Gold investment: How to start & where to check the latest price of gold in Malaysia

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Last year, the price of gold topped its highest ever value in 9 years at almost RM280 per gram in August 2020 and is predicted to increase to more than RM300 per gram in 2021. In this article, we detail how gold investment works in Malaysia and how you can get started.

gold-price-per-gram-malaysia

© strelok / GettyImages

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Gold investment seems to be a buzzword on the streets of late – Is investing in gold the right option? What is the risk like?

Well, the Malaysian media recently reported that many gold investors will feel the pressure to sell as the gold price continues to rise due to the negative market sentiment amidst Covid-19. But not to worry, there are still opportunities for new investors to jump onto the gold bandwagon and to 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’s an economic crisis, the value for 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. Physical Gold

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, right? Well, some do prefer it more because of its unique properties such as its size and design.

Gold Bar

These are usually the first choice for experienced investors. There’re various sizes of gold bars (ranging from 25 grams to 1kg). As it’s larger than gold coins, it’s easy to store and is an effective option for investment if you’re 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 a convenient option to liquidate. Let’s say you have a 1kg gold bar and you intend to liquidate your gold. The only option you have is to liquidate the entire bar. It’s not like you can slice it and only liquidate a quarter of it, right?

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 cheaper than gold coins Need to pay storage cost (if you put it in a safe deposit box)

Gold Coins 

A more convenient investment option due to its size and it is easy to liquidate or sell off whenever you need the money. It usually weighs between 2.5 gram and 25 grams of pure gold. 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 Could cost higher than gold bars (due to extra minting cost)
Easy to liquidate
Will be valued higher if it’s rare
Need to pay storage cost (if you put it in a safe deposit box)

READ: Is it better to settle your housing loan or invest your extra cash?

Where to buy and keep Gold Bar & Gold Coins? 

There are a few places where you can buy gold bars and gold coins such as Public Gold and HelloGold. In regards to safekeeping, you can keep it 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 at RM250.

NOTE: 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. It is guaranteed safe and you can drop them an email at [email protected] to get the latest customer gold list.

Gold jewellery

price-of-gold-in-malaysia

© Muhammad Sadiq Bin Mohd Jalaluddin / EyeEm | GettyImages

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. Thus, before purchasing, 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 that’s the case, usually the selling price will 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 & keep the gold jewellery?

You can buy it at any jewellery shop. Most people would keep their gold jewellery at home for safekeeping. It’ll also be a much more convenient option as you’ll want to wear it now and then. You can also opt to keep it at the 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

Do you guys know that 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, you pawn your gold with Ar-Rahnu Yapeim for 6 months and buy another gold (bar/coins) with the loan that you get. Within the loan period, you wait for the perfect opportunity to sell the gold. Then, you can redeem the gold that you’ve pawned. The excess money from doing all of these will be your profits!

This is a big if If you are still new to gold investment, we don’t recommend this. New investors who are not certain of what they are doing could end up losing money.

2. 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’ performance on the stock market has dropped a little since August 2020. At the time of writing, the share prices for Borneo Oil and Poh Kong are RM0.040 and RM0.90 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)
High liquidity

3. 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’s 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.

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
High liquidity

MORE: Housing loan checklist: 4 documents you need to prepare if you’re an employed person

4. Gold Investment Account

gold-bar-malaysia

©strelok /123RF

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. This offering is available at Maybank, Public Bank, CIMB Bank, UOB, HSBC Bank and Kuwait Finance House.

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, 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 service fee if you’re under required minimum balance
High liquidity

What is the price of gold in Malaysia?

In the past 6 months, the gold price has been between RM240 to RM255. Although it’s been somewhat volatile, the gold price in August/September 2020 hit a 9-year record high at almost RM280 per gram. 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 whenever there’s a crisis, the gold price is expected to go up and sometimes even higher. 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, this year has been especially tough due to Covid-19. 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.

The US dollar 

One word, dollar-denominated. That’s why gold prices and the US dollar has 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.

CHECK OUT: Properties vs stocks: Which is a better investment in Malaysia?

Gold investment: The Pros & 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

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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 return?
  • 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?

Putting aside the economic uncertainty and Covid-19, gold prices are still on the high side. A column that was published in The Star explains that the trend in buying gold is likely coming from their fear of economic recession and inflation. But, when the fear goes away, the gold price will fall.

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.


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