Buy Gold And Keep?

[summerela 0]

Why do the older gen always advise one to buy gold and keep if there are spare cash ard?

[korea 0]

Why do the older gen always advise one to buy gold and keep if there are spare cash ard?

aiyo b'cos gold has value mah.

[Phantom 1]

Why do the older gen always advise one to buy gold and keep if there are spare cash ard?

Overview

Gold has long been considered one of the most precious metals, and its value has been used as the standard for many currencies as civilisations and empires have risen and declined.

Due to its rarity and durability gold has historically been used as a method of payment because of its unique properties.

Diversification

Independent studies have shown that traditional diversifiers such as bonds often fail during times of market stress or instability. Even a small allocation of gold has been shown to significantly improve the consistency of portfolio performance during both stable and unstable financial periods. Gold can improve the stability and predictability of returns. The performance of gold is not correlated with other assets because the gold price is not driven by the same factors that drive the performance of other assets.

Dollar hedge

Gold is often cited as being an effective hedge against fluctuations in the US dollar, the world's main trading currency. If the dollar appreciates, the dollar gold price falls and similarly a fall in the dollar relative to the other main currencies produces a rise in the gold price.

Inflation

The purchasing power of gold has not diminished since Biblical times. According to the Old Testament, during the reign of King Nebuchadnezzar, an ounce of gold bought 350 loaves of bread. Today, an ounce of gold still buys 350 loaves. The value of gold therefore, in terms of real goods and services that it can buy, has remained remarkably stable. In contrast, the purchasing power of many currencies has generally declined. There is a growing body of research to bolster gold's reputation as a protector of wealth against the ravages of inflation. Market cycles come and go, but gold has maintained its long term value.

So gold is often bought to counter the effects of inflation and currency fluctuations. In fact extensive research from a range of economists has consistently shown that, in spite of price fluctuations, gold has consistently reverted to its historic purchasing power parity; and during periods of financial, economic and social turmoil, gold has been a safe refuge when the value of other assets was all but destroyed.

Safe haven

In volatile and uncertain times, we often witness a ‘flight to quality', as investors seek to protect their capital by moving it into assets considered to be safer stores of value.

Gold is among only a handful of financial assets that is not matched by a liability. It can provide insurance against extreme movements on the value of traditional asset classes that can happen in unsettled times.

Gold's liquidity is one of its critical investment attributes. Gold can be traded around the clock in larger size, at narrower spreads and more rapidly than many competing diversifiers or mainstream investments.

Gold is still considered an important reserve asset by most central banks, even though it is no longer the centre of the international financial system.

Gold is the only reserve asset that is no-one's liability. This means that, unlike a currency, the value of gold cannot be affected by the economic policies of the issuing country or undermined by inflation in that country.

Gold has a track record of holding its real value over the centuries. Since gold is no-one's liability, it can not be repudiated and holding it is a safeguard against potential unforeseen crises. Gold also brings much needed diversity to a central bank portfolio due to its low correlation with key currencies and its strong inverse correlation with the US dollar.

Coins and bars

Bullion coins and small gold bars, for example, which each contain a minimum of 99.5 % fine gold, are appropriate for private investors wishing to buy small amounts.

Bullion, which is legal tender in its country of origin for its face value, should not, however, be confused with commemorative or numismatic coins.

Gold accounts

There are two types of gold accounts: allocated and unallocated.

Holding gold in an allocated account is rather like keeping it in a safety deposit box. Specific bars (or coins, where appropriate), which are numbered and identified by hallmark, weight, and fineness, are allocated to each particular investor, who has to pay the custodian for storage and insurance.

Many investors prefer to hold gold in unallocated accounts, which are conceptually similar to foreign exchange accounts. Unless investors take delivery of their gold (usually within two working days), they do not have specific bars ascribed to them. An advantage of unallocated accounts is that investors do not incur storage and insurance charges. However, they are exposed to the credit-worthiness of the bank or dealer providing the service in the same way that they would be if they had any other type of account.

As a general rule, bullion banks do not deal in quantities under 1000 ounces. In this sense, they can be thought of as wholesalers or business-to-business entities. Their customers are institutional investors, private banks acting on behalf of their clients, central banks and gold market participants wishing to buy or borrow large quantities of gold. Major bullion banks are members of the London Bullion Market Association and their contact details are available on the "List of Members" section of the LBMA website.

However, other opportunities exist for investors wishing to open gold accounts representing less than 1000 ounces.

Exchange Traded Funds

Spot Gold, Futures and Options

Gold certificates

Gold-linked structured products

Gold mining equities

Gold investment funds

Hope this helps!

[summerela 0]

wow thanks Phantom, actually I was thinking more in line with those 916 gold in goldsmith shop but ur direction sound much better.

[applefreak 1]

actually the older gen prefer to buy gold and keep bcoz they've gone through the era of dollar notes suddenly becoming worthless

imagine what we have in our bank accounts now suddenly become nothing

as in the thousands of dollars can't even get you one brick then we might also become like them liao...

still remember a clip from some news where the russians (i think) carting a carton of dollar notes just to exchange it for a bunch of bananas !!

[Phantom 1]

wow thanks Phantom, actually I was thinking more in line with those 916 gold in goldsmith shop but ur direction sound much better.

lol...

my pleasure.

[raincole 0]

Where to keep Gold? In deposit?

[ARCHer 0]

Like many commodity prices in recent times, gold has appreciated significantly over the last few years. In Dec 2000, spot gold was trading at around USD 272.25 per ounce. The high was around USD 678.45 per own in Apr07, although the prices have dropped to around USD 648.79 today.

If you are investing in physical gold, your main return comes from appreciation of gold prices (plus the luxury if wearing jewellery if your gold is in jewellery form). The disadvantage to investing in physical gold is that there is storage/insurance cost. You also lose out on 'gold interest', which is sort of like lending out the gold and charging an interest for it.

[Phantom 1]

Where to keep Gold? In deposit?

lol.. not a good idea. storage costs not cheap.

they don't sell small denominations also.

[applefreak 1]

i only know of uob precious metal account

think you can buy gold or silver and keep it like a savings account

instead of $ and 0, you'll see your balance in gm of metal bah

[Homeowner 1]

Gold is often cited as being an effective hedge against fluctuations in the US dollar, the world's main trading currency. If the dollar appreciates, the dollar gold price falls and similarly a fall in the dollar relative to the other main currencies produces a rise in the gold price.

Gold also brings much needed diversity to a central bank portfolio due to ....its strong inverse correlation with the US dollar.

Don't think it's a good time to buy gold now 'cos the dollar is really low. The price of gold has more than doubled since 1999. A lot of people remembered the price shot up really high during the oil crisis in 1973, and bought gold during the 1980s thinking the price has come down. Then, it went all the way down. In 1999 or 2000, it actually went down to $14 per gram at the jewellery shops. As Archer said, " In Dec 2000, spot gold was trading at around USD 272.25 per ounce." The newspaper featured little old ladies buying little gold bars. What was unsaid was that a lot of people lost money in the gold funds.

[jeanettetan 0]

Inflation expected to rise again significantly this year....think gold prices will continue to go up??

[niwdehos 0]

Inflation expected to rise again significantly this year....think gold prices will continue to go up??

inverse correlation between stock performance and gold prices too.... flight to safety!

Saw this on fundsupermart...

!!

[Brainstorm 0]

Not really recommended.... heard from my uncle that he bought gold to invest few years back, the gold need to be kept in safe. You can never take it out to see, once you take out to see (only see, didn't even touch) the value will drop.... and you have to continuously pay for the fee to upkeep the gold in the safe. In the end, though he make some money when gold price rise, the profit need to compensate for the fee, he said that he wont have easily make more else where, eg. foreign fixed deposit, shares, etc.

Those who really make money from gold are big players, where they have other means to sell off the gold to make profit, eg. gold smiths, industry uses, etc. Normal people like us very difficult to profit from it unless you are very lucky to catch the price jump in gold and in a rather short period....

[Ah Keong 0]

I wouldn't use gold as a form of investment unless I'm high net worth. But the precious metal is a good form of hedge against inflation. If the 700b bailout goes through, the stock market would have some short term relief but in the long term, the dollar will be battered. The USD is the trading currency for gold so you do the sums. Venezuela and Iran are just 2 very smart OPEC to stop accepting the USD. Other diplomatic ones like UAE would redump the USD back to buy up the foreclosures.

For Singapore's case, MAS should be reliable enough to have a balanced basket of currencies so the SGD should be safe. But we can never be too sure. I wouldn't want to be in the situation of the Weimar Republic just before the Third Reich take over.

Having said that, I would NEVER buy paper gold. Only physical gold and it's not too difficult to store. It can be easily bought from UOB HQ or any branches (if you can wait) or even Mustafa. Storage of gold can be done at Cisco safe deposits. There's no way the value of gold will drop after seeing/touching/caressing/licking if it is just pure bullion or bar. Value of that particular piece of gold will drop if it had been slabbed and graded by professional agencies as perfect strikes or otherwise.

One last advise for all who are keen to own the precious metal, pay GST for all you gold, silver, platinium, palladium etc ...