A Story You Should Read Before Buying Gold: How to Choose and Dispose of Physical Gold, Accumulation Plans, Investment Trusts, and ETFs
When you get interested in gold and start researching it, various ways to buy it appear, such as gold coins, pure gold accumulation plans, investment trusts, and ETFs. Even if you think, ‘If it’s the same gold, shouldn’t I just choose the one with the lowest fees?’, the meanings of the costs written down are not consistent.
If you are a beginner, even just these differences can be confusing, right?
What you want to decide first in gold investment is not which product will rise the most. Do you want to hold the gold itself, or do you want to incorporate gold’s price movements into a portion of your assets? First, the method of choosing changes here.
If you hold physical gold, you must also consider storage and where to sell it. If you hold it through securities, you must consider the investment target and the trading mechanism. Even if you say ‘buy gold,’ the things you need to check are not the same.
In this article, I will compare four ways to buy and organize what you should read in official product documents. In the paid section, I will proceed to actual cost displays, checks before buying ETFs, the crossroads of taxes, and records when letting go. Finally, I have attached a fill-in sheet where you can compare your own candidates.
The target audience is those who are considering investing in gold from now on. This content does not predict prices or recommend purchasing specific products. It does not cover transactions using borrowing or leverage, selecting gold mining stocks, or appraising collectible coins.
1. Gold is not necessarily a substitute for savings
Even if you see terms like ‘gold in times of emergency’ or ‘safe asset,’ the principal is not guaranteed. It may fall below the price you bought it for, and costs and the difference between buying and selling prices also matter when selling.
Gold itself does not generate regular income like interest on deposits or dividends on stocks. Even if the amount of gold you hold is the same, the amount when converted to yen will change. Mitsubishi UFJ Trust and Banking: Explanation of Gold Investment
Therefore, you should think carefully about moving money you plan to use in the near future to gold just because it ‘seems safe.’ Keep money that has a fixed payment date separate from money that you can continue to hold even if the price drops.
The meaning of holding gold differs from person to person. Some people want to hold physical items, and others want to incorporate price movements other than stocks. However, it cannot be said that increasing gold will necessarily stabilize your entire assets. If you are considering diversification, you need to look not only at gold but also at your current assets and their proportions. Financial Services Agency: Basics of Asset Formation
2. The four ways to buy differ in what you hold
Physical: Holding bullion or gold coins
This is a method of purchasing gold bullion or gold coins and storing them yourself, or using a storage service. If your goal is ‘to hold the real thing,’ this is likely a candidate.
In return, you need not only a place to buy but also a storage location, preparations for loss or theft, and a place to sell. Since gold coins have a price difference associated with processing and sales in addition to the value of the gold, do not simply compare them by weight. Coins that expect collection value should be considered separately from the story of investing in the price of gold.
Pure Gold Accumulation: Continuously purchasing gold and depositing it with a business operator
This is a method of purchasing gold in fixed amounts, etc. However, ‘accumulation’ is just the name of the buying method, and it does not mean that the storage method or withdrawal conditions are the same for every company.
For example, in a general account at Tanaka Kikinzoku, it is explained that gold is kept in specific custody, specifically mixed deposit, which is distinguished from the company’s assets. This is the handling of gold by that company, and it is not a basis for judging that other companies’ services are the same. Tanaka Kikinzoku: Storage Method
If you are thinking, ‘I want to receive the physical gold later,’ you should also look at the required weight and fees. Having a balance in your account and being able to immediately receive bullion of the desired size are different things.
Investment Trust: Holding a fund that invests in gold
The investment trusts referred to here are general public investment trusts that are not listed on an exchange. You purchase them through banks or securities companies, and you receive the price fluctuations resulting from the fund’s management.
Even if the name relates to gold, what you are investing in through gold varies by product. Some invest in ETFs or similar instruments backed by gold. Do not decide based on the name alone; check the “Investment Objective” in the prospectus.
Furthermore, with general unlisted investment trusts, the mechanism is such that you do not know the net asset value applied to the actual transaction at the time of application. This is different from trading where you specify a price you see on the screen.Differences between JPX/ETFs and other investment trusts
ETF: Buying and selling products listed on an exchange
An ETF is an exchange-traded fund. You can buy and sell them through a securities account while watching the market price on the exchange. However, that market price does not always match the value of the product’s contents. We will look at this point specifically in the second half.
Additionally, even with ETFs backed by physical assets, it does not necessarily mean you can receive gold bars yourself. BlackRock’s iShares Gold ETF (314A) is a product that invests in overseas-listed ETFs backed by physical assets, and it is stated that conversion from 314A beneficiary rights to physical gold is not possible.BlackRock Product Description
“Can invest in gold” and “can receive physical gold” should be checked separately. This is the first point to consider when comparing how to buy.
3. Even if you can buy in yen, it is not unrelated to exchange rates
You pay in yen at a domestic retailer. You buy yen-denominated products in a Japanese securities account. Even so, the price of gold is affected by exchange rate movements.
The official FAQ for the Mitsubishi UFJ Pure Gold Fund also explains that even if you do not invest directly in foreign currency assets, the net asset value is indirectly affected by exchange rate fluctuations through the gold price referenced by the investment destination.Mitsubishi UFJ Asset Management: Impact of Exchange Rates
Therefore, even if you see gold prices rising in overseas news, your yen-based profit or loss will not necessarily increase in the same way. Exchange rates, product costs, and trading prices are also involved.
Even when adding gold to the foreign stock investment trusts you currently hold, do not assume that diversifying into gold will eliminate the impact of exchange rates. You are looking at what risks are being separated and what remains.
By now, I think you can see that you cannot decide how to buy based solely on price increases. Next, let’s read the product materials for each in the same order.
From here on, I will put things in a format where you can compare your candidates.
In the paid section, I will cover how to narrow down by purpose -> costs of purchasing, holding, and selling -> how to read investment trust and ETF materials -> NISA and taxes -> preparing to sell. I have also prepared official display examples and a comparison sheet that you can fill out for each candidate.
This content is designed to help you gather the materials needed to decide whether to buy or pass, starting from the stage of “I understand the differences, but what should I check for myself?”