Gold Investment

Gold, the yellow metal, always has different meanings for different people. Our parents will give away gold jewelry, rings and bracelets to their daughters getting married. I recalled seeing my mother and some relatives sold their jewelry collected long time in exchange of emergency cash, at the time when credits from banks were uncommon. For a lot of people, it has become a popular investment vehicle thanks the ever increasing gold price since 2000.

Many investors view gold as the "real money" as it stores values and hedges against inflation. With the soaring budget deficits, the unprecedented injection of money supply and money printing due to various government stimulus measures worldwide in reaction to the financial crisis, there is a big fear among investors for hyper-inflation when the world economy recovers in the near future. The inflation fears and the speculations have driven the gold price to it's peak at USD 1,226 per onunce at early Dec 09. It has contracted a bit due to the profit-taking and is still at its high of USD1,105 as at 24th Dec 09.

Gold has also become part of my investment since early 2008 with the objective of hedging against inflation. The investment amount is insignificant as it constitutes only 1-2% of the asset portfolio. My prefered investment vehicle is via the gold investment account with a local bank. There are currently 2 local banks (Public Bank & MayBank) offering this investment facility with a passbook provided to keep track the buy and sell transactions. This has become popular among the retail investors due to the convenience in conducting the transactions in the bank branches and no hassle in keeping the physical gold. However the investors would have to pay for the spread for the buy and sell price which can some time be as high as 5%. It used to be in the range of 3-4% in 2008.