According to World Gold Council, global demand for gold grew 21% to 1289.8 tonnes, the strongest Q1 on record. As gold demand ignites price rally, many investors are caught by surprise at the yellow metal best performance in 30 years.
The sudden change in the global economic and financial landscape has certainly caused investors to flee for security. Significant uncertainties stem from the sluggish economic growth and the Negative Interest Rate Policies (NIRP) implemented by Japan and European countries. Against this backdrop, many analysts anticipate that the pace of US interest rate increases is expected to slow down significantly. These factors combined to send gold price to rally by 17%, making gold one of the best performing assets in Q12016.
Among the key engine of growth is the astonishing come-back of gold-backed Exchange Traded Funds (ETFs), which saw an increase of 300% this quarter. This is indeed a revelation as it comes about after three years of straight outflow. While this type of scale is unlikely to be sustained for gold ETFs going forward, this trend reflects an improved outlook for gold.
Interestingly, the trend of gold bar and coins followed closely to that of the ETF market in Q1. Demand for bullion shot up by 55% year-on-year from 11.8 tonnes to 18.3 tonnes, representing 11% increase over 5 year average. Sales of the popular American Eagle coins rose by 68% year-on-year, to 7.6 tonnes while sales of 24k American Buffalo coins rose by 7% to 1.9 tonnes.
During this quarter, India government announced their first official gold coin which is minted by the Indian government mint. As India is one of the biggest importers of gold bullion in the world, the sale of the Indian gold coin will help to ease the pressure on the perennial investment demand.
If you are one of those investors who is still undecided on whether to buy gold bullion, gold ETFs or gold mining shares, then you need to look no further than the data on central banks’ purchases. In Q1 of this year, central banks purchased 109.4 tonnes of gold, slightly less than the 112.3 tonnes compared to last year. However, an important thing to note is that this is the 21st consecutive quarter of net purchases, dating back to 2011. This trend highlights the significant endorsement from institutional players and wealth builders should take it as a cue to accumulate gold as a form of asset to hold for investment portfolio.
In Singapore, wealth builders can choose to buy gold and silver bullion from BullionStar, one of the largest bullion dealers with more than 370 bullion products. The company has a unique retail shop, vault and advanced online system providing a one-stop shop for wealth builders to view, online purchase, collect, deposit, store, value, sell, audit or physically withdraw bullion.
BullionStar also offers customers their own minted gold and silver bars with zero spread. They have commissioned world-renowned LBMA-approved Swiss gold refiner Argor-Heraeus to produce these stylish and unique minted 100 gram 99.99 % purity gold bars.
Below are some gold bullion offered by BullionStar that are worth buying:
Singaporeans who still think that buying paper gold is the best way of investing in gold should wise up. Instead of risking your hard-earned money, start buying real physical gold from a trustworthy bullion dealer.
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SG Wealth Builder