Today, SG Wealth Builder is honoured to have an interview with Zane Lim, Regional Manager of Operations for BullionStar.
BullionStar is a physical precious metals trading company in specializing in online sales in Singapore. Its office is located at Marina Bay Financial Center Tower Two.
Zane, its a pleasure to meet you. Can you tell us more about your company’s background, business model and history?
BullionStar was formed by people with vast experience in the precious metals industry. The founders of BullionStar own and operate several precious metals companies worldwide. One of the founders of BullionStar, Mr. Torgny Persson, has established several bullion dealers in Europe previously. The Swedish company Liberty Silver AB was established by Mr. Persson in 2008 whereas Estonian Liberty Silver OÜ was established in 2011. Another founder of BullionStar, Mr. Joakim Andersson, is also the managing director of Bullion International Ltd which is a service provider for bullion dealers and information companies in the precious metals industry. The founders are supporting the Austrian School of Economics, hence BullionStar is built on a strong ideological belief that precious metals is the best unit of account and the purest form of money.
Precious metals have been used as money for thousands of years. During the last four decades, precious metals have been removed from our monetary system which no longer has any backing whatsoever. We at BullionStar believe that the current monetary system, called fractional reserve banking, is to blame for many of the economic problems arising today. We thus want to offer a reliable alternative, an asset which has retained its value and purchasing power for thousands of years: precious metals, specifically, gold, silver and platinum.
At BullionStar, we are dedicated to be a full service provider for individuals and institutions buying, selling and trading physical precious metals. We offer a full range of gold, silver and platinum products at competitive prices. You can take full physical delivery by having the products shipped to you, or you can collect the products personally if you desire. You may also choose to store your items in our vault where you are in full control of your assets. The vault operates with full accountability. All products offered are fully allocated, i.e. have full physical backing in precious metals.
In recent years, Singapore government has been aiming to make Singapore a hub for precious metals trading. How does your company fit into the picture?
BullionStar agrees with the government of Singapore that Singapore has a unique opportunity to take a leading position as an international hub for precious metals, not only in Southeast Asia, but in the world. The Singaporean government trade agency, International Enterprise (IE) Singapore has stated that they hope that Singapore’s share of the global precious metals market will grow at least fivefold within 5-10 years and create an Asia-Pacific industry hub for precious metals. BullionStar also believes that there is a need and a great possibility that Singapore will emerge as the hub for precious metals trade. As such, BullionStar intends to play a vital role as the precious metals market in Singapore grows.
In view of the recent gold spot prices correction, what is your long term view of holding the precious metal as part of one’s investment portfolio?
Gold is very well supported by its own fundamentals. Demand for the yellow metal is robust in both the jewellery and investment sector, especially with China now being a net importer of gold, is increasing. The supply however remains flat and has not increased during the last 10 years even though the gold price went from USD 200 to USD 1,900 per troy ounce. This highlights the difficulties that producers face to respond to the higher prices.
Sellers of investment precious metals, such as ourselves, are experiencing much higher demand than what is normal for the season. This indicates that investors have jumped on the possibility to add to their holdings during the slight decline over the last months. With supply drying up, it is in strange in our opinion that the price has not reflected this increased demand yet.
With the uncertainty springing from the European and US debt crises, gold is well positioned to once again be the eye-catching asset during the next flight to safety. Gold has historically always been a good inflation hedge as well as a safe asset in times of economic uncertainty and financial turmoil. As central banks are printing money in abundance to inflate away their debt problem, gold will most likely act as the ultimate asset for stability and value as it has for 6000 years.
With Germany deciding to repatriate half of its gold reserves held abroad, it will likely set the trend for other Central Banks to follow suit. This underlines the fact that Central Banks around the world do not trust each other on the actual volume of bullion that they claim to hold. One can’t help but wonder why 300 tonnes of gold require seven years for it to be completely delivered other than that the bullion is not actually in the vault. It is highly plausible that the gold have long been loaned out to bullion banks who in turn sold it. Seven years may very well be a delay tactic to recover the missing gold via printing of more dollars to buy gold from the open market and this in turn will only push gold prices further up.
On top of all this, we also observe that Central Banks, especially in Asia, Middle East and even Latin America, are continuing to buy gold for fear that major currencies such as the Euros and US dollar will degrade through Quantitative Easing Programs. With the frenzy buying of gold by Central Banks while others repatriate their gold holdings abroad, it will be a matter of time before private investors take notice and follow suit in the buying and taking delivery of physical gold.
Lastly, gold has always been viewed as an indicator of stability. When the global economy is in a downward spiral, we will be able to observe rapid rises in gold prices as more people seek for a safe haven for their wealth. With the Euro and US debt crisis, this is exactly the time when we should be expecting gold prices to surge. So why has gold been flat for the past few months?
Short term, the acts of Central Banks and traders on the commodity exchanges trading “paper gold” in the form of derivatives may affect the price in peculiar ways. If a Central Bank is trying to expand its balance sheet with inflationary policies, this might give an expectation of a more deflationary policy to follow with the affect the gold price react negatively in the short term. This is counterintuitive as the inflation is increasing but is telling for the interconnectedness and importance of future expectations in the world of finance. Some commentators would ultimately point the finger at the imperfection of the markets where the price of gold is set on commodity exchanges where there are more outstanding futures and “paper contracts” than there are backing of physical gold. This practice easily exposes itself to a suspicion of manipulation where some traders may have an interest in suppressing the price of gold to hide the inflation and risks in the economy that a price surge in gold would gossip about
With the interest in the gold market picking up due to these times of uncertainty, the volume of investments coming in will eventually render any price control impossible. That will be the day, and it should be coming sooner than later, when we will see the spike in gold prices as more people recognizes gold, which has stood the test of times, as an avenue to protect their wealth.
In light of recent gold investment scams in Singapore, what make your company different from the rest?
At BullionStar, we claim nothing more than that precious metals, which we offer at the lowest prices anywhere, are better to have than any other currency. And because of the inflation-based global monetary system, it is often better to hold stable money like gold and silver rather than most stocks especially during economic downturns. Whatever returns you get from precious metals are derived from the metal itself, not some kind of dividend. Gold is a one-of-a-kind medium of exchange. There’s nothing like it. But it doesn’t provide annual yields or dividends. Be suspicious if you are ever offered interest payments in exchange for holding your gold. Ask yourself, where is this money used to pay dividends coming from? The classic Ponzi scheme is one where payments to investors/members are derived from additional recruits who pay into the scheme. In the case of gold scam artists, they’re not making their money by simply selling to gold investors. They’re selling at such above-market prices that they are able to fund their operations.
How gold scammers operate
What happens is that the pricey gold is offered at a small ‘discount,’ that is a discount from their exorbitant prices. You are given the option of the company buying back your gold at full price, that is, at the full exorbitant price. And the money used to buy back the gold from you must be derived from new recruits. Meanwhile, these new recruits buy the ‘discounted’ gold in the expectation of returns from selling it back to the company at a later date. Such a system is highly impractical and unsustainable. With premiums of around 25% spot price of gold, what happens when you run out of dupes who are willing to buy high? Your ‘dividends’ are obliterated. You might derive some comfort that you are left with your gold — if they actually deliver the physical gold to you. But then, you could have bought the gold at much better prices almost anywhere else. In addition, such gold is of questionable quality. Looking at the products offered by some of these companies, the bars being displayed are of obscure brands. To whom can you sell these bars in the future? This is important, considering the potential for fraud or counterfeiting of metals. It is always best to buy trusted and reputable brands.
Avoid being fooled
Do not be led by rhetoric that you read off some website’s banner. It is possible that they are making money off people’s growing interest in gold and silver, while not necessarily providing them with good investment options. Even when something sounds nice and truthful, go by the facts. It’s not enough that a company proclaims the right thing, e.g. bullishness in gold, but that their business model is based on this, and not shady practices. The scary thing is these scammers are still in operation, in Singapore, Malaysia and other Southeast Asian countries, always looking for people who aren’t aware of how a Ponzi scheme could be applied to the precious metals investing sector.
Make sure you get your physical bullion at the most competitive prices, and that you are ensured of physical delivery. And in the case where you opt for vault storage of your precious metals, make sure a third party can verify the presence of your bullion in the vault.Apart from improving the regulatory aspect, it is important to instill in people the practice of due diligence before they put their money somewhere.We at BullionStar hope to help in getting the truth out, and allowing competition to really dictate what businesses last, and which ones disappear from a lack of suckers.
Should investors buy gold jewellery or bullions/coins?
When buying jewellery, not only do you pay for the amount of gold content in the item but also the workmanship. This may result in the cost of the jewellery costing much more than what it is worth in terms of gold. Also, if you are to sell the jewellery, most dealers will only be willing to pay 70-80% of the spot price for the amount of gold in the jewellery. Buying gold bullion on the other hand is different, you only pay a small premium compared to spot and internationally recognized brands of gold bars are accepted worldwide by bullion dealers. You will also be able to fetch a selling price that is much closer to spot if you choose to liquidate them.
How do investors register an account and what are the fees and transaction costs?
Registering for an account is as simple as setting up an email account. One simply have to click on the “Open an Account” link at the top right hand corner of our webpage and fill in the required fields accordingly. By registering for an account, we will reward you with 10 Vault Grams of Silver with no obligations at all! On top of that, account holders can also take advantage of our industry leading online trading platform in the “My Vault Storage” page.
With regard to fees, we do not charge any fees for account holders to maintain the account with us and there will be no transaction fees as well when purchasing or selling bullion to us. If the customer chose to store bullion purchased from us in our vault, we are providing free storage for 2 years. The only fee that the customer may incur is when they are withdrawing bullion stored in the vault. That will be at a transaction fee of $149 per withdrawal. For eg, A has 10 gold bars stored in our vault and decide to withdraw 1 bar, the transaction fee will $149. If he decides to withdraw 10 instead of 1 bar, it will still be at $149.