As countries continue to print more paper money in an attempt to stimulate the global economy, the value of these paper currencies goes down when compared to real assets, like gold. Many central banks have been reported in increase their gold holdings showing that the demand for the metal continues to grow.
By Clement Yap
Wednesday, Jul 11, 2012
Until about seven years ago, Mary kept 50 gold bars at home in a safe, in her cupboard and even in a bag.
Mary declined to give her real name for fear of being robbed.
The retiree and her husband bought about 50 gold bars some 15 years ago. She said each gold bar is half the size of a mobile phone and weighs between 100 to 150g.
Despite their small size, each of these bars cost about $600 back then and this meant an investment of about $30,000 for the lot.
She said: "Back then, the price was pretty good. We chose gold as it was a safe investment, one not vulnerable to external shocks.
"Furthermore, gold is easy to liquidate. All one has to do is bring it to any pawn shop and it is converted to instant cash."
These bars now reside in a Certis Cisco safe deposit box.
With a laugh, Mary said: "We used to keep the gold at home. However, after a while, we realised it wasn't very safe."
The Business Times reported last November that investors and central banks have been avoiding paper currencies in favour of gold, whose value has hit new highs.
Gold is now about US$1,580 (S$2,000) per ounce, compared to less than US$300 an ounce in 2000.
As countries print more money in an attempt to cope with the global financial crisis, the value of paper currency goes down when compared to real assets.
Properties, gold and works of art have been rising in value ever since.
China and Russia are diversifying their foreign reserves away from the US dollar, which has been declining in value, and increasing their exposure to gold.
While Mary may be a small-time investor, several governments and large companies are also turning to gold and other precious metals.
Mr Billy Chiam, who is in his 30s, is the owner of Gold Price Singapore, a leading gold and silver trading company here.
He said: "In recent years, there has been a huge surge in the demand for gold. We have seen not just consumers, but more corporations looking to purchase gold."
Mr Chiam said it may be because keeping one's assets in gold helps hedge against inflation while safeguarding against any possible crisis.
He added: "Singapore is a very safe location to store your gold (because of the secure storage facilities).
"Furthermore, gold will be exempted from the goods and services tax from October. Investing in gold will therefore become more lucrative."
Mr Chiam said Singapore ranks 27th globally in terms of official gold reserves held by the Government, with 127.4 tonnes of gold.
The high-security storage business is also booming as a result of the surge in demand for gold.
Certis Cisco spokesman Karyn Low said there has been a surge in service enquiries relating to international secured shipping and full liability storage in recent months.
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