Simple Guide to Using Gold as Protection for South Africans

Gold can work as a safety net for your money if you think of it as insurance, not as something that will make you rich. The key is keeping it outside South Africa and not putting too much money into it.

Why gold can protect you

Protection against a weaker rand

Gold prices are set in US dollars worldwide. When the rand gets weaker against the dollar, your gold becomes worth more rands, even if the actual dollar price of gold stays the same.

Safety during crises

When markets panic and investments like stocks drop sharply, gold often holds its value better. It doesn't always work this way, but it tends to help most when things get bad.

Keeping money outside one country

By owning gold stored in another country, you're not putting all your eggs in one basket. If South Africa introduces strict money controls or other problems, your offshore gold is separate.

Think differently about gold

Don't expect gold to grow your wealth like property or shares might. Instead, think of it as a savings account in a different currency and location, something that should keep its value over time, especially during tough periods.

Ways to own gold offshore

1. Physical gold bars stored abroad

Your name is on specific gold bars kept in places like Switzerland, Singapore, or London.

Good: You truly own it, low yearly fees, can move it if needed.

Not so good: Paperwork to set up, storage fees, takes effort to sell.

2. Gold investment funds (ETFs)

Like buying shares that represent gold. Easy to buy and sell through investment accounts.

Good: Very easy to trade, can start with small amounts.

Not so good: You're relying on the fund company, can't usually exchange for actual gold.

3. Digital gold platforms

Apps or websites where you can buy fractions of gold bars.

Good: Simple to use, can buy tiny amounts, instant transactions.

Not so good: You're trusting the platform; read the fine print carefully.

4. Gold mining companies

Buying shares in companies that dig gold out of the ground.

Good: Can make more money when gold prices rise.

Not so good: Much riskier, doesn't protect you well in crises.

5. Physical gold coins in a foreign safe deposit box

Actual coins you can touch, stored outside the banking system.

Good: Completely tangible, outside the financial system.

Not so good: Hard to access, insurance issues, difficult to transport.

How much gold should you own?

Standard amount: 5–10% of your investments

More (10–20%) only if:

• Nearly all your money and income is in rands

• You don't have other dollar investments

Less (0–5%) if:

• You already have US dollar cash saved

• You own foreign shares or investments

• 
  

A simple example in rands

Imagine you own R100,000 worth of gold:

• If the rand weakens by 15% but gold's dollar price stays flat → your gold is now worth R115,000

• If gold's dollar price rises 10% but the rand stays stable → your gold is worth R110,000

• If both happen (rand weakens 10%, gold rises 8%) → your gold is worth about R118,000

  
  

How to set it up (simple checklist)

Getting started

• Open an account with a foreign investment company or gold storage service in a stable country

• Choose "allocated" gold (specific bars with serial numbers belong to you) rather than "unallocated" (you just have a claim)

• Make sure your name or your family trust's name is on the ownership documents

  
  

Picking the right product

• For investment funds: Check that they actually own physical gold with published lists of bar numbers

• For stored bars: Use well-known vaults (not banks) with insurance and regular independent checks

  
  

What it costs

• Investment funds: Should cost 0.5–0.7% per year

• Stored bars: Should cost 0.4–0.8% per year for storage

• Buying/selling fees: Usually 0.2–1.5% depending on how much you're trading

  
  

Making sure you can access your money

• Try a small test: buy a little, then sell it, to see how it works

• Have two ways to sell: through your platform and through another dealer

  
  

South African rules

• Follow the rules about moving money offshore and paying tax on any profits

• These rules change, so check with a professional before moving money out of SA

  
  

Which option should you choose?

• Want it simple and easy to sell quickly? → Foreign gold investment fund

• Want the strongest ownership rights? → Physical bars in audited storage abroad

• Want potential for bigger gains but accept more risk? → A small amount in quality gold mining companies alongside actual gold

  
  

Fitting gold into your overall plan

• Use money from your rand savings or South African shares to buy gold (this spreads your risk better)

• Keep some US dollar cash or bonds alongside your gold to balance the ups and downs

• Check once a year and adjust if your gold has grown or shrunk a lot (for example, if you want 7% and it's now 10% or 4%, sell or buy to get back to 7%)

  
  

What can go wrong?

Price differences: Investment funds might trade slightly above or below gold's true value. Solution: Use big, popular funds and don't trade right when markets open.

Country problems: Very unlikely, but governments could seize assets or block money movements. Solution: Choose stable countries; consider splitting storage between two locations.

Long periods of no growth: Gold can sit flat or drop for several years. Solution: Don't put too much in; own other investments that pay interest or dividends.

Start small to test it out

Begin with just 1–2% using a foreign gold fund. Watch how it works for three months, check the fees, how easy it is to use, how quickly you can sell. If you're happy, increase to your target amount and maybe add some stored bars.

Quick rule of thumb

• No US dollar savings yet? All your money in rands? → Put 7–10% in offshore gold

• Already have dollar cash and foreign shares? → 3–5% in gold is enough

  
  

What this assumes

• You're investing for at least 3 years

• You want to protect your money, not earn high returns

• You can legally open offshore accounts and follow SA rules

  
  

One simple question to start

What amount feels right for you to begin with: 3%, 5%, or 10%?