The current dismal economy outlook and stock market conditions may entice many wealth builders to buy gold and silver bullion. After all, the price of gold has surged by 25% in the first half of this year, making it one of the best performing assets. You can buy gold bullion in Singapore from local bank UOB or various bullion dealers.
According to the latest World Gold Council report, gold continued its red-hot form, with global gold demand reaching 2,335 tons in the first half of 2016, 16% higher than the previous record in H1 2009. During the second quarter, overall gold demand grew to 1,050t, up 15% from the Q2 2015 figure of 910t. The growth was due to considerable investment demand as a result of global economic and political uncertainties.
The Chinese always has a penchant for gold and like to buy gold bullion. So not surprisingly, for the past 10 years, China has become the world’s largest gold producer and importer. The Chinese banks play a key role in making a gold hub in China through a range of gold-related business activities. In fact, more than 50% of investment demand involving sales of gold bars and coins is fulfilled through commercial banks’ network of branches.
Gold Accumulation Plan
Against this backdrop, the first Gold Accumulation Plan (GAP) was launched by World Gold Council and ICBC in 2010, providing efficient and flexible platform for wealth builders to buy gold bullion. Such plan is backed by real physical gold and investors can choose to redeem physical metal at any point of time.
Interestingly, GAP trading volume exceeded 500 tons in 2014 and 2015, indicating that investors in China are using this product to trade for short-term gains. This trend contrasts greatly with those investors buying physical gold bars and coins for the long-term.
Buy gold bullion in Singapore
In Singapore, UOB is one of the largest local banks and is the only bank that sells physical bullion to retail investors. It is also the only bank that has Gold Savings Account (GSA) and Silver Savings Account (SSA). The biggest advantage of opening a precious metal savings account with UOB is the convenience of transacting online via UOB Personal Internet Banking or UOB Mobile. You can also use your CPF funds to buy gold or silver through GSA or SSA.
However, unlike the GAP in China, investors should take note that UOB’s GSA and SSA are not backed by physical bullion. Thus you cannot convert your account balances and take physical delivery of gold and silver or certificates. Basically, UOB’s gold price is benchmark to international prices but there are no underlying assets.
Another important thing to highlight is that UOB’s GSA and SSA are not deposits, so they are not an insured deposit within the coverage of the Deposit Insurance and Policy Owners’ Protection Schemes Act. Hence, even if UOB is considered a safe bank that has a minimum possibility of going bankrupt during a financial crisis, in the event of a bank-run, your investments are not protected.
Bullion Savings Program (BSP)
Alternatively, you can buy gold bullion in Singapore through dealers like BullionStar. The Bullion Savings Program (BSP) is BullionStar’s savings and trading solution for physically allocated Gold, Silver and Platinum. With the BSP, you can buy BSP Grams of Gold, Silver or Platinum that is fully backed up by physical precious metals in BullionStar’s stock inventory. Grams in the Bullion Savings Program (BSP) are fully allocated physical precious metals. BSP Grams are available in Gold, Silver and Platinum for a low price premium and a low spread. This provides you with a cost-efficient way to start saving in precious metals.
BSP Grams can be converted to physical bullion bars at any time or sold back to BullionStar at any time. However, the CPF Board restricts what investments can be held under the CPF so it’s unfortunately not possible to hold BSP grams under the CPF. Other facts about BSP as follows:
There is no minimum or maximum purchase or maintenance level of BSP grams. BSP gram has to be bought in units of whole grams though so it’s not possible to e.g. buy 0.1 grams.
There’s no fee for buying or selling although starting 1 February 2016, there will be a storage charge of 0.09 % p.a. of the average value for BSP grams of gold and 0.19 % p.a. of the average value for BSP grams of silver and platinum. For an investment of e.g. SGD 10,000 that corresponds to a mere SGD 9 per year for gold or SGD 19 per year for silver or platinum.
There is no GST added as BSP grams fall under the Fourth Schedule of the GST act and is thus exempted from GST.
There is no penalty for early account closure. Customers don’t need to open any separate account to hold BSP grams. The BSP grams are held directly on the ordinary customer account and can be sold back to BullionStar or converted to physical bullion at any time.
UOB’s GSA and SSA are basically another means to own paper gold or silver. Given a choice, I would rather go for BullionStar’s BSP as the account balances can be converted to real gold or silver.
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SG Wealth Builder