>>10Jeff: But the USSR has been gone for a quarter-century. Hasn’t the situation with precious metals changed?
Dmitriy: Repressive Soviet laws are still on the books in modern-day Russia. It is illegal to buy or sell bullion bars anywhere except at banks that have a precious metals license, and very few have them. So if you buy or sell a gold bar from your friend or relative, you commit a criminal offense.
There are also special rules for transportation of bullion bars, and breaking them entails a prison term. Taking bullion bars out of the country is illegal. Selling and buying of foreign-made bullion bars is also illegal. To top it off, there are enormous hurdles for bullion coin importers.
I hasten to add that these laws are not strictly enforced; there are no gold owners languishing in Russian jails. But the laws remain on the books.
To make matters worse, bullion bars are subject to 18% VAT, and as a result, spreads are enormous. For example, one major bullion bank—Nomos—on May 29 sold 50-gram gold bars for 85,938 rubles ($1,547 per ounce) and bought them back for 67,890 rubles ($1,222 per ounce). The gold pm fix that day was $1,255.
Jeff: Wow. Is it the same for coins?
Dmitriy: Coins are the only reasonably priced bullion vehicle available for ordinary Russians. They are not subject to as many restrictions, are VAT free, and sold in banks and licensed numismatic shops.