Golden Shield: Russia's Unique Approach to Precious Coin Investment

Resurgence of Interest in Gold: Global and Russian Trends

Recent years have been marked by a rapid recovery in demand for `physical gold` in coins and bars among `retail investors` worldwide. According to a report by the World Gold Council (WGC), more than 222 tons of this `precious metal` were acquired by the public from July to September 2020 alone, which was one and a half times the figures for the previous year.

Russia also saw an increase in demand for `investment coins` and bars, although volumes were more modest, not exceeding 1.3 tons during the same period. Bank clients more often choose `gold coins` due to their high liquidity. Their price is usually comparable to the exchange value of the metal they contain.

Gold Rush in the Post-Pandemic Period

The third quarter of 2020 became a period of significant growth in `gold investments` among `retail investors`. WGC statistics confirm the purchase of over 222,000 kg of `physical gold` in the form of coins and `gold bars`, which is 150% higher than the same period in 2019. This surge was due to the beginning of the global economy's revival after the lifting of quarantine restrictions and the partial restoration of supply channels disrupted by the pandemic.

The highest `investment` demand for `physical gold` was recorded in China, where the sales volume of `investment coins` and bars to retail buyers amounted to 60.5 tons, an increase of 36% compared to 2019. Surprisingly, Turkey took second place in the demand for `precious metal`, purchasing over 48 tons of `gold` – seven times more than in the same period last year.

Demand for `gold bars` and `investment coins` among Russians also significantly increased in 2020. Private `investors` acquired 1.3 tons of these `assets` in Q3, which is 1.5 times higher than last year's figures. From January to the current moment, 3.7 tons of `physical precious metal` have been purchased in the country, comparable to the entire volume of `investments in the yellow metal` for the whole of 2019.

This growth is explained by concerns about inflationary processes caused by the increasing unbacked mass of paper dollars and euros. Under such conditions, the price of `protective assets` like `gold` will inevitably rise, which prompts `investors` to acquire the `precious metal` now.

Secrets of Choice: Investment vs. Commemorative Coins

`Precious metal coins` come in two main types: `investment` and commemorative. The selling price of both options is close to the value of the `precious metal` contained within them. However, there are significant differences between them that affect their `liquidity` and investment attractiveness.

`Investment coins` have greater `liquidity`, as their purchase and buyback prices are determined by banks. The difference between these prices, known as the `bank spread`, typically ranges from 10% to 15%. This difference covers not only the commission markup but also the costs of transportation, storage, and insurance of the `precious metal`.

By acquiring `gold coins` with a long-term perspective, typically three years or more, `investors` can realize significant profits. For example, `investment coins` purchased in January 2020 could have already yielded high returns upon sale, considering the increased price of `gold` over the year and the strengthening of the US dollar against the ruble. Such acquisitions are rarely part of momentary speculations.

Features of Investing in Russian Gold Coins

The sale of `precious metal coins` in Russia is handled by major financial institutions such as Lenta Bank, Sber, RSHB, VTB, Otkritie, Gazprombank, and others. Among `retail investors`, the domestic `investment coin` `George the Victorious` is most popular.

“George the Victorious”: The Flagship of Russian Investments

The `"George the Victorious" coin` has a nominal value of 50 rubles and contains 7.78 grams of pure `gold` 999 fine. The selling price varies depending on the bank: in early November 2020, it ranged from 42,500 to 46,600 rubles. The value of `coins` also depends on their place of minting; for instance, products from the Moscow Mint (MMD) are approximately 2.4% more expensive than those from the Saint Petersburg Mint (SPMD), which is also considered when selling the `coins` back to a Russian bank.

Legendary Soviet Chervonets

In the market for `gold investments`, you can also find `gold chervonets`, produced for the 1980 Moscow Olympic Games. These `coins` were issued in millions of copies and, in terms of `gold` content (7.74 grams), are similar to the `George the Victorious`. Their price in banks ranges from 41,000 to 45,000 rubles, but they are encountered much less frequently.

Rules for Storing Gold Coins

`Storing coins` made of `gold` requires adherence to certain rules, as their condition largely determines their subsequent resale value. Even a fingerprint can remain on the `metal` forever, so it is recommended to touch `coins` only with special cotton gloves.

1. Touch coins only with special cotton gloves to avoid fingerprints, which can remain on the metal forever.
2. Store `gold coins` in their original transparent plastic capsules provided by manufacturers to prevent stains and other damage.
3. Avoid opening the protective capsule, as this significantly increases the risk of microscopic defects and, consequently, reduces the subsequent resale value of an `investment` or collectible piece.