The new long term investment trend that Romanians are moving to: gold investments

In a market where people invest in real estate, a Northern Europe company, Tavex, tries to convince Romanians that, on long term, gold investment is a winning bet. Quality certificates available internationally, a variety of products, and, last but not the least, consultancy, convinced Romanians to buy from Tavex Romania few kilos of gold, each month, in bars and coins.

Tavex Romania is part of Tavex Group, leading precious metals and banknote dealer in Northern Europe, founded in 1991 and serving 1.9 million clients annually. It entered the market at the end of 2019. The pandemic and post-pandemic time was the one when Tavex Romania opened more offices and people started to notice it. Today, Tavex has 3 offices, in Afi Mall, Mega Mall and Sun Plaza, but also the online platform available for orders all over Romania.

The plan for 2021 is to consolidate the position on the market, but definitely aim to cover all the major cities in Romania with offices.

How much gold Romanians buy? Read our interview with Dimo Stefanov, country manager for Romania.

How did the Romanians reacted to gold investment?

We see increasing interest in the physical gold investments from the Romanian public. People searching for financial insurance and safety started noticing us. The Romanian market for gold is underdeveloped compared to the market in Western and North Europe. It would take some time until people start considering physical gold as an option for their investment portfolio.  As I said the Romanian market is underdeveloped compared to most of the other countries in Europe. We already have countries within Tavex group which have surpassed the 1 tone sales milestone for 2021. We would be happy if we can reach 300 kg sales for 2021. The market still needs time to be educated for gold and to recognize us as a trustworthy counterparty. I am convinced that within 2-3 year period we would reach the 1 tone milestone for Romania as well.

Is there a market for gold investment? Are Romanians used with this kind of financial tool?

First of all we have to distinguish between the markets for financial gold and physical investment gold. The financial gold is in essence gold derivative where you have intermediary between the investor/speculator and the actual physical gold. Usually it is used by sophisticated investors and speculators. The investment physical gold on the other hand represents a direct ownership of a worldwide liquid physical coin or bar. Usually people who invest in physical gold are more conservative, they search for safety insurance for their savings and protection from inflation.

I don’t think the general public in Romania is used with the physical gold simply because there were not so many companies trading gold on a professional level which can offer price service and enough liquidity to the general public. If you don’t have professional gold dealers on the market the gold investment becomes unpractical in most of the cases.

Do Romanians buy gold bars rather heavy or the cheapest ones?

First of all Tavex is a direct representative of most of the well-known international gold refineries and mints – Valcambi, PAMP, Perth Minth, The Austrian Mint etc. It is worth mentioning that in order to consider one product as investment one it should be bought and sold with very tight discount/premium compared to the international price of gold. The rule is- the bigger the product the tighter the premium, therefore the practical gold investment starts with products with weight 10-20 grams and more. We don’t advice our customers to buy smaller products for investment because the price per gram of pure gold is higher. For example, the premium for 100g bar is 3%; for 20g bar or 1 oz coin is 4-5% and for 5 gram bar is more than 15%. The choice for the product mix is strictly individual and we always advice our customers individually considering their needs.

 Do Romanians sell their gold (jewelries or similar) or they rather keep it and buy new type of gold?

Usually the people selling gold jewelries sell it because they need cash and the people who buy investment gold buy it because they need diversification from cash and other assets.

The two markets are completely different. Gold jewelry is illiquid, usually much more expensive per gram of pure gold than the investment gold products and has VAT.

It is very important for every investor to understand that in order to realize your investment you should have a counterparty to whom you can sell in a future period. Physical gold products are well known and the professional gold dealers have transparent and visible buy and sell prices all the time. Basically in any moment you know what money you can get for your investment products. This is definitely not the case with gold jewelries where the buyback process is more cumbersome and with less transparency.

Tavex offers its customers transparent price for gold material- jewelries that we melt and export to the refineries but the deal that they can get for investment gold products is substantially better. Usually the purchase price between gold jewelries and investment gold products is 5-6 percent in favor of the investment gold.

So if you want to invest in gold and you have cash- investment gold is the best choice without any dispute.

The other case where the customer has already invested in gold jewelries and wants to sell them for investment gold products to get more liquidity is first of all highly unlikely. Anyways, in my opinion this transaction is not worth in most of the cases because the investor will lose money from the additional transactions and anyways one day if he needs he will sell the jewelries for cash. The only reason you might do the transaction is the hypothesis that the premiums between the jewelries and the investment gold will change much more in favor of investment gold in the future. As I said this is highly unlikely but everybody takes his investment decisions individually.

How can they sell their gold bought from Tavex in case they need? Could they sell it abroad? Or do they have to sell it only to Tavex?

We offer our customer worldwide liquid products which are well-known from all gold traders/dealers anywhere in the world. We do not limit our clients to transact only with us.

It is worth mentioning that we have very clear and transparent buyback prices and the customers can see up to the second how they can realize their investment with us in case they want to sell the gold.

What would you recommend to a beginner in gold investment? Someone that has some money in the bank account, that is an adult and looks at different investment possibilities.

I always recommend the gold investment but for the right reasons. Our aim is not to give empty promises and false expectations to clients, but to give the best possible service in the realm of investment gold. That is why I recommend first the investor to educate himself and set his expectations before investing not only in gold but any other investment option.

 What are the “experts” normally buy from you?

The beauty of investment gold is that it is very simple product. You should follow few very simple rules and you won’t make with the products.

First of all, the customer should focus on the liquid products with small spreads (difference between buy and sell prices). Let’s take 3 very popular gold coins and 2 popular gold bars- 1 oz Maple Leaf, 1oz Australian Kangaroo or 1oz American Eagle, Valcambi 1 oz bar and PAMP 1 oz bar. All of them have 1 oz (31.1 grams) of pure gold and are liquid everywhere around the globe- almost every gold dealer trade them. Although there are some specifics on the local markets and some products are more demanded than others, in Tavex we advise the customer to take the cheapest product.

Also the bigger the product the tighter the premium for the product. Usually, a 100 gram bar costs less per gram of pure gold than 1 oz coin. 1 oz coin costs less per gram of pure gold than 10 gram bar.

The gold bars (like Valcambi and PAMP) come with certificate from the refinery. The coins don’t have certificate, because the producers (for example: Perth Mint, Austrian Mint, The Canadian Royal Mint) do not offer certificates themselves. This is good to be mentioned because there are some companies dealing with gold which issue “quality certificates” for the coins that they offer and mislead the uninformed customers. Basically there is no serious gold dealer in the world who accepts or issues “quality certificates” for the coins.

There are differences in how you should keep the gold bars and coins as well. The bars come in vacuum package with the certificates inside. If the customer opens or destroys the package basically the price he can get for his product would be less than it would have been if the product was properly packed. The reason is that the dealers trade with these bars. Sometimes they buy from one customer and sell to another, therefore the product should be in perfect condition. Otherwise usually the bars which are with destroyed package are exported to the refineries for re-melting which is a costly process from where the lower price comes.

Usually the coins come in protective capsules. Some of them, especially the pure gold (24k) coins, should not be moved out from the capsule and touched because you will leave fingerprints on the coin. You should not scratch or hit the coins. The same logic applies – if the product is not in good condition you will not get the best price for it. In Tavex we advise our customers to ask our consultants how they should keep their products in order not to do something stupid and be surprised in the end.

What makes you, as a company, stand above the crowd? Why to buy from Tavex and not from the banks?

I think what makes the difference is the way we do business. Tavex is less impressed and more involved in what we do. I prefer actions than words and as I said investment gold is a very simple product therefore people can compare us very easy with the other players on the market.