Why invest in gold

Why invest in gold?

Gold was, is and will be. Besides yellow metal there is no currency in the world that has served as universally respected currency for a long time. It has provided people with financial security for thousands of years, it impresses art admirers and investors. It would be difficult to find another conservative investment that will spread the risk of loss and increase the value of your finances above average in the medium to long-term period.

Is it worth investing in gold?

Besides an interesting appreciation, diversification of your portfolio is one of the main reasons for investing in gold. Your investment portfolio should be diverse and its individual components should not be interdependent. If one type fails to profit, a completely different type will earn you money. The advantage of gold is that its price development is generally independent of other assets (stocks, bonds, real estate,…), so the yellow metal cannot be adversely affected by them.

Another argument for investing in gold is to preserve real value. This means that gold has historically maintained a constant value in relation to comparable goods - for example, one troy ounce of gold was enough to buy a quality toga in ancient Rome, a tailor-made party suit during the great economic crisis and you can get the same for it today. In contrast to this example, the value of money decreases significantly even in a relatively short period of time. While one US dollar was enough to buy ten loaves of bread during the Great Depression, today you can hardly buy a bar of chocolate for it. Gold has preserved its value for millennia, the spending power of the dollar has fallen by 95% in 80 years.

The increase in the value of investing in gold is determined primarily by one of the basic economic principles - the conflict of offer and demand. On the offer side, there is gold mining. Surveys of mining companies clearly show that there are fewer and fewer sources of gold. And that's not all. Another trend is the declining quality of reserves - the rock that remains to be mined has a low gold content, therefore, it is increasingly difficult to find deposits that would be worth mining at all. On the demand side, there is an industry that applies the unique physical and chemical properties of gold in the production of key technologies, without which we can not imagine our lives. There are also goldsmiths and jewelers. Of course, we must not forget investors, whose demand for gold is constantly increasing, and the key players are still the states and their central banks, which accumulate gold as a reliable reserve… What does all this mean? The value of gold is on the rise, because gold reserves are declining and the amount that is mined and not consumed is wanted by smart investors.

Although it is no longer common to pay with gold today, its liquidity is very high and investment gold can be monetized virtually anywhere in the world, even in times of crisis, thanks to tradition and reputation. Therefore, gold is an ideal alternative means of exchange in the event of a failure of the paper money system.

How to invest in gold?

Investment ingots are available in many different weights and sizes and are highly liquid. The same is in case of foreign investment coins, which are issued in a number of nominal values. This allows you to easily regulate how much money you invest. They offer a better price per gram, but they are 100% dependent on fluctuations in the price of gold on the stock exchange.

Commemorative coins of the Czech National Bank or coins and medals of the Czech Mint add to gold a dimension of investment in art. This compensates fluctuations in precious metal prices and the burden of value added taxes. The limited schedule of issuance and top processing make coins and medals a sought-after collector's item, and the value of a comprehensive collection is many times greater than the value of a precious metal. Investing in coins and medals is an interesting alternative for those who want to save their funds in precious metals, but in addition to physical metal, they also want to own something that has its artistic value, which will increase within the time.

Learn more here.

In addition to the traditional purchase of investment products, the Czech Mint also offers you the opportunity to gradually invest via Gold Account.

Taxation of investment gold

Investment gold, i.e. gold ingots (certified, with a correct designation and purity of at least 995/1000) and coins (with a purity of at least 900/1000, minted after 1800, which are legal tender and whose selling price does not exceed the free market value of gold content by more than 80%) is exempt from VAT by law. However, gold medals are burdened with VAT of 21%.

The sale of gold is exempt from income tax in the case of natural persons. However, frequent and repeated sales could sound like an illegal business. If gold is included in business assets for the performance of business activities, income tax will not be applied to sales only in cases where it has been a part of it for more than 5 years.