1 – Nature of the Gold Market
A gold rate in Pakistan of Virtual Gold does not correspond to the simple acquisition of a solid and tangible Gold volume.
It is necessary to distinguish in fact two sub-categories:
Virtual Gold: this Gold is not totally immaterial in the sense that the gold rate in Pakistan actually exists. Gold purchased is in fact stored in the vaults of the intermediary through which the transaction was conducted. In many cases, these are banks that provide access to gold acquired. But other players, including online platforms, also offer a similar service with the difference that the buyer of Gold has no direct contact with his Gold, permanently stored in the coffers of the company in question, until possible resale later. Some sites operate in particular through various e-currency, virtual currencies, calibrated on gold: DON (digital gold currencies), convertible easily and 100% gold.
Paper Gold: Gold Paper is a panel of financial products (mainly ETFs: exchange-traded funds) indexed on the gold rate in Pakistan (but not 100% that said). People investing directly in the gold financial market can obviously use the various trading tools devolved to investors. This paper Gold does not correspond to the reality of the physical gold market in the sense that it is not connected to concrete and tangible matter. But like any financial asset, it is much more liquid and facilitates investments.
2 – Other precious metals
It should also be noted that the repurchase market includes other precious metals such as silver or platinum despite the fact that the investment at their destination is much less widespread than that in gold.
This alternative can be interesting.
Thus, for example, the silver ingot has the advantage of being more accessible than gold bullion (silver: 66% cheaper than gold). However, the case of money has a specificity: the silver ingots are hit by the VAT while the silver coins are not. Thus, silver coins are generally preferred to silver bullion.
To another extent, platinum offers it a larger store of value but it is rarer on the market (platinum: 28% more expensive than gold, comparisons on the 1kg ingot, gold rate in Pakistan on 29/06 / 10). The platinum market is also extremely dependent on the automotive sector (it is part of the composition of certain components) and thus varies according to the health of this industry.
Thus, the market, especially at the level of small investors, focuses on Gold because it is the precious metal that allows the return on investment the easiest (for example the money can only report if it is bought in large quantity).
Why buy gold?
I / Historical point of view
First of all, we must emphasize the historical importance of Gold as a bargaining chip, first and foremost because of the symbolic strength and rarity of this precious metal. Gold really took on a monetary dimension when the first gold coins were minted and put into circulation (6th century BC). Gold then spread throughout the world and retained its currency status until 1973, when it was demonetized (in favor of the floating exchange gold rate in Pakistan system).
Backed by a thousand-year history, Gold reassures and remains the flagship refuge in times of crisis. Its inalterability as well as the forced observation of its great rarity (gold cannot be reproduced industrially) make it a unique product finally, the fact that it is an effective tool for capital protection against the risks of inflation and to monetary troubles logically reinforces the confidence it inspires.
II / Tax point of view
Gold is an asset to which a specific tax system applies. In other words, any gold market trader sees himself or will be forced to pay a tax or tax on his gold.
In the specific case of Gold, it must be emphasized:
The great flexibility that governs the gold market (since 2006) with the choice between two tax formulas.
The possibility of not paying any tax in the event of gold being held over the long term thanks to the general capital gains tax regime (similar to the taxation of real estate assets).