How S’pore investors can ride the gold wave as prices hit record highs

SINGAPORE: Gold has kept smashing price records in March and April as tensions in the Middle East unnerve investors who pile into safe-haven assets for safety.

After hitting a record high of US$2,078.40 per ounce on Dec 28, 2023, the precious metal continued its strong run, marking a series of record highs in March and April, to hit US$2,401.50 an ounce on April 12.

The soaring value in recent months certainly makes gold an attractive part of any portfolio, but it can be quite costly for retail investors to get into.

One solution is what is known as fractional gold. This essentially splits up the cost of owning an ounce into smaller denominations, said Jermyn Wong, head of intermediary South-east Asia at State Street Global Advisors.

If an ounce of gold is split into, say, onetenth of an ounce, that is “10% of the gold price”, he added. An ounce of gold is equivalent to 31.1 grammes.

Retail investors can buy and sell fractions of physical gold bars from as little as one gramme to as much as an ounce at UOB.

As for institutional investors and traders, David Tait, chief executive of the World Gold Council, said “asset managers of the world have been apathetic or not even interested in gold for all of their career”.

Tait wants to improve transparency around how the yellow metal is sourced to create a trusted product that asset managers will want to hold in their portfolios.

The World Gold Council and its stakeholders, which include large-scale miners, refiners and financial institutions, are using blockchain technology to develop a database that documents gold from the mine to the end user.

“Legitimately produced gold is going into this database,” Tait said, adding that “each gold bar gets its own digital passport”.

The gold is represented as standard digital units, he noted.

“It could be one gramme of five nines (the highest quality of fine gold). It could be one gramme of 995 gold. If you think in those terms, one kilobar then translates into 1,000 standard gold units,” Tait explained.

That standard digital gold unit increases the “digital liquidity pool” and forms the basis for a variety of gold-backed financial instruments in the future, he said.

Richard Siaw, director of South-east Asia at Global X ETFS, believes that a digital gold unit backed by the physical metal that is stable in value would inspire more confidence among investors, as opposed to bitcoin or another cryptocurrency where there are wide price fluctuations. Straits Times/ann