/ world today news/ The gold coin “St. George the Victorious” with a weight of one ounce was issued in Russia. The troyounce is the international gold weight standard. This opens up real opportunities to export gold now in the form of coins and not just bars. Why has the Bank of Russia not released coins of this weight for so long, and how profitable will their purchase be?
In Russia, the “Georgi Pobedonosets” ounce weighing 31.1 grams was finally released. This is our flagship international gold coin in an international format. So far, Russia has not released any ounce coins. The denomination of the coin is unusual – 200 rubles. But such a coin costs 155 thousand rubles. The price depends on the exchange price of the gold and the markup.
For 15 years, a quarter-ounce gold coin weighing 7.7 grams has been minted in Russia. In the world, however, the accepted measure of weight is the ounce. Why didn’t the one ounce coin appear until 2021? “We ourselves have repeatedly asked these questions to mints, we have two of them – Moscow and St. Petersburg, and the Central Bank, which manages all this. At one time, they wrote an official answer that the average salary of Russians does not allow citizens to buy an ounce coin. The average wage has risen since then, of course, but not as much as gold. But last year, it was still decided to mint a one-ounce coin, which, of course, we were pleased with, “says Alexey Vyazovsky, vice president of the Golden Mint company.
Each country that is represented in the precious metals market mints its own one ounce gold coin. In the USA, for example, an ounce of gold “Eagle”, in Austria – “Philharmonia”, in Australia – “Kangaroo”. Finally, Russia has now appeared in this list of world coins.
The export potential of “St. George” is huge. Now, however, dealers are just beginning to explore the European market – and foreigners do not undertake to estimate the possible sales volumes of new gold coins.
Much will depend on the PR of coins abroad and the quality of their minting. Because before there were situations when buyers were dissatisfied with the quality of cutting. For example, there was a scandal surrounding the Olympic coins that were minted in St. Petersburg and sold to foreigners in Sochi. Suddenly they turned black. Officially, the mint did not acknowledge the problem, citing improper storage of the coin. But unofficially, there are rumors in the market that such an attack occurred due to the fact that technical oil was added to the workpiece. The black spots that appeared on the coin are of course not a serious problem, they are not difficult to remove, but foreign investors still have an unpleasant aftertaste.
“What I held in my hands yesterday and today is a high-quality minting of a 200-ruble coin. The only thing is that it comes in not very nice cardboard boxes. I would like mints and the Central Bank to think about the design of the coins. Now we put them in clear plastic capsules at our expense. If you deliver abroad, then everything must be beautiful, it must come out like the people in the market, “says Vyazovsky.
Last spring, in the midst of the first wave of coronavirus with strict quarantine, all Russian gold, be it coin or bullion, was simply taken off the market. In the second quarter of 2020, a historical record was even set: Russia earned more from gold exports than from gas exports. Of course, at the height of the pandemic, gold prices soared. According to the expert, no one is immune from repeating the situation in case of a new deadly strain of the virus. Then “St. George” will be purchased even with an even higher markup than now, according to Vyazovski.
Stock speculation aside, gold coins in general should be viewed from a long-term investment perspective.
“If you are serious about investing in precious metals, then it should be done regularly. That is, allocate 20% of your monthly or quarterly income and buy coins regardless of prices and quotes. We have an elderly customer who has been buying quarter ounce coins for 10 years. He started buying the coins when they were worth 8-10 thousand rubles, and now they are worth about 40 thousand rubles. The client said that he earned this way for the first year of his grandson’s education at MGIMO, ”says Vyazovsky. The bottom line is that gold rises sharply, especially during times of crisis, and falls during booms in the global economy. But when the investment horizon is long, these market price fluctuations are not so important.
“In the long term, gold only goes up. When in 1971 the Americans removed the peg of the dollar to gold, the so-called gold standard, gold was worth 35 dollars per ounce, and now it is 1,800 dollars, “says Viazovsky. “Coins are interesting to buy in the long term, speculative reselling will not be beneficial. They are also valuable for collectors and connoisseurs of rare things,” agrees Yevgeny Mironyuk from Freedom Finance.
Gold can be bought in both bars and coins. What is more profitable? “The market value of one ounce of coin will be 155 thousand rubles, the nominal value of gold in a coin at the current exchange rate is much lower – 135,000 rubles. An ounce of retail gold can be bought for 140,000 rubles, which is much cheaper, “says Mironyuk.
The prices for the coins are determined by the Central Bank, which is the customer and sells the coins to the primary sellers, who then resell them further. Now, the margin on the coin is about 15% over the exchange price of gold, which is the price at which an individual can buy a coin from a dealer or bank, Vyazowski says. “That’s 4% more than the premium for the quarter ounce coin. Although both there and there the gold is the same. Probably the logic of the Central Bank is that the one ounce coins have just entered the market and now they are being bought by the biggest fans and numismatists who are willing to pay more. But as soon as the market is saturated, the margin can fall – and there will be, as usual, the exchange price of gold plus a margin of 11%, “says Vyazovsky.
It is curious that the margin on Russian coins is usually slightly higher than that abroad. For example, the premium for the Austrian Philharmonic is 7-8% compared to the price of gold on the stock exchange. “Perhaps this is due to the fact that our coins are more expensive. Maybe because in our country everything is highly regulated and this always generates additional costs, “argued the interlocutor.
However, bullion coins have one important advantage over gold bullion. When you buy a coin from a bank, numismatic shop or at an auction, you don’t have to pay 20% VAT. “This more than makes up for the difference with buying gold bullion, which we estimate is about 11%,” says Mironyuk. However, there is hope that this year VAT will be abolished on investment ingots, but not earlier than September.
The bottom line is that it only makes sense to invest in bars and coins if you plan to sell them in a few years or even decades. “The coin can bring additional profit by increasing the collectable value. The disadvantage of investing in coins is the need for the most careful storage, because scratches, scuffs will automatically reduce the price. Another disadvantage is limited liquidity. This means that buying a coin is easy, but selling is often much more difficult,” says Alexander Bakhtin, investment strategist. Selling in banks is not profitable, it is better to do it at dealers or at auctions, Vyazovski said.
Translation: V. Sergeev
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