Buy physical gold: investment, collection or jewelry, how to invest?

Free tribune

The course of precious metal shines like never before and you don’t know how to acquire it? The explanations and advice of Clémentine Cazalets, economist at the Monnaie de Paris, to invest in physical gold with full knowledge of the facts.

The multiplication of crises in recent years (COVID, geopolitical conflicts, trade war) has handed over gold under the spotlight. In five years, Its price has been multiplied by two Thanks to its quality of refuge value par excellence. And interest in gold does not only concern central banks or professional investors; Many individuals have returned to gilded metal, whether to sell in order to take advantage of high prices, or to buy them in view of its impressive performance in this context of instability. In the United States, the Costco supermarket chain began to sell ingotins in June 2023 and success was immediate. The distributor recently announced that customers will now be limited to the purchase of an ounce of gold (about 31 grams) per checkout to be able to meet a request that does not weaken.

In Europe, after a spectacular increase in purchases in the early 2020s, individuals took advantage of the prices soar to resell their gold. But since mid-2024, the request has accelerated again despite the historical records affected by the Gold price. In the 1st quarter of 2024, net purchases (that is to say the gold bought less the gold sold) of Europeans exceeded 26 tonnes of gold. To take advantage of the dynamism of the physical gold market, it is essential to know the main characteristics of each product : investment, collection or even jewelry.

The physical gold market is essentially made up of investment gold, in the form of coins or ingots in pure gold. The most common format are the parts of an ounce, the reference measurement for precious metals. The most popular pieces are those struck by official institutions; They therefore have a facial value and have legal lessons but their real value depends on the weight of gold they contain. The price for the purchase or sale of such a part will be very close to the price of gold; The difference is called the “premium” And includes the manufacturing cost as well as the seller’s margin. This is the reference product to invest in physical gold because its value evolves exactly such as the price of golden metal, but there are other products on the physical gold market.

“The purchase of a collector’s part is also a financial logic”

Another option for investing in precious metals is the collectors. As with investment gold, collectors are pure gold coins, struck by official monetary institutes. On the other hand, their price does not depend only on their weight in gold but above all on their numismatic value: rarity, state of conservation, striking year, quality of drawing … Unlike investment parts, whose premium is generally low, the premium of collection currencies can be particularly high if it is a very sought -after piece. The purchase of a collector’s item is of course particularly suitable for passionate numismatics (collectors), but is also a financial logic. A collector’s buyer goes betthe historical dimension or even future demand to hope to see its piece take value, regardless of the evolution of the course of precious metals.

Finally, it is possible to take part in the physical gold market thanks to jewelry items. In France and more generally in Europe, it is not common to buy jewelry for investment purposes. But it is a widespread practice in many countries, especially in Asia for cultural, but also economic reasons (the more limited financial offer offers less savings products available to individuals to keep their assets). The phenomenon is so important that the price of gold is statistically higher in the months preceding the major cultural and religious events of these countries. For example, there is an increase in the golden price between November and February, which corresponds to the wedding season and the Divali (or Diwali) festival in India as well as in the Chinese New Year, or in August as the holidays of the holidays National Day in China. If it is rare to buy jewelry for investment purposes in Western countries, the resale of old jewelry is however rather widespread, especially during high price periods. A seller must however keep in mind that pure gold is particularly rare in jewelry: gold is a very malleable metal, it is therefore generally combined with another metal (silver or copper for example), which necessarily impacts the price of resale.

In a golden market in full effervescence, it is essential to understand the specificities of each type of product: investment, collection or jewelry, which respond to different logics, with very distinct rules and prices.