BullionStar versus UOB

Many years ago, I wrote several articles on UOB’s Gold Savings Account (GSA) and Silver Savings Account (SSA) in this blog. I had made some monies from GSA and had shared with readers my first experience with gold. But that was the time before BullionStar was established in Singapore and since then, my understanding of gold and silver has improved. The regulatory landscape for bullion trading has also changed as Singapore aims to be a precious metal hub by first removing GST for investment grade bullion. Subsequently, Singapore FreePort was established to cater to gold storage facilities.

UOB’s GSA and SSA

UOB is one of the largest local banks and is the only Singapore bank that sells physical bullion. 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, investors should take note that UOB’s GSA and SSA are not backed by physical bullion, and thus you cannot convert your account balances and take physical delivery of gold and silver or certificates. Basically, UOB’s gold price is benchmarked to international prices but there are no underlying assets.

Another important thing to highlight is that UOB’s GSA and SSA are not deposits, thus they are not an insured deposit within the coverage of the Deposit Insurance and Policy Owners’ Protection Schemes Act. So 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.

For UOB’s gold and silver savings accounts, there are many hidden charges like service charges, GST on service charges, monthly charges for maintaining the accounts and penalty charges for early account closure. All these charges can be substantial if accrued over the years, thus investors should be mindful of the costs involved.

BullionStar’s Bullion Savings Program (BSP)

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.

Conclusion

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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Magically yours,

SG Wealth Builder