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Frequently Asked Questions
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- Frequently Asked Questions
What are the measuring units of gold?
What are the measuring units of gold fineness?
What are the gold investment advantages?
Are the transactions of investment gold levied by taxes?
What should be the preference – coins or bars?
Is jewellery investment object?
What is investment gold?
Investment gold - is a high carat gold, which is officially produced by gold producing countries and is available in bullion bars or in bullion coins. The market value of such coins depends largely on the content of gold, rather than their rarity or face value of coins marked on the front side. The investment gold is considered to be the bullion with purity not less than 995 parts per 1000, which is a 23.88 carats, as well as gold coins produced after 1800 and of purity at least 900 parts per 1000.
What are the measuring units of gold?
Gold in the international practice is traditionally measured by weight in troy ounces, designated oz:
1 troy ounce (1 oz) = 31, 1034768 grams
1 kilogram = 1000 grams = 32,15074656 troy ounces (32.15074656 oz)
The historical Hebrew unit of weight - shekel is used less often to weigh the gold coins throughout the world. The most frequently occurring are 1 / 4 and 1 shekel coins.
1 shekel = 11,4 grams = 0,36652
1/4 shekel = 2,85 grams = 0,09163
There are sometimes also other units of measurement of gold used in the world, for example:
1 tola = 0.375 oz = 11.6638 g used in Luxembourg
1 tael = 1.20337 oz = 37.429 g used in China and Hong Kong. In Taiwan the same unit of measurement is of different weight: 1tael = 37.50 g
1 bath=0.4901 oz=15.244g used in Taiwan
What are the measuring units of gold fineness?
The fineness of precious metals is measured in carats. Pure gold is 24 carats. Therefore the real fineness of gold is determined as the percentage ratio against 24 carats.
Throughout the former USSR and Eastern Europe, including in Latvia, the other measuring unit is used – the proof (standard). The proof corresponds to the percentage contents of gold. The highest proof 999 corresponds to 24 carats.
|
24 |
K |
= |
999 |
purity |
|
22 |
K |
= |
916 |
purity |
|
20 |
K |
= |
833 |
purity |
|
18 |
K |
= |
750 |
purity |
|
16 |
K |
= |
625 |
purity |
|
14 |
K |
= |
585 |
purity |
|
10 |
K |
= |
417 |
purity |
|
9 |
K |
= |
375 |
purity |
What are the gold investment advantages?
- Gold protects you from inflation and currency fluctuations. Many experts recommend placing 10-20% of your investment portfolio into gold.
- Gold is an efficient asset for retention of your savings. It retains its long-term value. In contrast to the price and currency fluctuations, gold continuously reverts to the balance of its purchasing power. Generally, investment in gold is focused on maintaining savings in the long-term, rather than quick profit-making.
- Gold has a very high liquidity and it has the international market. It is easy to buy and sell it in all countries. Liquidity of gold is much higher than that of any other types of investments, such as real estate, sales of which takes much more time.
- Money may lose its value as a result of inflation, unreasoned national economic policies or some other external macro-economic and political circumstances. Under such circumstances, the government may be tempted to make extra money issues, and theoretically the emission and release of bank-notes may be endless and the money loses its purchasing power. Gold sales are limited to global gold stocks and gold mining. According to the estimate of some experts, the quantity of gold in world per capita is less than one ounce of gold (1 ounce is 31 grams).
Are the transactions of investment gold levied by taxes?
According to the Directive 98/80/EC of the European Union of 12 October, 1988 and the Latvian Law on the Value Added Tax, the investment gold is not subject to VAT tax in Latvia and other European Union Member States. Investment gold is exempt from import tax and customs duties on imports into Latvia and other countries, which are not members of the European Union.
What should be the preference – coins or bars?
Investment gold and other precious metals are available in the form of bars and coins. The bars, heavier than 1 kilogram, are usually chosen by the big investors and banks. The gold bars and coins of weight over 1 ounce (31.1035 grams) are most popular among the private investors. The commission on purchase of this gold is low, as the price of such bars and coins is attractive - it differs very slightly from the value of the actual gold content. When purchasing coins, weighing 1/2, 1/4, 1/10 and 1/20 ounce, customers pay higher commission percentages, therefore they are not as profitable for investments.
Is jewellery investment object?
Jewellery is not the investment gold. Jewellery has artistic value, and its purchasing price is several times higher than the intrinsic value of gold content. When you want to sell a jewellery article, normally it is the other way round – the price is several times lower than the intrinsic market value of the gold content. The price of investment gold is closely approximated to the prices at international stock exchanges, where the price is determined on the basis of demand and supply ratios. Both when purchasing and selling, the difference with the stock exchange price will be only a few percent. In case of investment gold, the actual gold content, rather than the subjective evaluation, determine the value of the bars and coins and make them into objects of investment.
