The Russians have increased their personal gold reserves: the dollar will displace

Next year, the most expensive precious metal will change the structure of citizens’ savings

Demand for investment gold from individuals from January to December may increase seven times compared to 2021. This was announced by the Deputy Minister of Finance of the Russian Federation Alexei Moiseev. In early March, Finance Minister Anton Siluanov himself recommended that citizens use this precious metal as an alternative to savings in dollars. To stimulate interest in such an investment instrument, on March 9, Russian President Vladimir Putin signed a law that exempted from VAT operations for the sale of precious metals in bullion by banks to individuals. What other reasons are behind the sharp increase in the interest of citizens in the precious metal and what they risk by choosing this type of savings, experts told MK.

The Ministry of Finance of the Russian Federation predicts an increase in demand for investment gold up to 40 tons by the end of 2022. By the end of November, the Russians had already bought 30 tons of the precious metal. For comparison, for the entire last year, citizens purchased only 6 tons of gold. According to Moiseev, the demand for such an investment instrument will increase by about seven times this year. “Last year, sales were 6 tons, now, in fact, at the end of November – 30 tons,” he said during a briefing on December 14. “We expect the pre-New Year season to bring this figure to 40 (tons), let’s hope.” Russians have the right to freely acquire gold bars in any quantity. On sale you can find them in very different weights – from 1 gram to 1 kg. Their technical characteristics are approved by a special goth. In addition, all ingots are sold together with certificates confirming their origin, which must contain the name of the manufacturer and country, the unique number of the ingot, sample, weight, year of issue of the ingot and signatures of responsible persons.

“This year, there have been several peaks in the growth in demand for gold bars and coins among investors,” continues the conversation, Associate Professor of the Department of State and Municipal Finance of the Russian University of Economics. G.V. Plekhanov, Master of Laws Mary Valishvili. – We saw the first jump in February-March 2022, which is characterized by investors’ expectations regarding the growth in prices for gold and other precious metals. The second peak of demand is recorded from the end of September.”

It is curious that a third of the purchases of citizens account for fairly large ingots. According to the Acting Director General of the Prioksky Non-Ferrous Metals Plant Sergey Slyusar, the main interest – more than 50% – among Russians is ingots from 1 to 20 grams, about 30% of demand falls on ingots “of 100 grams and kilograms.” A kilogram bar of gold in the largest bank in our country in early December could be bought for more than 3.8 million rubles. The price of ten-gram bars varies from 33 thousand to 36 thousand rubles. At the same time, it should be understood that buying one 50-gram ingot in a bank will be cheaper than 5 ten-gram ones, since their cost includes manufacturing and storage costs. According to Andrei Morozov, co-founder of the Golden Invest Club, buying gold is profitable, despite bank commissions and price volatility. The fact is that gold traditionally grows in price during a crisis and is the most optimal alternative to the dollar.

Interest in gold has grown due to a combination of several types of reasons at once – from the macroeconomic situation in the country and the currency restrictions of the Bank of Russia to legislative indulgences for the purchase of precious metals. As Mark Goykhman, chief analyst at TeleTrade, noted, demand for gold rose sharply in Russia in 2022 due to increased geopolitical risks, accelerating price growth, restrictions on the purchase and use of foreign currency, on bank cards, and the uncertainty of the future. In addition, in recent months there has been a decrease in exchange rates against the ruble, deposit rates, stock quotes, and real estate prices. All this reduces the possibility for Russians to save savings in the usual tools. This spring, the Ministry of Finance advised citizens to invest in precious metals. But the record growth in demand is hardly associated only with the recommendation of the department. An additional factor stimulating demand was the abolition of VAT on the purchase of precious metals by individuals from March 1, 2022. On July 14, Vladimir Putin also signed a law exempting individuals from the sale of gold bullion from personal income tax for 2022 and 2023. A non-standard reason that played into the hands of the demand for precious metals is the ability of individuals to buy a small ingot, take it to a jeweler for individual production and receive a finished piece of jewelry according to the author’s design without VAT. “Starting from the new year, such an opportunity should disappear,” recalls Artem Tuzov, Executive Director of the Capital Market Department of IC IVA Partners.

The main danger that Russians should be aware of when buying gold bullion is the possibility of losing such property due to theft. Therefore, it is worth keeping it in a bank cell. The second risk is that the price of gold is perfectly able to fall between crises, so only patient investors can make money on gold, the expert emphasized. The third risk of gold has to do with its physical properties. “It is worth at least taking care that the ingot is not damaged,” says Valery Yemelyanov, an expert on the stock market at BCS Mir Investments. – Gold is a very soft metal. Even fingerprints greatly reduce the cost of selling it back to the bank.” If we talk about moderate investments in gold, then it is usually recommended to have about 5% of your savings in the precious metal, with a maximum of 10%. And ideally, buying it in an impersonal form, the expert advised.