Gold’s explosive start in 2016

With fear firmly in grip on the global stock markets, gold price has seen an explosive start to 2016. The precious metal has surged an impressive 17 percent after bottoming in December 2015. Investors are fleeing the stock market and pouring massive funds in safe haven like gold and silver. Currently, gold is trading at spot price of USD 1238.40 per ounce. While it is still premature to claim that gold is in bull market, one thing that is certain is that globally, gold is still regarded as the safe haven in the midst of stock market chaos.

According to World Gold Council, the global demand for gold in 2015 remained flat as compared to 2014 at 4,212 tonnes. In spite of a weak start to the year 2015, gold demand rebounded in the 2nd half of 2015 due to huge buying from central banks and China. In fact, for China, the overall gold demand rose by 21% with investment in gold bullion being particularly strong as investors flocked to precious metal amid weaker currency and slowing economy.

Gold and Silver Bullion

Gold Trends in 2016

Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said:In a year that saw global economic and stock market turmoil, the first US interest rate rise in nine years and falling oil prices, demand for gold remained resilient, coming in at 4,212 tonnes for the full year. Official sector purchases, combined with strength in the Asian markets and continuing momentum in the US and Europe, reinforced gold’s credentials as a portfolio diversifier, a wealth preservation tool and a hedge against a range of risks.”

“Looking ahead, physical demand will continue to be supported by strong central bank purchases, and continued buying of jewellery, bars and coins  by households across the world, led by India and China. If we just look at the year to date, the investment case for gold is as strong as ever. While stock markets have wobbled, gold has performed well.”

Gold Market in Singapore

Over in Singapore, one of the largest bullion dealers, BullionStar, has reported a stellar financial report. Their sales revenue increased by 69.1% from 2014, totalling SGD 89.6 million. The company has also expanded their product range to include over 370 different bullion and they even released their own minted gold and silver bars which come with no spread between the buy and sell price. In term of market reach, BullionStar sold approximately 0.9 tonnes of gold bullion for the first three quarters of 2015,  thereby contributing an estimated 18.4% of total Singapore bullion market based on data published by the World Gold Council.

According to BullionStar, half of their sales were gold bars and 100 gram gold bars were the most popular among customers in 2015. Given the renewed volatility in the global markets due to poor economic outlook, bullion demand is expected to increase in 2016.

If you are interested in buying gold bullion in Singapore, you can open an account with BullionStar here. If you buy gold or silver from other companies or UOB Bank, you need to take leave from your work and waste precious time making trips to their premises. However, buying from BullionStar is relatively simple and hassle free as you can order online and have them delivered to your home (with applicable courier charges).

BullionStar CEO

An interesting thing to note is that many BullionStar’s customers opted to store their precious metals at BullionStar Vault Storage. By end of 2015, BullionStar stored approximately SGD 53 million worth of precious metal, an increase of 39.5% compared to one year ago. This means that a lot of wealth builders are buying up a lot of physical bullion and storing them at BullionStar’s vault. This made sense as you probably don’t want to store keep gold bars or coins at your home as they might be stolen, especially if you are going for long holidays during the festive season.

My Prediction for Gold in 2016

I expect gold to continue its surging run due to the flight to safety. The rise will not be  exponential of course and will probably comes with some pull backs. But overall, due to the strong support from central banks, the demand will be sustained. In fact, Singapore is being ranked 27th worldwide with official holding of 127.4 tonnes of gold bullion. Thus, I will continue to allocate some of my wealth on gold in 2016. Wishing all wealth builders a good year ahead.

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Magically yours,

SG Wealth Builder


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