Gold and Silver


Gold

Our world financial economy was once down with one of the worst financial crisis in year 2008 caused by the sub-prime crisis in the US. Even before the world could make a full recovery, another catastrophe spawned from the Eurozone crisis currently struck the global economy again.

Of date, no one can make prediction on how long the crisis will linger or the blow it may cause to the global economies with countries namely Portugal, Ireland, Italy, Greece and Spain facing huge debt-GDP ratios and massive fiscal deficit problems. However, as investor, we can always turn to investment asset such as physical gold to help ease and combat the crisis.

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Gold

Many countries across the world are hit by the economy crisis. European countries, US and India are among the few countries who are currently struggling their way through combating the lethal crisis.

India for example, has increased the import duty of the precious metal to 4% in order to control its citizens from buying and investing in gold. Hence, this resulted in a 21 days boycott against the new policy among the goldsmiths in India. They demand for a reduction of import tax from 4% to 3%.

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Gold

With the softening of gold prices since early this year, it could trigger an increase of sales among gold products in the market. This is because people are more susceptible to purchase the precious metals as they may find the prices more alluring during times like that. Even if gold prices were to drop, they will increase gradually and unlikely to cause havoc selling.

The price of gold per ounce now hovers at US$1,630, compared to US$1,740 in January 2012, and US$1,800 in November 2011.

Since January 2012, due to the rise in demand for gold products, Public Gold has been producing about RM20mil worth of gold dinars, gold coins, and gold commemorative items, compared to a monthly average of RM12mil, for 2011.

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Gold

Lately, a lot of buzz, cries and shouting out there that the world should go back to using gold as money. The purpose of this article is to show what will actually happen to us, to our ‘gold money’ if gold is actually being used as money, to replace our existing fiat paper standard. Let’s assume that we started to use gold as our money beginning in 1996, which is exactly 15 years ago.

First a little bit of history. Gold was widely used before but was removed by our grandfathers. Perhaps today’s generation forgot as to why gold was removed. Gold was found to be inherently unstable, difficult to be used as money. So it was removed and replaced with a better kind of money, our existing paper money. Paper money was so successful, it was the most successful kind of money ever. It is cheap, easy and almost counterfeit proof. Gold money possesses none of those ideal characteristics.

Now on to gold. In order to get the true value of gold, independent from the changes in paper money’s value due to inflation, we have to filter out the effects of inflation on gold. Once removed, the mask that hides the true value of gold will disappear, revealing the actual price of gold, its true price, due to its own supply and demand. The graph is shown below.

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Gold

There are a few ways to invest in gold. One of the most popular ways is via Investment or Savings account with a bank. The main benefit of this method is, investor does not need to worry about keeping the physical gold by themselves.

Currently, there are 5 banks offer gold investment or savings account. Normally, banks will issue either passbook or statement to the depositors. Some of the banks do allow physical gold withdrawal.

Banks that currently offer these services are,

  • CIMB Bank – Gold Deposit Account (GDA)
  • Kuwait Finance House (KFH) – Gold Account – i (GAi)
  • Maybank – Maybank Gold Investment Account (MGIA)
  • Public Bank – Gold Investment Account (GIA)
  • United Overseas Bank (UOB) – Gold Savings Account (GSA)

The following table are the details comparison between 5 investment or savings accounts.

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