But: Should we take advantage of the pullback to buy?
After months of soaring prices, gold has fallen 28% from its January peak, and the price per ounce has dropped back below $4,000. This is enough to pique investors’ interest. But buying gold at a low point is less about speculating on the price and more about strategy: how should it be incorporated into an investment portfolio, in what form, and under what tax rules?
The scenario is almost always the same. As long as gold is rising, no one wants to miss out; as soon as it falls, everyone wonders whether they should rush in. After a spectacular rally, the precious metal has just corrected by 28% from its January high, bringing the price per ounce below the symbolic $4,000 mark. For investors, the real question isn’t whether the price will rebound next week. It’s about understanding what role gold can play in a wealth management strategy, based on their investment horizon, need for security, and risk tolerance.
The first misconception to dispel: gold should not be treated like a stock that you hope to resell for a quick profit. Historically, gold has served as insurance, not a driver of returns. It pays no income, and its price can remain stagnant for years, but it tends to move in the opposite direction of the stock markets and protect capital during monetary or geopolitical shocks. This is precisely what justifies its inclusion in a diversified portfolio, and what argues for a gradual approach rather than a purchase driven by the emotion of the moment. Laurent Schwartz, president of the Comptoir National de l’Or, is among those who regularly highlight this distinction between speculative impulses and the logic of diversification.
Diversify Without Overweighting
How much gold should you hold? There is no single answer, but wealth management advisors generally suggest a modest range—from a few percent to about 10 percent of one’s financial assets. The idea is not to bet on the metal itself, but to use it as a safety net. Beyond that, the portfolio becomes dependent on an asset that generates no income and whose volatility, as we’ve just seen, can be severe. The current correction, in fact, illustrates the danger of buying all at once at the peak: spreading out purchases over time averages out the cost basis and prevents diversification from turning into a timing gamble.
The other pitfall is buying solely in response to price movements, whether up or down. A 28% pullback is neither a buy signal nor a sell signal in and of itself: it all depends on the time horizon. For those thinking in terms of ten or fifteen years, the exact entry point matters little; for those hoping for short-term gains, gold is rarely the right investment vehicle. Moreover, the recent correction is nothing out of the ordinary: in the past, gold has already experienced sharp pullbacks before regaining its role as a safe-haven asset. The challenge for investors is less about predicting the bottom of the cycle than about defining in advance the role they assign to this asset in their portfolio.
Physical or Paper, and What Are the Tax Implications?
The choice of investment vehicle remains—and it’s far from trivial. Physical gold, in the form of coins, small bars, or ingots, allows for direct ownership but requires managing storage, insurance, and resale. “Paper” gold, through financial products backed by the metal, offers liquidity and simplicity, at the cost of indirect ownership. For a first purchase, it’s best to opt for recognized coins or small bars that are easy to resell, rather than a format that’s too specialized. The issue of storage is also significant: keeping gold at home exposes you to the risk of theft and the lack of adequate insurance, while renting a safe deposit box or using a professional custodian incurs costs that must be factored into the profitability calculation. Finally, liquidity varies depending on the form: a common investment coin can be resold quickly and anywhere, whereas a large bullion bar requires finding the right buyer at the right time.
Finally, tax considerations should be taken into account at the time of purchase. In France, investment gold is exempt from VAT upon purchase. Upon resale, two tax regimes apply. By default, the flat-rate tax on precious metals applies, amounting to 11% of the sale price plus 0.5% CRDS, levied regardless of any capital gain. Optionally, and provided the seller has a dated purchase invoice, they may switch to the capital gains tax regime, which is taxed at 36.2% but includes a 5% deduction for each year of ownership beyond the second year, resulting in a total exemption after twenty-two years. Keeping your receipts is therefore no minor detail: it is what ultimately turns a sale into a net tax gain. Gold rarely rewards those in a hurry; it rewards those who know how to wait.
