Investment greetings, friends! Let's talk today about what an impersonal metal account is, what its pros and cons are, how to open and how to close compulsory medical insurance and how to generally make money on it. I have already partially touched on this issue in an article on investing in gold. But I decided to take a closer look at the aspect of opening an account for buying and selling “paper” gold, since compulsory medical insurance is more in demand than bars or coins.
How can you invest in precious metals?
There are three main ways to invest in precious metals, including gold. The first is to just go and buy a bar. In Sberbank, for example, this can be done without problems. Every whim is a bar for your money.
It sounds simple, but this is where the problems begin. First, liquidity. It is difficult to sell an ingot; banks often underestimate the purchase price, and jewelry stores will only accept it as scrap at the appropriate price. Secondly, the ingot will have to be stored somewhere. Somewhere - in a safe at home or in a bank. And these are expenses. And thirdly, when purchasing gold you will have to pay 20% VAT. That is, the profitability of such an “investment” is already minus 20% at the start.
There seem to be no plans to cancel VAT on gold in 2021, so...
The second way to buy precious metals is to buy investment coins. There are many pitfalls here, and it is better for beginners not to get involved in this matter. But in principle, you can’t make it sour. However, the coins will have to be stored somewhere, and a fair amount of time may pass between buying and selling.
The third way, in my opinion, is more optimal, to open a compulsory medical insurance – an impersonal metal account. It's like a bank deposit, only in gold, silver, platinum or palladium. And without interest, but with its own moments.
Opening a compulsory medical insurance is more practical than buying bullion. There is no need to spend money on a safe or worry about the safety of the bullion. And selling compulsory medical insurance (closing an account) is much easier. Less spread. And you don't need to pay VAT.
Operations with gold in Sberbank
The country's largest financial institution creates the most convenient conditions for its clients to purchase gold in all its forms: coins, bars and compulsory medical insurance. It is simple to carry out transactions with precious metals: if only there was money.
How to buy
To open a deposit, you need to come to a Sberbank branch with your passport and inform the manager of your desire. The client will be provided with a standard contract for review. You need to read it carefully so that there are no surprises later. Here are the nuances you should pay special attention to:
- Gold is purchased at an inflated price.
- The account holder must be at least 14 years old, but the person will have the right to dispose of the asset on the day he or she comes of age.
- It is possible to register a metal deposit for another person (son, daughter, grandson, etc.)
- It is allowed to have several gold accounts opened for one person.
- The rules provide for the possibility of transferring compulsory medical insurance to another person.
It's even easier to buy coins and bars. To do this, you need to take your passport (identity card) with you and have a sufficient amount in your account or in cash. A citizen has the opportunity, at his discretion, to leave the purchased physical metal in the bank for safekeeping or take it with him. Yes, it is better to choose a coin in advance and find out if it is available.
The precious metal product is accompanied by a sales receipt and a certificate. It is strongly recommended that you save these documents. Firstly, you will need them when selling a bar or coin. Secondly, numbers and other characteristics are duplicated in the accompanying papers, which simplifies their identification in case of theft. It is better to store certificates at home separately from physical gold.
How to sell
One literary character said that before climbing somewhere, it is useful to think through escape routes. How you can sell gold to Sberbank is written on the official website of the financial institution. The holder of the precious metal must:
- make sure there is no damage that could affect the weight of the product;
- attach the manufacturer's certificate;
- take your passport with you.
You can find out at what price the bank buys gold (in this case, bullion) in advance by making inquiries using this link.
With coins the situation is both more complicated and simpler. They are accepted by the financial institution at the cost indicated in the catalog, which theoretically takes into account the numismatic value of the specimen. At the same time, Russian legislation does not regulate the turnover between collectors in any way, and they can sometimes pay more. Unlike trade in bullion, these transactions are not prosecuted under the Criminal Code of the Russian Federation, but are associated with other risks. For example, the buyer may turn out to be a fraudster.
It is safer to hand over a gold coin on the terms under which Sberbank accepts them, attaching a check and a certificate.
You can withdraw funds from the gold compulsory medical insurance partially or completely close the account. With the money received, the client has the right to purchase a metal product or take the amount in rubles at any time.
How does compulsory medical insurance work?
Now let’s learn more about what compulsory medical insurance is. Technically, this is the same deposit as a deposit in dollars or rubles. But in fact it is an investment instrument. You buy paper gold (or silver), wait for it to rise, and then sell it for a profit.
Compulsory medical insurance can be opened in almost any bank. You can even do it online, for example, at Sberbank. You sign an impersonal metal account agreement remotely, choose a “currency” - gold / silver / platinum / palladium - and become the owner of precious metals.
At any time you can purchase the required amount of metal, organize the sale of assets of any volume from an impersonal metal account (within the amount of savings, of course). You can purchase literally from 1 gram.
But there are some peculiarities that should not be forgotten.
How to invest in silver
One of the most common ways to purchase silver is through coin dealers and bullion brokers. These people and companies sell silver coins, rounds, and bars both in brick-and-mortar stores and online, making it easy to purchase the precious metal no matter how you prefer to do it.
Most silver dealers accept cash, checks, credit cards, wire transfers, and cryptocurrency. This gives investors plenty of options to pay in the way that suits them best. You simply select the product you need, pay for it and either take it with you or receive it by mail if you buy online.
If you are purchasing silver as part of an individual retirement account (IRA) or would prefer to store your silver elsewhere, it is best to consult your dealer. Some of them have qualified depositories (storages) with whom they work directly.
Taxation
There is no need to pay 20% VAT when buying/selling compulsory medical insurance. However, from the profit received on the metal account, you will need to pay NFDL. For example, you bought gold for 600 thousand rubles and sold it for 700 thousand. From 100 thousand you pay 13% - 13,000 rubles.
And here’s another interesting article: Where you can invest online: a complete overview of methods
Most banks are tax agents - they themselves calculate personal income tax and transfer it where necessary. But some are not, and then you will need to fill out the declaration yourself, calculate the tax and transfer it to the Federal Tax Service.
The obligation to pay income tax does not arise in two cases:
- if the compulsory medical insurance has been active for more than 3 years, regardless of the type of metal and its amount;
- if during the year you sold metal worth less than 250 thousand rubles.
At the same time, you still need to fill out a declaration and submit it to the Federal Tax Service. The deadline is April 31 of the following year. For example, you sold silver from an unallocated metal account on November 21, 2018 in the amount of 300 thousand rubles, of which 50 thousand rubles are net profit. This means that by April 31, 2021, you need to submit a 2-NDFL declaration to the Federal Tax Service and pay 6,500 rubles in tax.
Types of metal bills
Most often, when talking about impersonal metal accounts, they mean gold (Au). Indeed, “paper” gold (and 999 fine!) is the main asset that, judging by the reviews, is bought through compulsory medical insurance.
But at the same time, most banks offering the service of opening compulsory health insurance allow you to buy:
- Silver (Ag) – its price dynamics are more susceptible to changes than gold, so it is more popular with speculators than traditional investors. At the same time, the minimum purchase price for silver is much lower than for the same gold, so many novice investors in compulsory medical insurance prefer to start buying metals with silver.
- Platinum (Pt) – Platinum is not particularly popular among investors. As, indeed, among jewelers. This metal is practically not used for jewelry, but is used in industry. And prices for it are formed, accordingly, in connection with industrial needs.
- Palladium (Pd) - similar to platinum, is rarely used in jewelry, but is in high demand in industry. Especially in rocket science, microprocessor development and Tesla car production. Now prices for palladium are at highs and, apparently, are not going to fall.
When choosing the appropriate type of impersonal metal accounts, be sure to take into account the market situation so as not to buy precious metal at an inflated price. Yes, and it is worth aiming at long-term investments - as practice shows, sometimes several years pass before the price reaches the desired value for the investor to make a profit.
How prices for compulsory medical insurance are set
Each bank sets its own quotes for impersonal metal accounts, based on the greed factor of the dynamics of supply and demand. When setting prices, they are based on data from the Central Bank - just as in foreign exchange transactions.
The Central Bank itself also does not take prices out of the blue. The price of the precious metal is determined by the London Stock Exchange every morning based on the results of trading. It is measured in dollars per troy ounce. One troy ounce is 31.1 grams. Historically, ounces have been used by jewelers to measure the weight of precious metals.
The Central Bank takes the price of gold in dollars, determined by the London Stock Exchange, then divides it by 31.1 and converts it into rubles at the current exchange rate. This is how the ruble price for 1 gram of metal is formed.
You can view the current rate here: https://www.cbr.ru/hd_base/metall/metall_base_new.
Then each bank, based on the price of the Central Bank of the Russian Federation, sets its own quotes. Here, for example, is the compulsory medical insurance rate at Sberbank on the same date (May 6, 2021).
Here’s another interesting article: Where to invest in 2021: a complete overview of investment options
Also keep in mind that the bank sets a spread - the difference between the purchase and sale prices. The larger the spread, the less profitable the deal and the longer you will have to wait until the price rises. Therefore, it is better to compare offers from several banking organizations and open compulsory medical insurance where the spread is the smallest.
Required documents
To open compulsory medical insurance at the branch, the depositor will need to provide a general passport. No other documents will be required.
During the registration process, an agreement for maintaining and servicing a metal account will be concluded between the parties. The standard form of such an agreement can be found here.
Before opening compulsory medical insurance, it is also recommended that you familiarize yourself with the full terms and conditions for placing deposits in precious metals (you can download it here).
Sberbank also makes it possible to issue compulsory medical insurance for a minor citizen.
This operation can be carried out by:
- parent, presenting: his passport;
- birth certificate of a minor.
- your passport;
You can see reviews of the Sberbank Save deposit in the article: Sberbank Save deposit. How to open a Good Year deposit in Sberbank is described in this article.
Is it possible to exchange compulsory medical insurance for real gold?
OMS is a “paper” metal. If you buy gold on compulsory medical insurance, then you seem to have it - but you cannot touch it and take it away, nor can you sell it to another bank. And if you suddenly decide that it would be nice to turn your paper gold into real gold, then you can do it.
True, with a few caveats:
- you will have to buy gold at the market price, which may differ from the cost of compulsory medical insurance;
- you will have to pay VAT upon purchase (+20% to the price);
- You will need to pay for the transportation of gold to the branch.
Plus, the resulting bars will need to be stored somewhere. At home under the pillow is not an option. One scratch and the ingot loses half its price. That's why you need a safe.
In short, you don’t need bullion gold or silver, much less palladium or platinum, if you decide to open a compulsory medical insurance. The metal account is designed to eliminate the disadvantages that are inherent in bullion, while allowing you to earn as if you owned it.
Open compulsory medical insurance with your precious metal bar
When opening an account with your own bullion, you must have all the documentation (certificates from the bullion manufacturer, which will indicate the serial number and fineness). If the metal meets all the standards and regulations of the country, the depositor fills out a written order to transfer the bullion to the Sberbank vault. During registration, the ingots undergo control and are inspected by specialists (both visually and using technical means). A legal transfer and acceptance agreement is signed with the investor in two copies. One of the copies is issued to the client.
If the bullion does not meet the established criteria, Sberbank has the right to refuse the depositor.
Upon expiration of the period specified in the contract, the client is returned the bullion that was left for storage.
How to make money on compulsory medical insurance
No, well, it’s clear: in order to make money on impersonal metal bank accounts, you need to buy cheaper and sell more expensive. But how do you know when is the right time to enter and exit the market, and where will the price of gold or silver go in general?
Of course, predicting precious metals prices is an art, and no one will give you an accurate forecast. However, you can know some patterns and be guided by them.
Thus, gold is used to protect against the fall of the ruble. Why is that? I wrote above that gold prices are set on the London Stock Exchange in dollars. If the price of a troy ounce remains the same, but the dollar rises against the ruble, then, consequently, the price of gold against the ruble will also rise.
If the ruble strengthens, then, other things being equal, gold prices fall.
And here’s another interesting article: What is diversification: basic rules for allocating assets in a portfolio
In addition, gold is a defensive asset, and when the stock market is “stormy”, investors seek refuge in stable bonds or in gold. States are buying gold in the face of the threat of a crisis, which also moves the price up.
In principle, the same is true for silver, which generally repeats the somersaults of the gold rate. But, since it is actively used in industry, when there is a shortage, its price begins to rise. Keep an eye on mining companies - if they are not doing well with their production, this may indicate an impending shortage.
But there is a lot of silver. But platinum and palladium, not so much. Therefore, when their industrial demand increases, prices also rise. If enterprises reduce production, prices rise. If someone launches a new high-tech production or if Apple and Tesla open a factory in China, prices rise.
But it is not exactly.
Other Forms of Investing in Silver
In addition to investing in physical silver, investors can also choose to invest in silver mining stocks or silver ETFs (exchange-traded funds). The latter are derivatives—financial instruments that track the silver market. Mutual funds and asset managers often hold ETF shares as a convenient way to gain exposure to the precious metal without having to store it. The iShares Silver Trust (SLV) is the most well-known silver ETF.
Silver miner stocks (or “silver stocks”) are shares of companies that mine the precious metal. Most silver is a by-product of gold or copper mining. However, there are still several companies that are engaged only in the development of silver deposits. In addition, there are ETFs that combine shares of many mining companies. Some of the leading silver miners are First Majestic Silver and silver streaming company Wheaton Precious Metals.
Another option is silver futures contracts. They are mostly owned by large institutions and operate like a stock market. Purchasing a silver futures contract involves taking physical delivery, which is why most “paper silver” contracts are settled in cash rather than through actual delivery. Retail investors typically have more flexibility when purchasing sterling silver coins such as the one-ounce American Silver Eagle.
Pros and cons of compulsory medical insurance
So, let’s highlight the main pros and cons of impersonal metal accounts. Advantages:
- investments are available from small amounts - you can buy a minimum of 1 gram of gold or 5 grams of silver;
- income is virtually unlimited - only by the increase in the exchange rate of the purchased precious metal;
- there is no 20% VAT, as when purchasing an ingot;
- Compulsory medical insurance does not need to be stored anywhere - it is in the bank;
- There is no fee for servicing a metal account;
- you can buy metal at a low price and sell it (partially or completely) at any time;
- there are tax benefits;
- you can open compulsory medical insurance online;
- If you wish, you can exchange paper gold for real gold (although it is very expensive).
But I will also note the disadvantages of impersonal metal accounts, which also need to be taken into account:
- no interest is accrued on compulsory medical insurance;
- such accounts do not fall under the compulsory medical insurance program;
- limited liquidity - you can sell paper metals only to the bank where you opened the account;
- large spreads - sometimes you have to wait for years for the price to “work out” at least the spread;
- the bank arbitrarily sets spreads, and sometimes they are not fair;
- not all banks with good rates offer online transactions;
- Sometimes you still have to pay taxes.
Well, the main disadvantage is that no one guarantees your income here. The price of the precious metal can either rise or fall. Therefore, you can either earn or lose money by investing in compulsory medical insurance. You need to be prepared for this.
What do you think about impersonal metal accounts as an investment instrument? My review: you can make money, but you need to know how and prepare for long-term investments. Not for a week, but for months and years. Perhaps it is more profitable to invest in gold ETFs or shares of gold mining companies? How do you think? Good luck and may the gold be with you!
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Is it worth investing in a metal account?
Metal deposits are a kind of investment for the future. Investing in precious metals for individuals does not have an interest rate to pay the bank, but you can only get real benefits if there are serious increases in the price of the precious metal. Sberbank, like other banks, depends on the established gold rates according to daily criteria from the Central Bank (they can be found on the official website).
Sberbank, in turn, is adjusting its adjustments to the opening of compulsory medical insurance: the sale price is overstated in relation to the Central Bank exchange rate, the purchase price is understated. In theory, it looks like this: if the Central Bank rate per gram of gold is 1,600 rubles, you will buy one gram at Sberbank for 1,700 rubles. Decide to sell it on the same day for 1,500 rubles, and you will lose 200. But if after a week or a month the price per gram of gold according to the Central Bank increases to 1,900, you will begin to make a profit.
The world's supply of precious metals is limited, so logically, their prices will only rise over time. Add to this a more stable position in relation to national currencies, and you get a completely reliable means of long-term profit. Over the past 10 years alone, taking into account all the nuances, the price per gram of gold has increased from 500 to 2,300 rubles.
At the same time, it is unlikely that you will be able to constantly make a profit with the help of compulsory medical insurance. Precious metal prices fluctuate throughout the year, and if you make a good profit one month, you may well lose it the next.
The opening of compulsory medical insurance should be approached wisely, trying to predict the pricing policy of the Central Bank. If possible, carefully monitor inflation processes.
