Investing in gold: physical gold the most expensive

Gold has gained 13 per cent in value since the beginning of the year, and almost 16 per cent in a 52-week comparison, now standing at €68 per gram (as at 4 April 2024).This could tempt some investors to sell part of their gold holdings - whether to take profits or to increase their own liquidity. However, anyone who has invested their gold in smaller bars or coins will have to reckon with a considerable loss of profit in the event of a sale.

Bullion: purchase prices are up to 15 per cent below selling prices

As a general rule, the smaller the denomination of gold bars, the higher the buy-sell spread. For very small sizes such as one gram, the purchase price can be up to 15 per cent below the current selling price at a precious metal dealer. For gold coins – e.g. 1/10 ounce Krugerrands – it is up to 13 per cent. This reduces the profit considerably and calls into question the point of selling small amounts. As with bigger gold bars, the trading margin decreases: for a 10 gram bar it is some 5 per cent, for an ounce of gold only 3.6 per cent. Nevertheless, even with larger denominations, the trading margin reduces the expected profit. And this is not taking into account the costs for secure storage of gold bars or coins; safe deposit boxes at banks or precious metal dealers can cost several hundred euros per year if they are to insure a high sum.

Xetra-Gold: 0.1 per cent trading margin and 0.3 per cent custody fee p.a.

Gold-backed ETCs are significantly more cost-efficient than gold bars, in terms of both trading and storage. With Xetra-Gold, the ETC on Xetra, the ask-bid spreads are generally no more than 0.1 per cent. Xetra-Gold also securitises the right for every investor to demand delivery of the corresponding amount of physical gold at any time. However, this does incur additional fees.