What a golden start for gold! Since the beginning of 2017, gold went on a rampage and increased in value by 6% within 2 weeks. This will be a short post to capture the latest trend on gold price.
What actually fuelled the surge in gold price? Many analysts could not really pinpoint the real cause but it certainly seems like 2016 all over again. Back then, when the US Federal Reserve raised interest rates for the first time in many years at the end of 2015, gold price also dramatically rose in value.
Will history repeats itself for gold price? The current trend indicates so. Since US Federal Reserve raised interest rates by 25 basis points on 14 December 2016, gold price crashed to USD 1129 per ounce but subsequently recovered and spiked to USD 1200 per ounce in 2017.
Conventional wisdom indicates that once interest rates in USA increased, gold price will likely drop because the precious metals does not yield interest. The opportunity cost of holding physical metal under such circumstances made cash more appealing. However, the world has evolved and things have become more complicated.
In fact, even though US has increased interest rates, it does not mean big economies like the European countries, China and Japan will follow suit. In fact, Japan and several European countries are still having Negative Interest Rate Policy (NIRP). Further monetary stimulus, in the form of quantitative easing, may also be possible in 2017 in these countries.
So is this the best time to buy gold? I would say yes because most wealth builders from the East like to buy gold when the price bottomed out and started to increase in value. Gold price has been bombed out in 2016 and the beginning of 2017 has seen the price galloped.
In Singapore, wealth builders who wish to build wealth with gold can do so conveniently with BullionStar’s Bullion Savings Program, which are fully backed by real physical gold. Unlike other gold savings accounts in the market, this BullionStar product can be converted to 100 gram PAMP Gold Cast Bar at any time without any extra cost whatsoever.
BullionStar’s advanced online platform allows investors to fully control ownership of BSP Grams online under My Vault Storage where they can buy, sell or convert BSP Grams at convenience. BullionStar publishes a daily report on the holdings of physical precious metals backing up the Bullion Savings Program here.
A word of caution is that BullionStar’s products are not regulated by Monetary of Singapore (MAS), so investors should be mindful of the risks involved. I always prefer buying gold bars and coins because the counter-party risks is zero – what you see is what you get.
In Singapore, more and more investors are starting to buy physical gold as a form of store of wealth. According to Minister Lim Hng Kiang, he mentioned during the London Bullion Market Association (LBMA) conference 2016 that the physical volume of gold traded in 2015 was about 5 times the amount in 2012. Over the same period, employment in the sector has doubled to more than 280 jobs.
As an investment blogger, I always believe that wealth builders should buy gold as a form of asset allocation. In this regard, I aim to be the voice for promoting gold trading in Singapore.
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