Investors look to physical gold as safe haven

By Rachel Kelly, Channel NewsAsia

SINGAPORE : Gold continues to glitter as an investment option while global equity markets face continued volatility and turmoil.

The price of gold is holding steady at the US$850-per-ounce mark, but experts said it could rise to as much as US$1,200 in the next six months.

The precious metal has long been regarded as a safe haven investment compared to options such as shares or currencies. And investors are seeking out physical gold instead of shares in bank-owned gold.

William Kwan, bullion director, Gold Capital Management, said: "In the first place, there is a divergence between the physical gold market and the paper gold market. A lot of consumers are already converting their unallocated holdings from paper gold to physical gold allocated, because they find that it is safer for them to hold physical that is more tangible.

"That is why recently there is a short supply of gold coins around the world. A lot of consumers are queuing up outside of bullion dealer shops to buy gold coins and gold bars."

Industry players have noted a two to three-year low in gold paper trading. And for those investors looking to get their hands on some physical gold, such coins cost in the region of S$1,500 per ounce.

United Overseas Bank (UOB) in Singapore is one lender that trades in gold coins, and has noted a significant increase in demand for physical gold, gold bars and coins.

However, UOB also said that high gold prices have deterred jewellers and goldsmiths from buying gold bars.

That said, while there has been interest by investors, it is costly to invest in physical gold as GST and gold holding fees will be incurred.

UOB expects the demand for physical gold to subside over time when there is more stability in the global financial markets.

Jewellers in Singapore have also noticed an increase in demand for gold for investment.

Charles Ho, president, Singapore Jewellers Association, said: "In the past one to two weeks, there (has been) an increase of 15 to 20 per cent in enquiries, in particularly gold bars. If (they are buying gold) purely (for) investment, then most of the customers will look for gold bars...but gold bars are not wearable, so the best choice may be to buy some gold jewellery where you can touch it and feel it everyday."

Experts also recommend stocking up on gold with higher carat values as these make better investments. - CNA/ms

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