SG Wealth Builder was alerted to an article written by fellow finance blogger on “Precious Metals: The warning signs are already here”. Personally, I like that article because it provides me value-added information on the latest updates on precious metals. The blogger highlighted that there is currently a tight supply of bullion even though the spot prices for gold and silver are falling. He also cited several notable reputable precious metal dealers to buy from, such as BullionStar. The challenge now is finding trustworthy dealers who have inventory to sell bullion to investors because of the huge demand.
As a wealth builder in Singapore, whilst I have been tracking the prices of gold and silver for quite some time, I did not really note down the price premiums for the gold bars that I bought like what the blogger did. This is because I have always been confident on the long term prospects of both gold and silver, as such, I don’t see the point of monitoring the price premiums. Nonetheless, I was really impressed by the blogger’s research and I must say he really knows what is considered the “normal price premium” for different products.
In his post, he wrote “Today spot silver is at $14.65, but American Eagles are selling for $29.16. When I bought my American Eagles 2 months ago when spot silver was $14.80, I bought the Eagles at $24.57! Spot prices are 1% lower, but physical prices are 18% higher? Whoa, that’s weird, isn’t it?”
Perhaps I can help to address his query.
Even though the blogger has been tracking the price premiums for gold and silver bullion, he failed to realize the difference between spot price and market premium. The spot-price is the price for which someone can buy certificates or futures on the commodity exchange. On the other hand, market premium reflects the difference between the spot price and the price of physical metal on the real physical market. The market premium is dependable on several factors such as default risk in the commodity exchanges and the lack of production capacity for gold and silver bars.
So you can see that even though spot price and market premium are inter-related, they are not directly dependant on each other. That is why even though the spot price for silver is lower compared to 2 months ago, the blogger ended up paying more for his silver coins.
From the article, my general impression is that Singaporeans’ knowledge on physical gold and silver are still lacking. That is probably why many Singaporeans got ripped off by dishonest dealers or con artists. It is important that you buy gold and silver from reputable dealers who are willing to share their knowledge on the precious metal market with you. To this end, just like BullionStar, one of the goals of SG Wealth Builder is to educate Singaporeans on the merits of owning gold and silver bullion as a means of wealth preservation.
Starting 8 September 2015, BullionStar will allow customers to add and keep funds on their BullionStar accounts.
As a BullionStar account holder, you will be able to keep funds on your BullionStar account in Singapore Dollars, US Dollars and Euros.
Keeping funds on your BullionStar account will greatly simplify trading in and out of bullion positions as well as making it easier to stay liquid without involving bank transactions. This will speed up the transaction flow with BullionStar as well as save you repeated and costly bank fees.
When selling bullion to BullionStar, you will have the option of keeping the funds on your BullionStar account to re-purchase at a later time. You can keep funds on your BullionStar account as long as you like and you can withdraw the funds at any time.
You will be able to check your balance, fund your account and withdraw funds under “My Account” after logging in to your BullionStar account.
Notwithstanding the above, it will be optional to fund your BullionStar account prior to making purchases. You will thus continue to be able to place and settle orders just like now.
Funding Your BullionStar Account
There will be two different ways of funding your BullionStar account.
1) Add Funds via “My Account”
You will be able to fund your BullionStar account upfront via “My Account” after logging in to your BullionStar account.
2) Top-up Funds when Ordering
Alternatively, you will be able to top-up funds to your BullionStar account at the checkout page while placing an order.
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