Russians bought tens of tons of gold: the pros and cons of investing in the precious metal are named

The margin was about 37 percent per annum

Last year, Russians purchased 95 tons of gold, which is only slightly lower than the 2022 figure. The volumes in both cases are impressive: the interest of individuals in the yellow metal has grown manifold recently. It is obvious that the demand for it will continue to grow, although not at such an explosive pace. Meanwhile, the practice of investing in gold as a protective asset has, in addition to its advantages, its own risks. At the moment, in the context of sanctions and geopolitical uncertainty, the former clearly outweigh.

According to Deputy Minister of Finance Alexei Moiseev, the main volumes of purchases in 2023 occurred in the fourth quarter, when exchange rates were introduced on gold and a number of other goods from October 1. “And this coincidence, of course, puzzled us,” the official admitted. Previously, the volume of purchases of precious metals by individuals was systematically declining throughout the year.

Export duties linked to the ruble exchange rate are valid until the end of 2024. They range from 4% to 7% of the customs value, depending on the exchange rate of the national currency, and will be charged at a rate of 80 rubles per dollar and higher. The main driver of consumer demand for gold was the law that came into force in 2022 on the abolition of 20% VAT on the purchase of bullion by individuals. A year later, another legal document came into force, according to which Russians can purchase gold bars without VAT directly from refineries and Goznak: the latter began selling them in May 2023. In addition, citizens were exempt from paying personal income tax (13%) when selling bullion in 2022 and 2023.

The benefits made themselves felt: in 2022 alone, individuals bought 100 tons of precious metal from credit institutions. This is 15 times more than previously, when the annual figure was about six to seven tons.

“In 2024, consumption growth will continue,” says Alexey Vyazovsky, vice president of the Zolotaya Plata company. – This is largely due to the tightening of the sanctions policy towards the Russian Federation. Due to unprecedented pressure from the United States, Turkish banks began to close the accounts of Russians, moreover, to suspend interstate payments. President Biden recently signed legislation that greatly simplifies the process for triggering secondary sanctions against foreign banks. This leads to further defragmentation of the global financial system. And relocant Russians (primarily the rich) will return their capital to the country, partially investing in gold.”

Today, it’s definitely worth investing in the yellow metal, assures Vyazovsky. According to MK’s interlocutor, if a person bought gold in January 2023 and sold it in December, his margin in Russian currency was about 37% (how much the price has increased over the year). As for the prospects, if by December we receive 6,500 thousand rubles per gram, that is, an annual increase of 500 rubles for each gram purchased, this will already be a good profitability.

“Today, gold is trading within 6 thousand rubles at the Bank of Russia exchange rate,” notes Alexander Shneiderman, head of the sales and customer support department at Alfa-Forex. “Although this is not a historical maximum, it is quite a high figure. However, there are certain risks associated with investing in gold that you need to keep in mind. For example, it does not allow you to protect your assets over short distances: market volatility is too high, and interest in precious metals is speculative. For example, in the spring of 2022, the price jumped sharply to 7 thousand rubles and higher per gram. Accordingly, there is a risk that after a year or two you will end up losing money.”

By the way, another risk is associated with storing gold: if you buy physical gold, there is some chance, albeit small, that it will be stolen from you. If you buy gold through an unallocated metal account (UMA), then if the bank’s license is revoked, your losses will not be covered. Mandatory deposit insurance does not apply to compulsory medical insurance.

It is better to purposefully invest in gold over a horizon of five to ten years, says Shneiderman. At the same time, invest only large sums, provided that investments are diversified and there is confidence that the investor will not need this money earlier. According to Shneiderman, in 2024 the volume of purchases of yellow metal by Russian individuals is unlikely to increase, rather, on the contrary. Because its potential profitability may be lower than that of other financial instruments available to the population – ruble deposits or, for example, real estate not purchased with a mortgage.