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Why Singaporeans should invest in gold bullion

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This week, an article by Reuters reported that gold jewellery exports by India is expected to grow by 25% in the year to March 2015. This is an impressive figure given that last year, the Indian government raised the import duty to a record 10 percent and also make it mandatory for merchants to export 20 per cent of the imported gold. In Asia, various data released by gold analysts indicated that China and India will continue to be the leading consumers for gold. The key reason for Asian’s fascination for gold is because the Chinese and Indians understand the value of gold as a means to preserve wealth.

Over in Singapore, the government is beginning to appreciate the role of gold bullion in the investment fraternity and has been implementing policies to develop Singapore as a metal trading hub for gold. In 2012, the government removed 7 percent GST from investment-grade precious metals, hoping to spur Singaporean’s demand for gold.

BullionStar CEO

As a result of this policy shift, many gold dealers, such as BullionStar, has set up shop in Singapore. For many international and domestic investors seeking safe haven for their precious metals, Singapore is considered one of the best choices because of its reputation for being a safe country with low crime rate. BullionStar stands out from the rest of its competitors as it offers convenient, end-to-end solutions for the purchase, sale, storage and delivery of an assortment of bullion products through its BullionStar’s “My Vault Storage”.

Three ways to build your wealth with gold. You may buy “paper gold” such as gold mining stocks or gold Electronic Traded Funds (ETFs) through the stock exchange.  However, it is important to note that investing in these investment products carry substantial risks for average investors because of the potential risk of defaults on the commodity exchanges. Secondly, you can choose to invest in “digital gold”. In Singapore, UOB is probably the only local bank that offers gold and silver saving accounts. Lastly, most average retailers prefer to invest in “physical gold”, such as jewellery and bullion, which consists generally of coins and bars.

Personally, I prefer putting my money in physical gold as there is virtually no risk of defaults. Furthermore, being a more traditional person, my belief is always “seeing is believing”. I prefer to take possession of my gold bars, rather than holding “paper gold” or “digital gold”.

Last year, gold prices has witnessed a massive correction because of huge sales out of major ETFs. That had provided an opportunity for many average retailers to enter the market at reasonable prices. On the other hand, big players, such as China central bank, had also made use of the window of opportunity to accumulate gold to build up their reserves. Thus, the outlook for gold is still intact as both the retail and institutional demand are still strong. In fact, Bloomberg revealed that China and India are still consuming about 8 million ounces of gold per month. It is unlikely that this demand will taper off, so going forward, Singaporeans should seize the opportunity to accumulate gold whenever there is a correction in price.

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Updated: January 22, 2016 — 1:13 pm

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