Ingots from the manufacturer – Newspaper Kommersant No. 234 (7435) dated 12/16/2022

In the near future, factories that produce gold bars will be able to sell their products to citizens and compete with banks, which are still monopolists in this market. The corresponding law was adopted by the State Duma in the second and third readings. The authors of the law are confident that as a result, the purchase and sale prices of bullion will converge and gold will become more accessible to citizens. Banks are finding reasons not to be afraid of competition yet.

On Thursday, December 15, the State Duma immediately adopted a bill in the second and third readings, according to which the sale of precious metals and precious stones to individuals by refineries and Goznak is exempt from value added tax (VAT). Previously, banks received such an exemption (see “Kommersant” dated March 2). According to the author of the bill, a member of the State Duma Committee on Budget and Taxes Vladislav Reznik, competition in this market will increase. “After the law comes into force, we will not see spreads for gold bars of 7–10%, as banks are now setting,” he said. As a result, gold will become more liquid, and this may increase both the demand for bullion and the turnover of this instrument.

This year gold sales as bullion (see “Kommersant” dated August 4), and in the form of investment coins and the opening of metal accounts have increased markedly compared to previous years (see “Kommersant” dated October 5). In the explanatory note to the bill, the demand for gold bars was estimated at 50 tons. Deputy Finance Minister Alexei Moiseev, who visited the Prioksky Non-Ferrous Metals Plant at the beginning of the week, noted that 30 tons of gold had been sold by the end of November, and “the New Year’s season will bring the volume to 40 tons.” In the RSHB, the volume of sales of ingots to individuals in the nine months of 2022 increased 50 times compared to last year, at Sberbank since March 1, sales increased by more than 17 times, at Realist Bank – 15 times.

The industry sees the passage of the law as just the first step towards making bars available to the general public.

“There are only 11 refineries in Russia, and a detailed study of the regulatory framework is required to allow them to organize retail sales taking into account all existing requirements for controlling the circulation of precious metals,” says Artem Sokolov, managing partner of the Sokolov jewelry holding, which includes the refinery. Nevertheless, according to him, this decision enables businesses to create new economic models, removes the barrier that prevents manufacturers from competing with credit institutions, and increases competition in this market. At the same time, Vladislav Reznik suggested that factories could open their own retail chains.

According to Yevgeny Safonov, director of the private capital department at PSB, interest in gold bars was moderate back in spring, but since the introduction of tax incentives – the abolition of VAT in March and personal income tax in June on the sale of bars – demand has grown significantly. In addition, as noted in Sberbank, the growth was also associated with a change in the list of “investment instruments available to individuals.” In particular, many clients of banks and brokers had foreign securities frozen abroad, and severe restrictions were imposed on transactions with the currency of unfriendly countries. Elena Magera, head of the department for operations with precious metals at Sovcombank, notes that gold bars are now used by the population for investment purposes, as an alternative to foreign currency.

At the same time, representatives of credit organizations are skeptical about the fact that granting refineries the right to sell gold bars to individuals will lead to a decrease in demand for them from banks. According to Vladimir Elmanin, Chairman of the Board of Realist Bank, a very slight decrease is possible, since refineries do not have the infrastructure for the mass sale of ingots to the population. “Banks selling bullion always set a buyback price, and it is not known whether the refinery will buy back its products, while the investment attractiveness of this product lies in the fact that it can be sold back,” explains Elena Magera.

Maxim Buylov