You wouldn’t be caught dead with an Ah Pek gold chain around your neck. So obiang! But that doesn’t mean you might not want to buy some of the yellow precious metal yourself.
Gold isn’t just for show. It also offers you a way to invest and grow your wealth. And to do so, you don’t have to cart around massive gold bars… unless you want to. But how do you start investing in gold?
How do you invest in gold in Singapore?
There are a few main ways Singaporeans can invest in gold:
Buy physical gold
Physical gold is usually sold to investors in the form of gold bars or coins. You will have to store your shiny loot at home or in a safe deposit box at the bank. Any form of physical gold is fair game, so that gold chain around your neighbourhood ah pek’s neck can also enjoy an increase in value if gold prices rise. But no, you don’t need to start poking around those gold jewellery store at Little India.
You can buy physical gold for investment purposes at banks. For instance, it’s possible to buy gold bars or gold bullion coins at UOB.
Buy gold certificates
Buying gold certificates is like buying physical gold, except you don’t have to cart those gold bars home. Instead, you are issued a certificate, which can usually be exchanged at any time for cash or physical gold.
Buy gold using a gold savings account
Some banks give you the option of opening a gold savings account, which enables you to buy and sell gold without having to deal with physical delivery.
Just like gold certificates, a gold savings account lets you buy and sell gold without having to deal with the real thing. Your gold deposits will simply be reflected in your account balance.
Buy into gold-related ETFs or other types of funds
This works in much the same way as you would invest in stocks or other commodities through an ETF. You buy and sell your shares through a broker or online platform. You do not have to deal with the gold in its physical form.
- Min. Commission Fee US Stocks
- US$1
- Min. Commission Fee SG Stocks
- S$1
- Min. Funding
- S$0
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Some multi-asset ETFs, such as those you can buy with robo advisor StashAway, also include gold as one of their asset classes, together with others such as stocks and bonds.
See a listing of online brokerages for ETF investment in Singapore.
Buy stocks in gold-related industries
While investing in gold-related industries isn’t exactly the same as investing in the precious metal itself, the fortunes of these industries often mirror gold prices. When gold prices soar, stock prices of gold-related industries also rise in tandem. The reverse is also true.
Gold-related companies include those involved in gold mining, gold exploration and gold production.
Trade futures, options, commodities and forex
If you just want to make a quick buck by trading gold rather than hold on to it as a long-term investment, you can trade gold on the futures, options, commodities and forex markets. For instance, forex traders can track the price of gold against the USD or some other currency. If you’re not an experienced trader, you probably shouldn’t consider this option.
See a listing of online brokerages for forex trading in Singapore.
Why invest in gold?
Your feng shui master says your element is metal, so investing in gold will bring you luck. Just kidding!
Actually, there is a good reason to add gold to your portfolio even if you have other investments such as stocks. That’s because gold is traditionally thought of as a “safe haven” in times of economic crisis.
In a recession, you can expect stock and property prices to be depressed. Gold prices, on the other hand, tend to rise in times of economic and political uncertainty. Holding gold can thus be a way to hedge against economic downturns.
In addition, the purchasing power of gold has remained fairly constant over a long period of time, which has given rise to the phrase “the Golden Constant”. By contrast, 30 years ago, the SGD could buy a lot less than it can today. This makes investing in gold a good way to hedge against currency risk. If your currency crashes and burns, your money might become worthless, but your goal will retain its value.
Finally, investing in gold adds yet another asset class to your portfolio, which is great if you’re looking to diversify your investments further in order to spread out the risk.
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- Min. Commission Fee US Stocks
- US$3.88
- Min. Commission Fee SG Stocks
- 0.08% (no min.)
- Min. Funding
- $0
What are historical gold prices like?
So, how has gold as an investment really performed over the last few decades? Here are historic prices of gold from 1989 onwards.
| Year | Price (USD/oz) | % Change |
| 1989 | $401.00 | -2.23% |
| 1990 | $386.20 | -3.69% |
| 1991 | $353.15 | -8.56% |
| 1992 | $333.00 | -5.71% |
| 1993 | $391.75 | 17.64% |
| 1994 | $383.25 | -2.17% |
| 1995 | $387.00 | 0.98% |
| 1996 | $369.00 | -4.65% |
| 1997 | $287.05 | -22.21% |
| 1998 | $288.70 | 0.57% |
| 1999 | $290.25 | 0.54% |
| 2000 | $272.65 | -6.06% |
| 2001 | $276.50 | 1.41% |
| 2002 | $342.75 | 23.96% |
| 2003 | $417.24 | 21.74% |
| 2004 | $435.60 | 4.40% |
| 2005 | $513.00 | 17.77% |
| 2006 | $635.70 | 23.92% |
| 2007 | $836.75 | 31.59% |
| 2008 | $869.75 | 3.97% |
| 2009 | $1,087.50 | 25.04% |
| 2010 | $1,420.25 | 30.60% |
| 2011 | $1,531.00 | 7.80% |
| 2012 | $1,664.00 | 8.68% |
| 2013 | $1,204.50 | 27.6% |
| 2014 | $1,199.25 | -0.4% |
| 2015 | $1,060.00 | 11.6% |
| 2016 | $1,145.90 | 8.10% |
| 2017 | $1,291.00 | 12.7% |
| 2018 | $1,279.00 | -0.930% |
| 2019 | $1,514.75 | 18.4% |
And in chart form, so you can see the price fluctuations more clearly.
As you can see, gold prices have been steadily rising since the mid-2000s, and are at a bit of a high right now. You can also see that gold prices started their sharp ascent around the time of the global financial crisis of 2007/2008. People who got burned during the financial crisis would have been glad if they had added gold to their portfolios earlier.
What are some gold investing scenarios?
At the time of writing, the price of gold in USD/oz was $1,570.70.
If you had bought 10 ounces of gold in 1989, you would have paid about $4,010. Today, those 10 ounces would be worth $15,707. If you had held on to that gold till today, your investment would have yielded $11,697 in 30 years.
Now, let’s say you bought 10 ounces of gold ten years ago in 2008 and held on to it till today. You would have paid $10,875. Today, those 10 ounces would be worth $15,707. Your investment would thus have yielded $4,832 in about 10 years.
It is important to note, however, that the above worked examples are just based on the price of the gold itself. In reality, your profits would have been reduced slightly by any fees paid to your bank, broker, trading platform or other service provider.
Investing in gold is really no more difficult than buying into any other ETF or fund. It’s also a tried and tested investment asset class that you should consider if you’d like to hedge risk in your portfolio.
Do you invest in gold? Share your tips in the comments!
- Commission Fee US Stocks
- US$0
- Options Commission Fee Per Trade
- US$ 0.70
- Min. Funding
- US$3,500
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