buying gold in switzerland tips

7 Tips for Buying Gold in Switzerland

What should you consider before investing in gold? What are your options for gold ownership? How can you save on gold purchases in Switzerland? This moneyland.ch guide explains.

Gold is one of the few assets which has consistently kept its value over time. This attribute has made it popular as a store of wealth for millennia. The fact that the value of gold fluctuates against that of fiat currencies makes it attractive as an investment vehicle.

Unlike some other countries which restrict or even prohibit gold ownership, Switzerland has very favorable gold ownership laws. Gold bullion is classified as a currency equivalent in Switzerland, meaning it is free from customs duties and value added tax (VAT). Swiss gold refineries like Valcambi and Argor Heraeus are world renowned, and Swiss banks and other gold brokers offer many different gold denominations to suit the needs of gold users.

If you plan to buy gold as part of an investment plan or as a way to store wealth, consider these basic tips on saving money and securing your investment:

1. Consider alternative gold investments

If your main goal in buying gold is to make a profit by selling it at a higher price within a relatively short term, you may be better off investing in some form of gold derivative. Exchange traded funds (ETFs) which track gold price indexes are one option. Although you pay fees (the TER and possible custodial fees and brokerage fees) to participate in ETFs, you benefit from greater liquidity because fund shares can be bought and sold through stock exchanges (using cheap online brokers, for example).

Unallocated gold certificates are another alternative. These are a form of promissory note by which a third party (a gold pool, for example) promises to pay out the corresponding amount of gold upon request. These certificates allow you to invest in gold without purchasing actual gold bullion. Unallocated gold certificates can be purchased directly from gold pools or through securities brokers. Unallocated gold certificates generate much lower storage fees than allocated gold certificates, or even none at all.

Gold (XAU) forex pairs and gold contracts for difference are only suitable for very short-term gold investments due to the high ongoing margin costs which detract from capital gains and compound capital losses.

2. Consider precious metals accounts

Many Swiss banks offer accounts which are dominated by gold rather than Swiss francs. Holding assets in a precious metal account lets you benefit from the stability of gold prices, and possible growth.

The advantage of using a precious metal account is that you can buy and add gold to your account instantly at favorable exchange rates, and sell gold back to the bank instantly if you choose to. You can also transfer gold to other gold accounts (fees may apply when you transfer to a different bank).

The disadvantage of these accounts is that you pay an account maintenance fee which is basically a negative interest rate. When you hold assets in a precious metal account, you steadily lose money to account fees, which detracts from capital gains.

3. Prepare ahead of the purchase

Having a safe installed or renting a safe deposit box ahead of purchasing your gold will minimize the possibility of theft. Buying gold in the same bank or gold dealer which hosts your safe deposit box is the most secure option because it eliminates the need to transport the gold to a safe storage. Some dealers offer secure gold transportation at an additional fee.

4. Compare prices

The differences in prices charged by different dealers for the same amount of gold can be substantial. Depending on where you buy your gold, you may pay as much as CHF 80 francs more per ounce and as much as CHF 500 more per kilo at the most expensive dealers than you pay at the most affordable dealers. Take time to compare prices before you buy.

5. Buy from a reputable dealer

When buying a physical commodity like gold, the risk of ending up with counterfeit bullion is a very real one which can have devastating financial consequences. Avoid purchasing gold online, even from websites which appear to be legitimate. Before buying gold from a private individual, have it appraised by a qualified, independent specialist.

Swiss banks are a safe solution for gold purchases, but not all banks sell gold. Alternatively, you can also safely buy gold from reputable independent gold dealers like Degussa, Pro Aurum and Philoro, among others.

6. Buy bulk

As a general rule, buying many small gold bars or coins is more expensive than buying the same weight in gold as a single bar or coin. That is because minting and retail markups in relation to value are highest for small coins and bars and lowest for large denominations.

Example: On November 8, 2019, a 1-gram gold bar cost 58 Swiss francs at Degussa. A 1-kilogram gold bar cost 47,441 francs at the same dealer on the same day. At those rates, if you were to buy 1000 x 1-gram gold bars from Degussa, you would pay 58,000 francs – a full 10,559 francs more than the 47,441 francs you would pay for the same amount of gold minted as a 1-kilogram bar. (Prices courtesy of Goldpreis.ch).

7. Ignore face value

While a select few antique coins do have historical or collectible value, many gold coins and bars have little value above their weight in gold. Collectible coins and bars often come with high minting fees, and unless you are interested in them as a collector, they are best avoided. Stick to basic, non-exclusive gold bars and coins minted by well-known refineries which have the lowest markup above their gold weight.

More on this topic:
Swiss precious metal accounts compared
Online brokers comparison

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The moneyland.ch magazine provides accurate, unbiased information on topics related to finance and money. In addition to research and expert interviews, the magazine contains numerous financial guides.