2009

Fearing inflations Germans are buying gold - the demand for physical ingots in, Germany traditionally the largest buyer of coins and ingots in, in To Europe the first half of 2021 was the highest since at least 2009.

Software developer Palantir bought $50 million worth of gold bars

In mid-August 2021, the developer of PPalantir Technologies bought gold bars worth $50 million. Read more here.

2017: Exchange-traded funds ramp up gold investment

High demand for gold in 2017 is observed from specialized exchange-traded funds - ETFs. Managers are buying up gold for fear of increasing political instability in the world. In addition to physical gold, ETFs invest in futures.

For example, one of the largest SPDR Gold Shares funds for November 2017 owns 850.5 tons of gold. Since the beginning of the year, according to the Gold.org website (the resource tracks the indicators of the largest gold ETFs), over the year the fund acquired 28.5 tons of gold.

German ETF Xetra-Gold bought even more - 55 tons. According to Bloomberg, the total assets of exchange-traded gold funds already exceed 2,236 tons, since the beginning of the year they have grown by 240 tons.

The biggest ETFs investing in gold

Source: Gold.Org

2016: Growth of investment demand for gold in Q1 by 122%

For the first quarter of 2016, investment demand for gold increased by 122% compared to the same period last year, while the inflow of funds into exchange-traded index funds focused on gold jumped by 300%.

2012: Soros and SPDR Gold Trust

• The private fund SPDR Gold Trust, which was launched in 2004, owns 1 thousand metric tons of gold as of August 2012 - this is 1% of the world's mined gold reserves. Since 2004, it is this fund that has created 15% of global gold demand. The fund has more gold than China's official reserves. ^[9].

• In August 2012, it became known that billionaire investor George Soros increased investments in gold, taking advantage of a sharp decline in world prices for the precious metal. As Bloomberg points out, the quarterly decline in gold prices has become the highest since 2008. Hedge fund manager John Paulson^[10] has returned^[10].

Thus, the share of Soros Fund Management in the SPDR Gold Trust trading gold fund more than doubled by the end of the second quarter compared to the first quarter - to 884 thousand shares. The stake of investment firm Paulson & Co. increased to 26 percent, or 21.8 million shares.

Gold trading

2023: Tokenized Gold Market Tops $1 Billion for the First Time

In early April 2023, the global tokenized gold market for the first time in history exceeded $1 billion, as evidenced by CoinGecko statistics. Read more here.

2022

Export of a record 96 tons of gold from Russia to the UAE

Russia became the main source of gold for the UAE after Western countries refused to buy: according to the UN Comtrade database, in 2022 the UAE imported 96.4 tons of gold from Russia - more than any other country.

The UAE has long been one of the key hubs for the precious metals trade, especially from Africa and India, but in 2022 it was instrumental in the Russian gold trade for the first time.

Other major gold suppliers to the UAE in 2022 were Mali and Ghana, supplying 95.7 tons and 81 tons, respectively. Switzerland became the main destination for the export of gold from Arab countries, accepting 145 tons.

World's first gold ATM opened in India

In early December 2022, allowing the world's first ATM the purchase of gold coins with money from credit or debit plastic cards, began serving customers Indian in the city of Hyderabad. More. here

Exchanges

2022: Russia proposes to create "Moscow World Standard" as an alternative to LBMA

In July 2022, the Ministry of Finance of the Russian Federation proposed to create a new international standard for the precious metals market - "Moscow World Standard" (MMC) - Moscow World Standard (MWS) to normalize the functioning of the precious metals industry.

MWS will have to become an alternative in its functions to the standard of the London Bullion Market Association - LBMA.

As part of the exchange's work, it is proposed to create a Price Fixing Committee, which will include the Central Banks of the EAEU member countries and their largest banks operating on the precious metals market, subject to the application of the MWS standard.

2020: JPMorgan caught manipulating gold price and will pay $1bn fine

Claims against the bank arose with the Department USA U.S. Securities and Exchange Commission of Justice, the federal to trade and the Commodity Futures Commission.

They incriminate JPM traders with the so-called "spoofing" - putting up applications for the purchase or sale in a significant amount without the intention to execute them.

The largest American bank will pay a record fine of $1 billion for "spoofing."

2016: London remains leader in gold trade

Gold remains one of the most popular goods in the world and the main reserve of world central banks. In October 2016, the LBMA reported that the average daily volume of gold trading rose to 18.6 million ounces. During the month, this is about $23.5 billion.

For 2016, almost half of all gold trading deals occur in London.

Over-the-counter transactions are sealed by virtual handshakes, whereby the risk of default at this time is distributed between buyers and sellers, rather than between risk-managing clearing houses.

But after the financial crisis of the late 2000s, all markets are reconsidering their ways of doing business and managing risk amid increased regulatory scrutiny. This is especially true for large exchanges, where prices are determined, after it was discovered in 2012 that banks they manipulated basis interest rates.

The need to minimize risks has led LBMA to pursue changes that will make operations more transparent and secure for customers. In the first half of 2017, the association, which consists of HSBC and JPMorgan, will begin to conduct reports on transactions made by its members, as well as introduce a new trading platform.

The largest bigwigs in finance are fighting for control of the gold market in London, which has an annual volume of $5 trillion. In the mid-2010s, this three hundred-year-old center of commerce is forced to adapt to the digital age.

In 2016, the London Precious Metals Market Participants Association is rebuilding the over-the-counter transaction system and since 2017, CME Group Inc., Intercontinental Exchange, Inc. and the London Precious Metals Exchange have been introducing new ways to buy and sell precious metals.

Some big banks will also be interested, including Goldman Sachs Group Inc., HSBC Holdings Plc and JPMorgan Chase and Co.

'

There are four weddings and we have to at all four because it's not known exactly which marriage will last a lifetime. Only one will remain, "said Adrien Biondi from Commerzbank AG

.

In August 2016, LME, the world's largest metal exchange, announced that the first half of 2017 was scheduled to launch spot and futures contracts for gold and silver, and then for platinum and palladium^[11].

The process will be supported by a group of five banks including Goldman Sachs, ICBC Standard Bank Plc and Societe Generale SA, as well as the World Gold Council.

ICE operates a "Gold Auction" in London under the LBMA guarantee among 13 participants who set a daily price. In October, ICE said it would begin trading gold futures in February 2017, including those traded in London and on the New York Stock Exchange.

Chicago-based CME Group, owner of the Chicago Mercantile Exchange, sought to get into the London market even earlier. In November 2016, CME announced its intention to begin trading gold and silver futures contracts effective January 9, 2017.

"We are

preparing for five years of turmoil in this market before the situation stabilises. The good old London market of OTC transactions will have to keep on the defensive until we come to any consensus, "said Tony Dobra from Baird & Co

.

Change is necessary and inevitable, noted senior traders, including Biondi and Simon Grenfell of Natixis SA.

The development "reduces credit risk in the system and facilitates the process of trade, changes in the gold market will increase transparency and reduce credit margins," Grenfell said.

However, opinions are divided on who comes out on top. Dobra, Biondi and Raj Kumar, head of precious metals business development at ICBC Standard Bank, believe LME offers the best solution for the market. Brad Yates of Elemetal LLC believes CME is best suited to the needs of the business. And participation in the ICE test, which is at the heart of his contract, continues to grow after INTL trading house FCStone Inc. joined the process.

"The OTC market will always be in London. However, much of what is currently happening here will move to exchanges. Participation in any new contract entails organizational costs, and therefore companies will need to prioritize which centers they will be able to trade with, "Kumar said

.

Import countries

India's gold imports jumped to their highest since April, up 71% year-on-year to 43.6 tonnes in July 2021.

The decline in gold prices in the domestic market contributes to sales growth, it is expected that demand for gold in the second half of 2021 will be higher than in the previous six months.

Volume of gold in circulation

The gold supply as of August 2019 is $8.7 trillion, the US dollar supply is $1.7 trillion. The volume of rubles in circulation is $150 billion.

�​Obyem of cash in circulation (in USD UNITED STATES). Data for 2019]]

Fake and diluted gold

2023: Perth Mint sent 100 tonnes of diluted gold to Shanghai Exchange and tried to hide it

In March 2023, Australia's largest mined gold processor Perth Mint faced a potential $9 billion gold bullion recall after selling diluted or "doped" bullion to China, as well as attempts to conceal it.

Up to 100 tonnes of gold shipped to the Shanghai Gold Exchange (SGE) potentially falls short of Shanghai's strict purity standards for silver content.

2020:83 tons of counterfeit gold pledged on loans to the largest jewelry company in China

In July 2020, one of the largest fake gold scandals in history is being promoted in China. In the center of it is a large Chinese gold jewelry manufacturer Wuhan Kingold Jewelry. Over the past five years, this company has attracted loans and loans totaling 20 billion yuan ($2.8 billion) secured by gold bars with a total weight of 83 tons. Now it turns out that all these ingots were made of copper alloy and are only covered with gold on top. The severity of the situation is added by the fact that the pledges were insured by the state insurance company PICC Property and Casualty.

Wuhan Kingold Jewelry is considered the largest gold processor in Central China. It used to be a state-owned factory overseen by the Chinese People's Liberation Army, represented by General Jia Zhihong. In 2002, the factory was transformed into a joint stock company and privatized. As a result, a private company was formed, with controlling shareholder Jia Zhihong.

As the Caixin agency notes, 83 tons of counterfeit gold in the repositories of Kingold's creditors are equivalent to 22% of annual gold production in China and 4.2% of the state reserve of precious metal. The gold reserves of the Celestial Empire fell by more than four percent at once.

Price dynamics

On June 30, 2020, gold futures hit $1,800 an ounce. For the first time since 2011.

In April 2020, amid the COVID-19 coronavirus pandemic, Bank of America forecast gold prices to rise to $3,000 in 1.5 years.

In the first 6 months of 2019, the value of gold in dollars rose by more than 10%, reaching 5-year highs amid uncertainty in global financial markets.

The yield on 10-year US government bonds decreased from 3.2% in October 2018 to 2% at the end of June 2019, which was accompanied by a flow of investments in gold.

Prices increased by 9.4% in 2016, as of December 21 - about $1160.3 per ounce.

For 2014-2015, the selling price of the gold coin Georgy Pobedonosets with a face value of 50 rubles increased by 98.3% - from 10.5 thousand rubles. up to 20.8 thousand rubles. apiece. As of May 20, 2016, the value of this coin amounted to 22.3 thousand rubles^[7].

At the end of May 2012, it was reported that the fall in gold prices was a record since 1999; at that point it was worth about $1,573 an ounce.

In April-June 2012, the value of gold decreased by 4 percent.

In 2011, gold prices set a record, reaching $1,889 an ounce at some point.

At the end of 2011, business media wrote that the largest American investors suffered losses from investments in gold. The size of the losses, however, was not specified.

Ingots, coins or compulsory medical insurance

Buying bullion from a bank

This is how you acquire metal in its pure form.

Pros:

• Ingots come in different sizes, weighing even 1 gram.
• You will get a precious metal that will retain value for all time.
• You only pay for the metal itself, not for its processing.

Cons (as of September 2017):

• When buying, you need to pay an additional 18% VAT, and when selling it you will not be returned.
• If you sell the ingot earlier than three years after the purchase, you will have to fill out a declaration and pay income tax (personal income tax) - 13% of the difference in the purchase and sale price. If you owned it for three years or more, you do not need to pay personal income tax.
• If you want to store the ingot in a bank cell, you will also have to pay extra for it.
• It may take some time to check the ingot. It's good if the bank does it in your presence. But this is not a bill that can simply be passed through the detector, so the answer can be given the next day.

Investment coins

The value of the coin is clearly tied to the value of the metal from which it is made.

Pros:

• You can choose a gold or silver coin of suitable value - from 1,000 to several tens of thousands of rubles.
• When buying investment coins, VAT does not need to be paid. But when selling, you will have to pay personal income tax on the difference from purchase and sale, as in the case of precious metals. If you have had a coin for more than three years, then you do not have to pay personal income tax.
• The coins are compact, easy to store at home.

Cons:

• The Bank of Russia sets the value of the coin with a mark-up of 3 to 20% of the net value of the metal, and commercial banks add their commission to this.
• Commercial banks redeem coins back at a discount of up to 30% of the price. Carefully study the conditions of different banks.
• You can also earn money with the help of commemorative coins made of precious metals, which are in demand among collectors. Over time, their value can grow faster than the cost of the metal itself.

Contributions to compulsory medical insurance are not insured

Open an impersonal metal account (CHI)

This is a purchase of "virtual metal," you will not get it in your hands. It's just that your account will contain grams of precious metal. To open such an account, you need a passport, TIN and money that you pay for precious metal.

2017: Pros and cons of impersonal metal accounts

Pros:

• An account can be opened for any amount and tied to any precious metal.
• You don't have to pay VAT.
• You can buy and sell virtual grams of precious metal to a bank in any quantity at any time and make a profit through price fluctuations.
• Virtual metal can be exchanged for real: close the account and get an ingot in your hands.

Cons (as of September 2017):

• If you take a deposit in the form of an ingot, you will need to pay VAT of 18%.
• The storage of funds in impersonal metal accounts (compulsory medical insurance) in banks does not fall under the law on insurance of deposits of individuals, respectively, they are not subject to guarantees of the deposit insurance system.
• In some banks, you can open an urgent compulsory medical insurance - for a certain period, and then an interest will be charged on the deposit. True, if you want to sell the metal and close such an account ahead of schedule, interest will burn. You will only get the difference in metal value at the time of purchase and sale.

Digital Gold Rights

2023: The first hybrid digital gold rights appear in Russia - you can get money or bullion

Atomais and Rosbank on November 9, 2023 announced the launch of the first hybrid digital gold rights in Russia. According to representatives of the parties, the instrument carries two innovations: the first is the possibility of choosing a convenient repayment format (money or a gold bar), the second is an interesting price for the investor. Read more here.

2022: Sber began issuing digital financial assets for gold

Sber starts extension digital financial assets (CFA) to. gold This was announced on December 12, 2022 by TAdviser representatives of Sberbank. As they specified, the release will be carried out on its own. to blockchain platform bank More. here Investors will have the opportunity to purchase an analogue of a traditional instrument, an impersonal metal account, in digital format.

Gold Taxes

2022: Russia abolished a 20% tax on the purchase of gold bars and allowed their purchase by individuals for foreign currency

On March 4, 2022, the State Duma of the Russian Federation adopted a law abolishing the tax on the purchase of gold bars by individuals. This rule will apply to legal relations that arose from March 1, 2022, that is, to have retroactive effect.

Previously, the acquisition of precious metals by Russian citizens (with the exception of coins) was subject to VAT at a rate of 20%, including ingots withdrawn from the bank's storage facilities. When these ingots are sold back to the bank, the VAT paid is not returned. The condition on the collection of VAT, depending on the fact of the removal of ingots from the storage facilities of banks, was enshrined in the legislation in order to prevent the sale of ingots for production purposes, RIA Novosti points out.

Investment gold is a 999 sample metal that cannot be used in jewelry. It is sold by banks in ingots from gram to kilogram, they are made by Russian refining organizations in accordance with state, industry or enterprise standards.

The bill on the abolition of VAT on precious metals in bullion was introduced by the deputy from United Russia Vladislav Reznik. The explanatory note notes that "the current taxation system is the main obstacle to the use of precious metals as an investment tool and de-dollarization of the economy."

On March 2, 2022, the Ministry of Finance of the Russian Federation supported the initiative to abolish VAT when buying gold bars from banks and called them an ideal alternative to currency for investment.

Against the background of an unstable geopolitical situation, investments in gold will be an ideal alternative to buying up dollars, since the American currency is more volatile, subject to various kinds of risks, "said the head of the department Anton Siluanov.

By March 5, 2022, Sberbank can buy a gold bar at a price of 9124 rubles per ^[12]

On March 14, Russian President Vladimir Putin signed a federal law allowing authorized banks to sell precious metals in bullion to individuals for cash foreign currency by the end of 2022.

2015: personal income tax on all income is paid independently

Banks are usually not tax agents for gold transactions, that is, you independently calculate and pay tax on the sale of physical and impersonal metal:

Art. 226 of the Tax Code of the Russian Federation as of June 2015 establishes that the calculation of the amounts and payment of tax is made by the tax agent in relation to all income of the taxpayer, the source of which is the tax agent, with the exception of income in respect of which the calculation and payment of tax is carried out in accordance with Article 228.

Art. 228 of the Tax Code of the Russian Federation determines the need for independent calculation and payment by individuals of tax on amounts received from the sale of property (in this case, from the sale of impersonal metal) belonging to individuals on the right of ownership.

Residents of the Russian Federation calculate and pay tax on income from operations with impersonal metal accounts at a rate of 13% (paragraph 1 of article 224 of the tax code of the Russian Federation). If the metal has been owned for less than 3 years, the tax base can be reduced by a property tax deduction in the amount of up to 250,000 rubles. (Clause 1, paragraph 1 of Article 220 of the Tax Code of the Russian Federation).

If the metal has been owned for more than 3 years, income from its sale is not subject to personal income tax (clause 17.1 of article 217 of the tax code of the Russian Federation).

Non-residents of the Russian Federation calculate and pay tax on income from operations with impersonal metal accounts at a rate of 30% (paragraph 3 of article 224 of the tax code of the Russian Federation).

When buying coins, you need to obtain documents confirming the purchase of coins (receipt and expenditure cash orders), where its name and catalog number, precious metal of the coin, denomination and number of purchased coins should be indicated for each coin. It is important to keep these documents until the moment of sale of coins, because they confirm your expenses for the purchase of coins and the period of ownership.

Read more about calculating the amount of personal income tax and the procedure for paying it here.

2011: Coins exempt from VAT

Since April 1, 2011, commemorative and investment coins from precious metals, unlike bullion, are exempt from payment. VAT

Gold mining

Main article: Gold mining

History of gold

For the first time, man found gold on the surface of the earth. It was a bullion. Over time, it became clear that gold can be not just searched for, but extracted golden sand, washing it out of ordinary land. This is how the technology of mining gold from placers appeared, which has survived to this day.

The history of gold can be conditionally divided into five periods:

1. Ancient Egyptian period

By the forces of slaves and prisoners of war in the mines of ancient Egypt, under the supervision and strictest protection, the lords of Egypt of that time managed to create the largest gold mining industry in the ancient world. The amount of gold in Egypt can be judged by the volumes of this valuable metal preserved in the untouched tombs of the rulers of Egypt. Military defeats by Libyans, Ethiopians and Arabs prevented Egypt from remaining a major gold mining country.

2. Period of Ancient Greece and Ancient Rome

The Romans, following the example of the Egyptians, constantly searched for new sources of gold in their and newly seized possessions. The main source of gold mining at that time was the territories of modern Spain and Portugal. Arrugia (gold mining enterprises) were formed on their territory, which employed tens of thousands of slaves. But the main mining of gold still went through the conquest of new countries and peoples. Gold in the Roman Empire became one of the objects of the economy and financial system of the state, a means of payment, payment to mercenaries - legionnaires and redemption from barbarians, payment for luxury.

3. Period of the Middle Ages

Humanity has suffered the stagnation of gold-bearing places. So if in ancient Europe about 4,000 tons of gold were mined, then in the Middle Ages only about 570 tons were obtained.

4. New period

It began with the discovery of America. The discovery of gold in South America coincides with new geographical discoveries. The Inca Empire had in 1532 one of the largest gold reserves in the world. When the Spaniards captured King Atahuollp, he offered as a ransom a room of 7x5.5 meters filled to the very top with gold. Unfortunately, it didn't help him.

5. Our time

1928: "Golden Operation" to save Soviet gold from the United States

• The golden blockade of the USSR in the 1920s

1976: US waivers from pegging dollar to gold

The turning point was 1976 - the year of turning gold into a special investment commodity. The dollar, as well as other currencies, ceased to be provided with gold, which was decided at the Jamaica Conference, which abolished the gold standard. Since then, investors in the days of financial disasters have been looking for a quiet harbor, investing in gold.

2018: Britain refuses to return Venezuela's gold

Since 2018, the United Kingdom, like the United States and many other Western countries, has not recognized the legitimacy of Venezuelan President Nicolas Maduro. Therefore, the Bank of England, which stores 31 tons of Venezuelan gold, has been refusing to give them to the country's authorities since 2018.

In January 2020, Bloomberg reported that the Bank of England refused to give Venezuela $1.2 billion in bullion. Obtaining these funds, the publication wrote, was a priority for the Maduro government, but after the failure of negotiations, central bank officials in Caracas were ordered to stop trying.

In May 2020, Venezuela filed a lawsuit against the Bank of England: it demands the return of gold bars stored in the UK worth more than $1 billion.

The lawsuit was filed in commercial court on May London 14. The Central Bank of the country demands the return of funds, because they are necessary for contributions to the funds of the development program, UN which will help the country in the fight against the spread of coronavirus. COVID-19 Funds from the sale of gold should go to the purchase of medical equipment, medicines and food.

Gold since Hugo Chavez, who did not trust the dollar, has been a crucial part of Venezuela's international reserves. But the precious metal in fact turned out to be not very reliable: in 2011, Chavez ordered the repatriation of gold in the amount of $11 billion, but it was not completed.

The Maduro regime, during a brutal economic crisis, sold off gold reserves to avoid defaulting on external debt. The country has no other options due to international sanctions.

Why There Is Little Gold in the Universe

In July 2013, scientists at the Harvard-Smithsonian Center for Astrophysics reported why gold should be valued very highly. This is a rare metal, and rare not only on our planet, but throughout the universe. It turns out that gold was born in a special type of star collision, which is very rare.

A team of astronomers led by Edo Berger believes that all gold in the universe was born as a result of collisions of massive nuclei of dead stars that were once supernovae. This is a very rare event and very large-scale, but, fortunately, scientists were lucky to observe a short gamma-ray flash (GRB 130603B) - a distant echo of such a catastrophe^[13].

Edo Berger believes that gold is so rare on Earth not because it is our planet that is poor for them, but because gold is small in the entire universe. All due to the fact that gold is born only in the crucible of a large-scale space disaster and cannot be produced in the "usual order" inside the star, like more common carbon or iron.

Scientists came to this conclusion by studying the gamma-ray flash of a distant GRB object 130603B, distant from Earth at a distance of 3.9 billion light years. At the same time, this outbreak is the closest of all that scientists have seen in the entire history of astronomical observations. The GRB flash was 130603B the result of a collision of two neutron stars, and this collision gave rise to a specific glow that lasted for several days. Radiation analysis suggests that the collision produced a significant number of heavy elements, including gold. According to scientists, gold formed a little - about 10 masses of the moon, which is very small for the collision of such massive objects as neutron stars.

Astronomers believe that all gold in space was born precisely in such collisions, which means there is little gold in the Universe and it is possible that the concept of "universal hard currency" is wider than we think.

Interesting facts about gold

• At the beginning of 2015, most gold is stored in the United States - about 8 thousand tons. The second place is occupied by Germany. The largest number of gold jewelry is in India, and the largest personal gold reserve is in one of the royal families in the East.

• Interestingly, 85% of all gold found is still used. This is possible due to the resistance of gold to external influences, corrosion and minimal reaction with other elements, which makes this noble metal almost eternal.

• For thousands of years, man tried to invent a substitute for gold, but no one succeeded. But the dream of alchemists to turn ordinary metal into gold was realized at the end of the 20th century. Nuclear fusion produced gold from lead isotopes. However, this method was not widespread, because energy for several million dollars was spent on the synthesis of several grams of gold.

See also

Investment in silver

Notes