Gold as a new yet traditional way of saving

Individuals buy gold to hedge against inflation and to have a safe haven in an uncertain environment or to diversify one's portfolio.

On The Breakfast Huddle with Elliott Danker & Manisha Tank, Walter Wee, Chief Investment Officer at KINGS Group shares how gold offers you a way to invest and grow your wealth.

Manisha Tank: Is investing in gold a big thing in Singapore?

Walter Wee: There is a healthy number of institutional and corporate gold investors but there is a surprisingly small number of retail investors, people like you and me who are in the middle-income group. The medium-income and lower-income groups tend to have the wrong impression that it will cost a lot of money to take the first step to invest in gold.

MT: What sort of gold investments are we talking about here?

WW: I would like to focus on physical gold bars. There are several ways to invest in physical gold bars such as buying into exchange-traded funds, mutual funds, or investing in mining stocks. But a simple way of getting into gold investments is actually the act of buying the gold bar itself. It could be one gram or five grams, but that is the first step.

MT: Where do you go to buy a gold bar?

WW: In Singapore, you could either go to a goldsmiths shop or you could purchase it from a reseller. But you should be cautious of the source you buy the gold bar from. Go somewhere credible [even though] it could cost you a little bit more because you will be assured when it comes to certification and authenticity.

Elliott Danker: What is so special about a gold bar? Why is there a drive to buy it?

WW: For gold bangles or jewellery, they have a certain aesthetic shape. To keep that shape, you are looking at 18 to 22 carat. However, there is a certain standard in the market for gold bars, usually triple nine and above. It is kept in the shape of a bar because it is not as malleable and at the same time, it is more valuable.

MT: What are the pros and cons of investing in gold?

WW:

Pros:

• Gold preserves wealth. For example, in the early 70s, an ounce of gold could be worth about US$35 (S$46.36). Today, you can barely buy a good meal with the same US$35 [cash] as opposed to the ounce of gold [if you had invested back then].
• Gold is highly liquid and also globally recognised. You could pawn or sell your gold for cash. Gold is also recognised in the same value across borders.

Con

• Gold is not efficient. Its value is dependent on how people see it because gold by itself, is not as usable or utilised as silver or cash.

ED: Who would recommend this form of savings to?

WW: Gold prices tend to rise in a crisis. I would advise people who intend to save in gold to diversify their portfolio. Those who have just started out in their careers and are unable to set aside a lot of money, I believe it is easy to enter with a small amount, and at the same time, gold bars are not difficult to liquidate if you need money urgently. Start with a simple amount and if you feel comfortable, you can always scale up.

Listen to the full podcast to find out how you can start saving in gold in a fun and affordable way:

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ALSO READ: Going for gold: How to invest in this commodity

This article was first published in MONEY FM 89.3.