|Pros of Gold bar||Cons of Gold Bar|
|High liquidity (get more money if you sell)||Higher risk of theft (if you keep it at home)|
|Easy to store||Not a convenient option to liquidate|
|Cost is cheaper than gold coins||Need to pay storage cost (if you put it in a safe deposit box)|
Gold prices in Malaysia have trended between RM235 to RM285 in the past year. Despite this volatility, gold is still considered a good investment and some analysts expect the price to rebound in 2023. This article details how gold investment works in Malaysia and how you can get started.
While the price of gold has dropped as economies recover, this precious metal is still considered a good hedge against inflation and is a reliable alternative for investors who wish to diversify their portfolios. Gold price forecasts see higher prices for 2023 due to the potential weakening of the US dollar.
Therefore, there are still opportunities for new investors to jump onto the gold bandwagon and make a profit out of it.
Is gold a good investment in Malaysia?
Other than to make a profit, you should consider investing in gold because:
- It is a strong hedge against inflation and will always be of value due to scarcity
- It is a safe choice for investors. Whenever there is an economic crisis, the value of gold will always trend upwards and sometimes continue to climb higher.
- It diversifies your investment portfolio – numerous studies have shown that gold can be a safe haven asset in stock portfolios.
- Has the potential to be in higher demand in the coming years.
What are the different types of gold investment in Malaysia?
1. Gold bar
Physical gold comes in many forms such as gold bars, gold coins and even gold jewellery. It might come as a shock to you that some people prefer physical gold more in this digital age. That may be because of gold’s unique properties such as its size and design.
Gold bars are usually the first choice for experienced investors. There are various sizes to choose from, ranging from 25 grams to 1kg. As it’s larger than gold coins, gold bars are easy to store and are an effective investment option if you are looking to make a sizable one. One gold bar could cost you thousands to hundreds of thousands of ringgit.
The downside is that gold bars aren’t as convenient to liquidate. Let’s say you have a 1kg gold bar, which you intend to liquidate for cash. The only option you have is to liquidate the entire bar. It’s not like you can slice off a quarter and only liquidate a portion of it, right?
2. Gold Coins
Gold coins are a more convenient investment option due to their size and are easy to liquidate or sell off whenever you need the money. It usually weighs between 2.5 grams and 25 grams. It’s also an ideal investment option for new investors that are trying to get their feet wet.
The price for one gold coin could be between hundreds to thousands of ringgit. Here’s a fun fact, sometimes a gold coin is valued higher due to it being individually minted. This makes gold coins more authentic and expensive.
|Pros of Gold Coin||Cons of Gold Coin|
|An ideal choice for new investors||Higher risk of theft (if you keep it at home)|
|Easy to store and liquidate||Need to pay storage cost (if you put it in a safe deposit box)|
|Will be valued higher if it’s rare||Could cost higher than gold bars (due to extra minting co|
Where to buy Gold Bar and Gold Coins in Malaysia?
There are a few places where you can buy gold bars and coins. These include specific companies as well as online gold platforms and apps such as:
A. Public Gold – Public Gold is a gold bar trading company with branches all over Malaysia. Customers can purchase gold at daily quoted gold prices for 10g, 20g, 50g, 100g and 250g in Malaysian Ringgit.
B. Maybank offers the Kijang Emas Gold Bullion Coins which feature the kijang (barking deer) on one side and the hibiscus on the other. It is priced according to international prices and you can view Maybank’s gold price here (updated daily). The Kijang Emas coins can be purchased individually or in a set of 30 at selected Maybank branches.
C. HelloGold – HelloGold is a Shariah-compliant app that allows you to buy, save, sell and redeem physical gold. Should you purchase gold from HelloGold, you don’t have to keep it at the bank. This is because HelloGold will store it in their vault for you. You can email them at [email protected] to get the latest customer gold list.
D. Some investing platforms offer gold as one of the many other investments available in their portfolio such as Wahed.
As with any company or online gold platform, do your due diligence and research before investing. Regarding safekeeping, you can keep your gold bars and coins in your safe box at home (which we don’t recommend for security purposes) or in a safe deposit at the bank which could cost you around hundreds of ringgit depending on its size. CIMB Bank charges the lowest storage fees at RM250.
3. Gold Jewellery
Although some prefer gold for an investment, others choose to wear it. The price of gold jewellery could range from hundreds to millions of ringgit.
For those who are unaware, gold jewellery isn’t all pure gold. It’s usually combined with other materials such as silver, copper and nickel. Thus, before purchasing gold jewellery, make sure you know how many carats it is.
Another thing about gold jewellery is that the value doesn’t usually stay the same. This is because some gold jewellery may lose its value if it’s broken or scratched. If this is the case, the selling price will typically be lower than the buying cost. Unless it’s a rare, antique gold item such as the ‘Patek Philippe Super Complication Gold Pocket Watch’ which was made in 1933 and cost a whopping US$11 million!
Where to buy gold jewellery in Malaysia?
You can buy it at any jewellery shop. Most people would keep their gold jewellery at home for safekeeping. It will also be a much more convenient option as you will want to wear it now and then. You can also opt to keep it in a safe deposit at the bank.
Pros of Gold Jewellery
Cons of Gold Jewellery
|Can use as an accessory||Low liquidity|
|Easy to buy||Higher risk of theft|
|–||High acquisition cost|
|–||Cannot sell at the buy price|
How to make money with Ar Rahnu Yapeim
You can make extra monies using gold with Ar Rahnu Yapeim. Yes, you can pawn it at Ar-Rahnu for a loan, but there’s a trick that you can do to get a much higher return. That said, do remember that this needs to be done within the loan period.
Some background on Ar Rahnu Yapeim – It is a relatively new micro-credit instrument. Only gold and jewellery made of gold can be pawned. It is available to both locals and foreigners, Muslims and Non-Muslims alike and loan tenures range from 1-6 months. Borrowers have a choice either to repay either via lump sum or by monthly instalments. Generally, the margin of finance is from a minimum of RM100 up to 60-70% of the value of the gold.
Here’s what you can do:
Step 1: Pawn your gold with Ar-Rahnu Yapeim for 6 months.
Step 2: Buy another gold bar or gold coins with the loan that you secure.
Step 3: Within the loan period, you wait for the perfect opportunity to sell the gold.
Step 4: Then, you can redeem the gold that you have pawned. The excess money from doing all of these will be your profits!
You can use the Ar-Rahnu Yapeim calculator to get an estimation of how much financing you can secure with 10 grams of 22K or 916 gold.
This is a big if – If you are still new to gold investment, we don’t recommend this avenue. New investors who are not certain of what they are doing could end up losing money.
4. Gold mining stocks
With gold mining stocks, you’re not exactly investing in gold but you’re investing in the company that does the mining. With that said, your return for this kind of gold investment would be depending on the company’s performance – that’s where you’ll get your dividend.
That’s the thing about gold mining stocks. Although there’s indirect exposure to gold performance, it doesn’t always reflect in the results (company’s stocks). This is because other factors such as other stock markets and the company’s current circumstances would affect it as well.
Some of the gold mining companies are Borneo Oil Bhd and Poh Kong Holdings Bhd. For your info, these companies’ stock prices peaked in the second half of 2020 but have since dropped, with Poh Kong performing better than Borneo Oil. At the time of writing, the share prices for Borneo Oil and Poh Kong are RM0.025 and RM0.710 respectively.
Pros of Gold Mining Stocks
Cons of Gold Mining Stocks
|Indirect exposure to the gold performance||Volatile and risky compared to others|
|No physical gold||Depending on the company’s performance|
|Low initial investment (depends on the company’s share price)||–|
5. Gold Exchange Traded Funds (ETF)
Just like gold mining stocks, you don’t exactly buy gold, but you’re investing in the ETF that’s backed by gold instead. It’s a commodity ETF that tracks and reflects the gold price. This is a great investment tool for investors who want to gain exposure to gold.
Let’s say, you’ve invested in several stocks that are heavily influenced by dollars and you’re trying to reduce the risk, gold ETF is the right option for that. It’s because the gold ETF can help shield you from the downside.
Here are some of the gold ETFs you can invest in:
- TradePlus Shariah Gold Tracker (Malaysia)
- SPDR Gold MiniShares Trust (US)
- abrdn Standard Physical Gold Shares (US)
- VanEck Merk Gold Trust (US)
|Pros of Gold ETF||Cons of Gold ETF|
|Gain exposure to the gold performance||Need to pay a broker fee|
|Easily invest in gold ETF online||Not eligible for everyone (require a share trading account)|
|Zero risks of theft||Easily affected by other markets (non-gold related)|
|No storage cost||Volatile and risky compared to each other|
6. Gold Investment Account
This kind of gold investment would require you to open up a gold investment account with a bank. Some investors prefer this because they can invest in gold with 99.9% purity without keeping any physical gold.
There are several banks in Malaysia offering this service, as listed below.
Check Maybank’s gold price here.
A. Maybank: Maybank Gold Investment Account
B. Public Bank: Gold/eGold Investment Account
Check Public Bank’s gold price here.
C. Kuwait Finance House: KFH Gold Account-i
D. CIMB Bank: e-Gold Investment Account
E. UOB – Gold Investment Accounts
There are two different accounts – the Premier Gold Account (minimum transaction is 1kg of gold) and the Gold Savings Account (minimum transaction is 5 grams of gold). Check out UOB’s gold price here.
F. HSBC: HSBC Gold Account
Another advantage is that some banks only require a minimum initial deposit as low as 1 gram which would cost you around RM250. Plus, you can even withdraw your investment in cash, physical gold or by crediting into your designated current/savings account. Isn’t that awesome?
Do note that this kind of gold investment has no interest, or dividends and is not insured by the Perbadanan Insurans Deposit Malaysia (PIDM). Some banks also will charge you a conversion fee and service fee if your gold is under the required minimum balance.
Pros of Gold Investment Account
Cons of Gold Investment Account
|Invest in 99.9% pure gold||No interest or dividend|
|Can easily invest online||Not insured by PIDM|
|Zero risks of theft||Need to pay the conversion fee|
|No storage cost||Pay a service fee if you’re under the required minimum balance|
What is the price of gold in Malaysia?
In the past 1 year, the gold price has been between RM235 to RM285. It has been somewhat volatile and the prices seem to be seeing a upward trend overall. You may refer to the price trend provided by Goldprice below:
What are the factors which influence gold price?
Economic uncertainties and market sentiment
Gold is considered a safe-haven investment. It’s because the gold price is expected to go up and sometimes even higher whenever there’s a crisis. Many investors choose to invest in gold because they want to limit their exposure to losses in the event of any economic uncertainty.
For example, when the MCO was first imposed in March 2020, many investors started to invest in gold. Well, that’s not surprising because, at that time, the economy was unstable due to the nationwide lockdown.[RMS1]
Even though Malaysia has moved out of the pandemic stage of the COVID-19 virus and the economy has fully opened up, there are still a lot of uncertainties. With the soaring prices of food, fuel and other consumer products, Malaysia has seen an increase in its inflation rate.
The US dollar
One word, dollar-denominated. That’s why gold prices and the US dollar have a total opposite relationship. The gold price will trend upwards when the US dollar value weakens and vice versa. In a way, more investors will buy gold when the US dollar is weaker.
For example, when Donald Trump won the US elections back in 2016, the gold price fell by 5% but the US dollar rebounded!
Supply and demand
According to the World Gold Council (WGC), at least 75% of global demands come from gold mining activities. What about the remaining 25%? It usually comes from golds that have been recycled from jewellery and technology devices.
So, whenever there’s more supply than demand, the gold price would be lower and vice versa. Why? Because the supply wouldn’t be sufficient to meet the demand.
Gold investment: The pros and cons
Pros of Gold Investment
Pros of Gold Investment
|Increase in value over time||Little industrial/commercial value|
|Protect against inflation||Little utility value|
|Protect against a time of crisis||A commodity|
|Unique properties||Produces neither dividend/income|
|Low investment risk||Low long-term overall performance|
|Increasing demand over time||–|
What should you ask yourself as a first-time gold investor?
1. The current market conditions
- What are the current gold prices?
- How is it going to be in the upcoming months and years?
- If the price is high, shouldn’t you wait first before buying?
2. Your reasons for investing in gold
- What are your reasons for buying gold as an investment?
- Are you looking to diversify your portfolio?
- If this is your first time investing, should you start with gold?
3. Your options for investing
- What type of gold investments are you looking for?
- Have you weighed all options for gold investment?
- What’s the best way for you to invest in gold?
- Are you financially ready to maintain the gold investment?
- Are you investing for short-term or long-term returns?
- If you’ve decided to invest in physical gold, where’ll you keep it?
- Are you willing to pay extra for your investment option (storage fee, broker fee, service fee)?
Is now a good time to invest in gold?
As the global economy is slowly finding its way out of the low caused by the pandemic, we still face a lot of uncertainties. Food and oil prices are going up, partly because of supply disruption caused by the Russia-Ukraine war. In August 2022, our own Finance Minister warned of a global recession which will affect Malaysia’s growth in 2023.
If you have the funds and are looking at longer-term investment, now might be a good time to invest in gold because of the lower gold prices and speculations of a rise in prices in 2023.
However, if you do decide to invest now, make sure that you have done your research regarding the matter. Ask yourself this, ‘Am I ready to take on gold investment?’, ‘What kind of investor are you?’ and most importantly, ‘Are you a risk-taker?’. If all of your answers are yes, go ahead!
This article was originally published as Gold Malaysia: Here’s Your Guide to Gold Investment 101! by Loanstreet.com.my and is written by Faiz Rahim.