How to Invest in Gold in South Africa

Gold Investments South Africa

When it comes to investment in South Africa, Gold is without a dilemma is a paramount option, and this became evident in the year 1886 when the world’s biggest gold reefs was unearthed at Witwatersrand. Later on, Africa went through a significant gold rush, and this led to the foundation stones of Johannesburg, South Africa’s largest city. Do you know South Africa is the biggest extractor of Gold in the entire world? Additionally, it is the largest gold refinery known as the Rand Refinery.

Good investment is not as easy as you might perceive

Investing directing in commodities like Gold is far more baffling that buying bonds & stocks. One of the biggest reasons is that bonds and stocks are liquid investment, and can easily be transferred and accessed without much fuss. Traditional commodity, Gold is complicated to invest-in, owing to uncertainty about the market in both near and long-term future.

Investing in Gold in South Africa

During the epoch of the global financial crisis, and when the world’s economy has fallen apart, the gold coins were thriving investment commodity. The reason was the share markets then was quite vulnerable, and they were looking for a kind of investment that can withstand the apocalypse.

In the last couple of years, the prices of gold in South Africa have remained somewhat steady-but the popularity of gold coins has faded away.

Broadly, there are two ways of investing in gold in South Africa. One option is buying gold companies share, as the gold investment can easily be traded.

Recently, the legislation in South Africa is letting investors invest in gold bars.

There are two kinds of coins:

There are a plethora of perks buying gold coins in South Africa. They are quite easy to trade, while no capital gains tax is there on coins transactions.

Add to that, gold coins can be bought internationally, and these coins maintain the value of the dollar, till you wish to exchange the coins.

However, the shortcoming that comes with buying gold coins is, unlike other forms of investments, the gold coins don’t provide you a continuous source of income. On the other hand, with shares, you get dividends.

So, in a nutshell, you are not after a continuous income flow, in that case, the gold coins can prove to be an ultimate insurance policy when you are in great need of money.

Now, there are two gold coin types-old and modern coins, and the rarity determines the worth. 

The collectible coins are divided in two categories. Proof coins such as the Nelson Mandel coins, they have a global legal tender worth. The natural mint typically manufactures these coins, and central bank is responsible for its regulation. The best part, no VAT is charged on the proof coins.

The second coin type is the Medallions, but they are not legal tender. Any accredited mint is responsible for the minting of Medallions. Buying these coins is like investing in gold or silver, as VAT will be charged.

The price of such coins are often volatile and as an investor, the rand movement.

While collectible coins prices typically are steady, several types have shown exceptional performance –further helped by no VAT charge.

Things to Consider When Investing in Gold Coins:

As a rule of thumb, it is a no-brainer to avoid buying too many gold coins, even if anticipate the prices to surge progressively as an upward slope. To boil down, don’t put all your investment money into gold coins. Experts believe that the 10 to 15 investment percentage is the best strategy.

  • Find a Trustworthy Dealer

When you’ve decided on how much you want to invest in gold coins, the next step is selecting a credible dealer. There was a massive boom when it comes to god traders in South Africa, shortly after the worldwide financial crisis.

Inquire whether your prospective gold trader is a part of an association like the South African Association of Numismatic Dealers. Such dealers are generally required to adhere to business ethics and follow a code set up by the association, and the association will settle disputes. So, it is advisable to do homework before you commence your search for buying gold in South Africa because your one mistake can prove to be costly.

Get to your known, who have recently invested in gold, and their first-hand experience will ensure you stay clear of every possible hurdle and hassle when buying gold.

  • Do a Through Price Check

Before you buy a gold coin from just about any trader, it is advisable to do a comprehensive price analysis to save every penny possible. The markups cost on the gold coins varies massively from one dealer to another. So, it is imperative to talk to your prospective gold dealer why they are charging extra, in case the value of the coin is high.

You also need to know that the Krugerrand coins are somewhat 2 to 5% higher than the amount of gold It contains.  Now, coming to the collectible coins, they are about 500% more expensive than the worth of metal it contains. Usually the price variation is based on the demand and desirability.

  • Understand the Risks Involved

Understanding the risks involved with gold investment is a fundamental practice. The major threat could be the sudden collapsing of the gold prices. 

  • Storage

Storage is another factor you need to take into account when investing in gold. You probably don’t want to travel places, carrying the briefcase with a large volume of gold coins. There are so making storage options you need to consider; such as storing your gold coins in the bank locker is traditionally the right choice. Again, talk to people who have vast experience in investing in gold.

  • Stay Clear of Scams

The cases of counterfeit coins, in recent times, have been on the rise. Also, be wary of exclusive discounts and bargain deals.

At the End

So, after going through the entire article, you probably come to know everything about investing gold in South Africa. Also, we would love to hear from you, share your views in the comment section of this blog post.

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