GOLD VS SGD (20 Nov 09)

In my last post on gold "GOLD VS SGD Chart. Why Gold might be a good investment in Singapore? ", I mentioned that Gold is might be a good investment/hedging for inflation in Singapore. We shall do a update for gold price in term of SGD.

The closing price of GLD 10US$ has reached $112.360, and the USD/SGD is 1.3888 on 20 Nov 09. So if we multiple both the value together, we will get S$156.0456/GLD. In the beginning of 2009, I have calculate the value to be S$121.18/GLD. So GLD has actually increased by 28%.

But having say that, I am not a fan of gold is because it doesn't give me dividends. I treat it as a hedge for inflation. And one more thing, gold is not meant for shorting. Shorting gold has no meaning at all and you are exposed to high risk as you are dealing with both GLD price in USD and the exchange rate in term of USD/SGD in singapore.

GOLD VS SGD Chart. Why Gold might be a good investment in Singapore?

In my last post on gold, I mentioned that gold might provide a good hedge to the dollar. I am using SPDR GOLD SHARES for this example. Gold are traded in USD. I will combine the USD/SGD and GLD/SGD so as to see whether is gold stills a good hedge. Instead of taking all individual values from both charts, I just take values from beginning of each year. Please note that the 2010 values are estimated values from OCT 09.



I multipled USD/SGD and GLD/USD values together to get GLD/SGD. You can see that gold price keeps going up from 2005 to 2009 Oct. Even though market crash from 2008 to 2009, the value of gold in term of SGD still go up. Isn't it a safe haven investment? From $70 to $140, is about 15% compound annually.

Click here if you are interesting in how to buy gold.

Update: GOLD VS SGD (20 Nov 09)

How to buy gold for hedging purposes?

If you have decided to hedge your money by buying gold, you must know what types of gold are available in the markets. There are three ways you can buy gold.

1)Buying gold from jewellery shop.
Well, the first thing in your mind is to buy gold from jewellery shop. This type of gold might not be a good hedging as firstly you will be charge on the workmanship for the design, and secondly you will be charge GST(currently at 7% as of today). When you intend to sell it next time, you may be charge GST again. With all these, your value of gold will go down a lot.

2)Buying gold bullion.
What is gold bullion. It is commonly known as gold bar. Yes the one you always see in movies showing a safe room which a lot of gold bars inside. It also comes in term of coins. Again this types of gold may not be good for hedging too. Firstly, you will be charge GST, secondly you must find a safe place to store it. If you keep in the bank safe, you need to pay an amount every year.

3)Buying paper gold.
The third type is paper gold. Please it is not the one you buy and burn during the hungry ghost festival. Paper gold are something like shares. Like shares, you can buy it if you have a trading account. The only extra cost is commission when you buy or sell your paper gold. This commission is generally less than 1% which is much lower than GST. In SGX, there is a ETF called GLD 10US$ which is a form of paper gold. One thing to note, this ETF is traded in US$. Before you start buying (or selling), you must take the exchange rate between USD and your currency (singapore dollar).
You can also invested in paper gold using the UOB Gold Savings Account. However beware of the monthly charges.