Standards and Value in Gold Buyback: What, Where and How to Sell

Has the price of investment gold gone up? Did you inherit a gold bar or receive a gold coin as a gift? If you suddenly need cash and want to sell gold, this article explains exactly what to do.

I INHERITED A GOLD BAR — WHAT SHOULD I DO?

There are no special legal provisions governing the gifting or inheritance of gold and other precious metals, so the duty specified in the Duties Act (Act XCIII of 1990) applies. A significant advantage, however, is that in Hungary there is no duty payable on gifts or inheritances between direct-line relatives.

A favourable characteristic of gold and other precious metals is that they are very easy to sell. The proceeds can readily be divided among heirs, and gold bars and coins can simply be distributed according to their precious metal content.

If you do not yet wish to sell the gold but have no bank safe, an alternative is to deposit the gold bar with a gold dealer for safekeeping. There you will find not only an insured storage service but also the option to decide at any time to sell the investment gold through the online system and request the proceeds to be transferred to your bank account.

WHICH PRODUCTS SELL AT THE BEST PRICE?

Among Argor, Münze Österreich and Heraeus gold bars, Münze Österreich bars command a slightly higher price on the secondary market in the Central European region (only marginally, by a few basis points). If someone were to sell their gold bar overseas or in Switzerland, for example, they would probably achieve a somewhat higher price for an Argor bar, while in Germany the highest value is typically obtained for Heraeus bars. In all three cases, however, the difference is only a matter of basis points.

WHERE SHOULD I SELL MY GOLD?

One of gold's greatest advantages is that it is tradeable virtually anywhere in the world. In developed countries, the gold trading infrastructure is highly developed and spreads are appropriately tight. Specialist dealers can be found almost everywhere who can purchase non-standard gold products as well. In Hungary there are numerous scrap gold buyers; however, when selling investment gold it is worth seeking out a dealer specialising in investment gold, as they will in all likelihood offer a better buyback price. This is because an investment gold dealer can resell the purchased coins and bars, making it worthwhile to offer a higher buyback price compared to a dealer who will simply melt the gold down.

I AM SELLING MY INVESTMENT GOLD — WHAT CAN I EXPECT FROM THE DEALER?

When selling, you can request that the gold dealer settles the price of the investment gold by bank transfer or in cash; payment in euros or dollars is often also available. When selling investment gold, it is not mandatory to present the original purchase invoice, but it is worth keeping it, as it may be needed when calculating the taxable gain (if the transaction was profitable).

When selling, you must attend at the gold dealer's office or send the product in. The dealer will examine it free of charge and non-destructively, and if everything is found to be in order with the gold coin or gold bar, the purchase price is settled immediately. The price can be determined on the basis of the market price prevailing at the moment of sale, or at a price fixed in advance via a telephone or online sell order.

At most gold dealers, sell orders for investment gold can be placed online and by telephone. Reputable gold dealers confirm and execute the transaction at the price quoted over the telephone and published online — following market pricing — and simultaneously fix the sale or purchase price. This means that the price does not subsequently change in either direction, regardless of market movements. This greatly simplifies settlement for both the client and the dealer.

I WOULD LIKE TO LEND MY INVESTMENT GOLD AT INTEREST

There is no retail gold lending market in Hungary. Lending gold is much the same as lending money, since whoever borrows it will in all likelihood sell it — for example, to repay a debt.

WHO NEEDS TO BE NOTIFIED WHEN I SELL MY GOLD, AND HOW AM I TAXED?

For transactions settled by bank transfer there is no reporting obligation to the tax authority (NAV). However, cash gold buyback transactions exceeding HUF 2,000,000 must be reported to NAV, accompanied by the seller's tax number or, for foreign nationals, their passport number. Under the currently favourable tax rules, this is also in the client's interest, as it generates taxed income at a favourable rate.

In certain cases it is advantageous to have the original purchase invoice available, but it is certain that a dealer will be found who will buy the gold without it. If the purchase invoice is available, the taxable base is the profit between the purchase and sale price, taxed at 15%. For example: sale price HUF 1,400,000 / purchase price HUF 1,000,000 / difference HUF 400,000 / tax HUF 60,000. If the purchase invoice is no longer available, the taxable base is 25% of the sale value, also taxed at 15%. For example: sale price HUF 1,400,000 / taxable base HUF 350,000 / tax HUF 52,500.

Given the frequent changes to tax legislation, it is strongly advisable to consult a tax adviser for larger transactions.

THE CERTIFICATE IS MISSING AND THE INVESTMENT GOLD HAS BEEN UNWRAPPED — WHAT SHOULD I DO?

There is no cause for concern. A gold bar that would normally come with a certificate is still sellable even if the certificate has been lost. In such cases, gold dealers typically apply a discount of around 1%. A wrapped gold bar or gold wafer can be unwrapped from its packaging, but in that case a discount of around 1% should be expected from the dealer when the time comes to sell.

I RECEIVED AN INVESTMENT GOLD COIN AS A GIFT AND IT HAS BECOME SCRATCHED. HOW MUCH DOES THIS REDUCE ITS VALUE?

If an investment gold coin has minor scratches, this may reduce its value, but typically only by 1–1.5%. If the coin is damaged to the point where another client would be unwilling to purchase it from the dealer, its value may fall by 2–3%, as it would need to be melted down. Damaged packaging on investment gold wafers also reduces their value, by approximately 1%. Gold is one of the most liquid assets available and can be converted to cash immediately. Larger dealers can pay out significant sums immediately in cash or by transfer, and can typically handle even extremely large amounts within 3 business days. Moreover, with a power of attorney, someone else can sell your gold on your behalf.