Gold Investment

In the recent years, few major banks in Malaysia have launched the Gold Investment Account. These include Maybank, Public Bank, CIMB Bank, UOB Bank, and Citibank. For those of you who are new to this financial instrument, it may be an useful information to help you to understand more about gold investment for retail investor.

The History Of Gold

  1. Around 50 B.C, people started to use gold as money to replace metal tools such as shells and rocks. People also use gold to make jewelery and gold coins. Slowly, gold had become an important trading instrument because it has an intrinsic value (value that that thing has “in itself”).
  2. Today, gold is still the most significant object that we continue to use gold for wedding rings, jewelery, Olympic medals, Oscars, Grammys, medical, aerospace, semiconductor, and money.
  3. Gold price always appreciate in value over the long term. You can see from the chart below. 20 years ago, it was US$252.80 in 1993. It is US$1,734.40 in Nov 2012. An increase of US$1,400.15 or 418.89% over 20 years.
  4. Hence, it is one of the best financial instrument to hedge against inflation and you can make a capital gain provided you buy and sell at the right price.

10 year gold price per ounce

How Can You Make Profit From Gold Investment Account?

  1. You buy in when the price is low and sell it when the price is high. The selling and buying price will be based on international gold price and the bank’s prevailing price quoted in RM per gram.
  2. For example, the bank’s selling price is RM165.30 per gram. You purchase 5 grams and it cost you RM826.50.
  3. When the price go up to RM174.71, you sell the 5 grams for RM873.53. Bear in mind that bank only buy back at buying price which is RM174.71. You make a gain of RM47.02 or 6%.
  4. Hence, before you make the decision to buy or sell, you have to look at the spread between selling and buying price. It is only a good sell if you sell at a much higher price than your original purchased price. You can refer to the scenario below.

What Are The Investment Risk?

  1. Pricing risk – gold buying or selling price will be based on prevailing world and local market conditions for gold, the exchange rate between US$ and RM and other market conditions
  2. Market risk – gold investment will be exposed to market forces or volatility. You may sustain losses if market conditions move against your favour.
  3. This is a non-protected product by PIDM.

What Are The Fees And Charges?

  • Maybank
    1. Minimum initial purchase of 1 gram.
    2. Subsequent purchase in multiples of 1 gram.
    3. Minimum balance in account of 1 gram.
    4. RM10 for stamp duty for agreement.
    5. Mode of operation – passbook and online.
    6. RM15 for loss of passbook.
  • Public Bank
    1. RM10 for quantity less than 10 grams as at 31 Dec.
    2. RM10 will be waived off if account opened less than 1 month.
    3. RM10 for stamp duty for agreement.
    4. Mode of operation – passbook and online.
    5. RM10 for loss of passbook.
    6. Physical gold can be withdrawn in denomination of 50g and 100g with fee charged on per piece basis – 50g (RM220-RM250), and 100g (RM240-RM270).
  • CIMB Bank
    1. Minimum initial purchase of 5 grams.
    2. Subsequent minimum purchase of 5 grams in multiples of 1 gram.
    3. RM5 annual fees if balance fall below 5 grams.
    4. RM10 for stamp duty for agreement.
    5. Mode of operation – passbook and online.
    6. RM20 for loss of passbook.
    7. RM10 for closure of account within 6 months.
    8. Physical gold can be withdrawn in denomination of 100 grams with RM1 charge per gram.
  • UOB Bank
    1. Minimum initial purchase of 20 grams.
    2. Subsequent minimum purchase of 5 grams in multiples of 5 grams.
    3. RM2 service charge per month if balance fall below 10 grams.
    4. RM10 for stamp duty for agreement.
    5. Mode of operation – passbook and online.
    6. RM15 for loss of passbook.

     

About Tiffany Tang
Tiffany was a former Financial Controller for INTI Education Group, Malaysia (part of US Laureate International Universities, US). She worked as a Regional Accountant and had been in a regional exposure in few countries such as Singapore, Shanghai, Korea, India, and Japan. She worked for a few large multinational companies in the industry of retail, bulk logistics, computer hardware and civil engineering firm. She has more than 15 years of working experience. She holds a Bachelor (Hons) in Applied Accounting, UK. She is also a member of IFA, UK.

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