With the government exempting investment grade gold and other precious metals from GST come October 2012, buying physical gold as a hedge against systemic failure in the world of fiat currencies will become less burdensome.
Singapore's investment gold demand nearly tripled to 3.5 tonnes last year, according to consultancy firm Thomson Reuters GFMS.
Refiners have been put off by Singapore's taxes, opting instead to mould and sell gold bars in Hong Kong, which does not impose duties on bullion, and Japan, where the consumption tax on gold is 5 per cent.
Industry sources, however, said at least one major refiner has shown interest in opening a factory in Singapore around the talk of the tax change.
More gold traders are expected to set up offices here and store more bullion, following JP Morgan Chase & Co which opened a precious metals vault in 2010.
"I think this is really going to change the landscape in Singapore. A lot of companies will find the incentive to start operations in Singapore," a gold dealer said.
"This news is going to draw attention to Singapore as a safe place to park funds. Asset managers will also be very excited.
"The trend in the last three years is that people are moving to physical hard assets from paper," the dealer added.
Singapore imports gold bars from Australia, Switzerland, Hong Kong and Japan, which are then sold to buyers in South-east Asia and India, the world's largest gold consumer.
Source: TODAY online, 21 Feb
4 comments:
Hi AK
Ive benefitted greatly from your blog on REITS, and is now starting to explore gold and silver as investment options.
There are currently some gold trading companies offering buy and sell back schemes which offer very attractive returns. Companies I know are Genneva, Gold Guarantee etc
You buy the physical gold from these companies at $XXX (Spot px plus 20% mark-up) less 1.5% discount. 1 month later, sell back to them at the same $XXX. Thus earning 1.5%.
What are your thoughts about this?
EK
Hi EK,
I am glad you have found my blogs useful. :)
I buy gold bullions and keep them as a store of value. They are an insurance against the possible failure of fiat currencies.
Heightened inflation is one of the consequences we want to guard against. Holding physical assets like gold bullions therefore makes sense.
If you are taking part in schemes offered by Genneva et al, you are actually investing in Genneva et al and not gold. No investor would pay 20% above spot for gold.
Genneva et al is actually borrowing money from you and promising a return of 1.5% per month. What is the background of Genneva et al? What are the chances of them failing?
If they should default, you would be left holding some rather expensive physical gold.
Not my cup of tea. ;p
Hi AK
I appreciate your opinion and would like to know , do u think it is time to buy some gold as it have come down alot.
What do you say abt silver?
Thanks, i appreciate your opinion and sound advice.
thanks.
victor
Hi Victor,
I believe that everyone should have some gold and silver as an insurance against the inherent flaws of fiat currencies.
So, yes, we should have some gold and silver but as to whether it is the time to buy now, I cannot answer that question since it is a question on timing and I cannot assure you that prices would not go lower from here. ;)
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