Investments in gold and silver are coming back to the fore in a period of inflation, geopolitical turmoil and general doubts about the future development of currencies.if you’re just starting out in precious metals, this article will serve as a practical roadmap: you’ll learn why and when to consider the metal at all, where to buy safely, how to avoid common mistakes and how to tax any profits.
Why use gold and silver investments? Precious metals are a historical store of value. Unlike paper currencies, they can’t be “printed” in bulk and so are better able to withstand inflation. In addition, gold and silver have a low correlation to stocks and bonds, reducing overall portfolio risk. Traditionally, an allocation of 5-15% of savings is recommended.
In practice, gold is particularly sought after in times of uncertainty (recession, high inflation, military conflicts), while silver also responds to industrial demand (photovoltaics, batteries). Gold has a special privilege in the EU – investment gold (if the legal conditions are met) is sold VAT-free. Compared to silver, you start with lower costs and the investment is more profitable right from the start.
Gold or silver, which is better? There is no universal answer. More conservative investors tend to gravitate towards gold, while silver offers the potential for higher returns, but at the cost of greater price fluctuations.
Wondering how to buy investment gold? Ingots (1g – 1kg) and refinery bars (12.5kg) are the most common options. Choose products with international certification (e.g. LBMA standards for reputable refiners) and with a clear indication of the manufacturer/refiner, purity and weight, ideally also with a serial number and certificate. Buy from banks or from proven and established dealers/refiners with transparent terms and conditions and buy-back options.
One of the main advantages of physical investment gold is that you are holding a real asset that is not tied to any counterparty – unlike stocks or bonds, gold cannot “fail in your hand”.
On the other hand, there are practical drawbacks to consider, such as the need for safe storage and the relatively high spread, the difference between the buying and selling price, which is usually between 3% and 8%.
If you don’t want to hide gold bars at home or deal with vaults, you can invest in gold simply through exchange-traded funds(ETFs). These work in a similar way to ordinary shares – you buy a share in a fund that holds real gold safely stored in vaults (e.g. funds called GLD or IAU). You never physically hold the gold, but the price of your investment replicates the price of gold on the market.
Entry amounts are not staggering, you just need to buy one “share” of the fund, which can cost around $40 to $180 (or around CZK 1,000 to 4,000). Annual fund management fees are low, usually around 0.15% to 0.40% of the value of the investment. It’s a convenient and affordable way to participate in the price of gold without the hassle of physically holding it.
Shares in companies such as Newmont Corporation or Barrick Gold are another avenue. These stocks tend to have a higher beta to the price of the metal, meaning that they deliver excess returns on the upside, but fall faster on the downside. Funds like the VanEck Gold Miners ETF (GDX) spread the risk among dozens of miners.
Our legal experts will advise you on how to buy, store and sell precious metals correctly without complications and with respect to tax obligations. Gain security and safety when investing.
As with gold, you can buy silver bullion (999/1000 purity) or American Silver Eagle coins. Where to buy silver at spot price? Order larger volumes from foundries or specialist dealers who offer a smaller mark-up. The downside is the 21% VAT you have to pay when buying in the EU.
Do you want to invest in silver but don’t want to hide bars at home? Then you may be interested in exchange-traded products such as ETFs or ETCs – funds that replicate the price of silver. For example, the SLV or PowerShares Physical Silver fund tracks the current price of silver on the market, so you can see how your investment is performing without having to worry about physical storage. Annual management costs tend to be relatively low, usually between 0.20% and 0.50% of the value of the investment. But beware of so-called leveraged products (e.g. ETNs with “accelerated” gains or losses) – these are more for experienced investors and can be very risky for beginners.
You can also always contact an experienced financial advisor who is familiar with the world of investing in gold and other commodities to advise you on the best way to value your funds.
If you want to buy gold or silver, be careful who you shop with. Reliable sellers include large banks such as ČSOB or Komerční banka, well-known refiners (e.g. Argor Heraeus) or verified dealers such as Aurum or Zlaté Rezervy. You can also order silver online – reputable e-shops often allow personal collection in a safe room, so you can be sure of safety.
Before you pay, check three basic things: whether the company has a valid ID and traceable contact details, what other customers say about it, and whether it has a clear price list with the difference between the buying and selling price (called the spread and margin) clearly stated; then, when investing through an ETF broker, check that it is a regulated investment service provider. This is the only way to avoid unpleasant surprises.
When you buy gold or silver, you want to make sure it’s genuine. The Hallmarking Act regulates the hallmarking of precious metal products (typically jewellery); for investment bullion and many investment coins, authenticity is in practice verified mainly by the manufacturer, certificate and other protective elements, not necessarily by the Czech official hallmark. The latter protects the ordinary buyer from counterfeits.
What to look out for when buying? Hallmarks vary according to the type of metal and purity (it is not a one-size-fits-all “swan”/”rabbit” mark); in addition, for investment bullion, you will more commonly see the refinery, purity, weight and serial number. Ask for a certificate of authenticity and the bar’s serial number – this is like a birth certificate for your gold. For larger bars (over 500 grams), a certificate of hallmarking is also common, although this is no longer directly required by law for such quantities.
The difference between the purchase and sale price (the spread) is the main cost of the physical metal. For ingots up to 10 g it can be 8-12%, while for kilo bars it drops to 3%. With ETFs you pay an annual fee (Total Expense Ratio). You also have to take into account the bank transfer or storage fee (0.1 – 0.3% per year for vault storage).
Investment gold has one big tax advantage – you pay no VAT when you buy it. For an ordinary individual (non-business), the income from the sale of physical investment gold (bullion or coins) is generally exempt as the sale of tangible movable property, so there is no three-year time test. You would typically only deal with income tax in atypical situations (e.g., if there was a systematic “repurchase” with business characteristics or if the gold was included in business assets); for ETFs and other securities, the standard securities rules apply, including the three-year time test.
For silver, the situation is different – you already pay 21% VAT on the purchase. For an ordinary individual (non-business), the income from the sale of physical silver (bullion or coin) is generally exempt as a sale of tangible movable property, so the three-year time test is not an issue; the main difference with gold is that VAT is usually applied on the purchase of silver.
If you invest through ETFs (exchange-traded funds), the securities are usually securities: the income from their sale can be exempted either if the three-year time test is met or if the total income from the sale of securities in a year does not exceed CZK 100,000; otherwise the gain is reported on the tax return.
And one more note for entrepreneurs: if you buy gold or silver as a company or self-employed person, slightly different rules apply to you – the metal is recorded as stock and you deal with taxes according to the Income Tax Act.
Once you own investment gold or silver, it’s time to figure out where to put it, because hiding bullion under your mattress really isn’t the ideal solution. Here are three main options:
1.Home safe: If you want to keep your precious metals at home, get a good quality safe. It should be at least EN 1143-1 Class III certified and firmly anchored into the floor. Expect an investment of around CZK 10,000. The advantage? It’s always close at hand. Disadvantage? The liability is up to you, so be sure to get theft or fire insurance too.
2. Bank lockbox: This is a safer option where you store your gold in a safe deposit box at the bank. A small box will cost you between £1,500 and £5,000 a year. The advantage is that it is already insured up to CZK 500,000. It is an ideal solution for smaller volumes of metals.
3.Specialised storage abroad: if you are planning larger investments, you can use professional storage in Malta or Switzerland, for example. The annual fee is around 0.15% of the value of the metal stored. The advantage is that if you decide to sell the metal, you often only need to give instructions and do not have to physically transport it anywhere.
What about ETFs? There, the fund’s custodian (e.g. HSBC or JPMorgan) takes care of the security, and your insurance is included in the fee. So you don’t have to worry about storage at all.
Gold and silver are the traditional hedge against inflation and currency uncertainty – gold is more stable and suitable for conservative investors, silver has more return potential but also a more volatile price due to industrial demand. In the EU, gold is sold VAT-free if the conditions are met, whereas with silver you pay 21% extra. Physical metals are most commonly purchased as bullion (1 g – 1 kg) or coins; for gold, typically with a purity of at least 995/1000 and with clear indication of the manufacturer/refinery, purity and weight, ideally also with a serial number and certificate. Purchase from banks or from proven and established dealers/refiners with transparent terms and buyback options. When buying, always check in particular the identity of the seller (ID number, history and reviews), the product parameters (manufacturer/refiner, purity, weight, serial number and certificate if applicable) and the redemption terms; for ETFs and other investment instruments, check that the trade is through a regulated investment service provider. Alternatively, ETFs or ETC funds (e.g. GLD, SLV) hold physical metals for you, with annual costs of up to 0.5%. For mining stocks (e.g., Newmont, Barrick Gold), expect higher returns but also higher risk. The main cost is the spread – up to 12% for small bars, around 3% for kilos. For an ordinary individual (non-business), income from the sale of physical gold (bullion and coins) is generally exempt as a sale of tangible personal property; for ETFs and other securities, securities rules apply (typically a three-year time test, or a limit of CZK 100,000 of aggregate income per year). Safe custody is provided by a home safe (from CZK 10,000), a bank safe deposit box (CZK 1,500-5,000 per year) or a specialised warehouse abroad (e.g. in Switzerland, for about 0.15% per year). Insurance against theft and the elements is essential.
This article is informative and does not constitute an investment recommendation.
No. Neither the purchase nor the holding of investment gold is reported. Tax liability only arises on sale if you sell before 3 years of holding and a profit is made.
Standard dealers pay out the money within 24-48 hours of delivery of the ingot. For banks, settlement can take 2-3 business days. ETFs and other exchange-traded form are sold immediately during exchange trading hours.
Smaller weights (1-20 g) carry a higher premium but can be sold off gradually. Larger bricks (100 g, 1 kg) have the lowest spread, but less flexibility for partial sales. Combine the two options according to your planned amount and liquidity.
Yes, if you believe in long-term price growth and have a horizon of 5+ years. The higher volatility of silver can “beat” VAT, especially when buying larger volumes at a lower premium.
The fund’s assets are recorded separately with a custodian (e.g. HSBC). In the event of a trustee failure, the fund is liquidated by the custodian and shareholders are paid the sale value of the metal, so the shares are not part of the trustee’s bankruptcy estate.
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