How to buy gold in Singapore

Gold has been seen as a reliable store of value since ancient times. Today, it’s commonly considered to be a stable investment that doesn’t experience the same volatility as stocks and other tradable assets, making it well worth considering if you’re looking for a way to protect your wealth. But if you want to buy gold bullion or invest in gold through the stock market, how do you go about it?

To find out, let’s take a closer look at how and where to buy gold in Singapore.

Choosing a type of gold asset to buy

When most people hear the term ‘gold bullion’, it immediately conjures up images of bank vaults with chunky gold bars stacked to the ceiling. In reality, gold bullion refers to gold that is at least 99.5% pure and has been transformed into bars or ingots or minted into coins. Bullion is the form in which gold is traded on commodities markets around the world.

If you want to gain exposure to gold, there are a few ways to go about it. You can physically buy gold in Singapore, invest in gold prices or companies via the stock market or trade gold on the financial markets as Contracts For Difference (CFDs).

Investing in gold on the stock market

It’s possible to invest in gold through the stock market rather than physically owning gold. Stock market investors can buy stocks in companies that have gold exposure, such as gold miners, or units in a gold-themed exchange-traded fund (ETF).

With this approach, you don’t actually buy any gold – rather you’re investing in the performance of the gold industry or the mining company. You can thus invest in gold without the hassle of buying, storing and insuring it. However, because you don’t actually own any gold, it exposes you to all the usual risks that the stock market carries, such as market volatility, company bankruptcy and the possibility of losing your investment.

When you buy units in a gold-themed ETF, you’re tracking the price movements of the commodity itself or stocks in multiple companies with gold exposure. Gold-themed ETFs listed on the SGX include:

1. SPDR Gold Trust ETF (SGX:O87)
2. CNMC Goldmine Holdings (SGX:5TP),
3. Wilton Resources Corporation (SGX:5F7)
4. Anchor Resources (SGX:43E).

If you want to buy stocks in companies with gold exposure, there are dozens to choose from on the Singapore Stock Exchange. Some of the most well-known are included in the table below.

Invest in gold via CFDs

An alternative to buying gold stocks or units in an ETF is to speculate on price movements through CFD investing in the futures market. CFD investors seek to profit from bond price movements – whether up or down. That means that even if gold prices are falling, CFD investors can still make a profit. However, because CFDs can be highly risky and are complex derivative products, CFDs are better suited to advanced traders.

Invest in gold certificates

Purchasing gold certificates (also commonly known as ‘paper gold’) is similar to acquiring physical gold – without having to cart them home or stash them in a secure location yourself. In this case, you’ll be issued a certificate that can be exchanged for physical gold or cash at any time. Gold certificates have no expiration date, so you don’t have to worry about having to liquidate them.

As with all financial products, always deal only with well-regulated entities. In the case of gold certificates, you’ll need to trust that the issuing authority will be able to uphold its legal obligations to exchange your certificates for cash or physical gold upon demand, and that they’re not selling the rights for the same physical gold to multiple investors.

Invest in gold with a gold savings account

Similar to gold certificates, a gold savings account allows you to trade gold as a ledger, without having to deal with the physical delivery of the precious metal. Your gold holdings will be reflected in your account balance as grams and you can transact in varying amount.

Investing in physical gold

This is the traditional approach and involves buying gold as a physical asset and owning it yourself. It allows you to get your hands on a tangible asset and avoid the counterparty risks associated with exchange-traded funds.

If you decide to buy physical gold, you’ll then need to consider what form you’d like to acquire. You can buy gold bullion in bars or in coins. Bars are larger and therefore more expensive, but they are an effective option if you’re looking to make a sizeable investment. Gold coins are smaller and less valuable, so they can be a more convenient option when you need to liquidate some of your investment.

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Deciding where to buy gold in Singapore

There are several options to consider when choosing where to buy gold, so make sure to consider the following factors before deciding where to buy:

• Location. There are several gold dealers around Singapore, so the location of those dealers will influence your decision if you plan on buying gold in person.
• Online options. There are also many online dealers that allow you to conveniently buy gold bullion over the Internet. However, as is always the case when spending money online, you’ll need to make sure you know who you’re dealing with – do some research to find out whether the seller is reputable and trustworthy.
• Gold production methods. You’ll also need to find out where the dealer gets their gold from. Is it refined and produced by an established manufacturer?
• Premiums and commissions. Read the fine print to find out what fees the dealer charges. Expect to pay a commission to the dealer, which is usually folded into the purchase price, as well as an assay fee to check the purity of the gold and to verify its authenticity, but shop around for the best value.
• Compare price to Singapore gold price. Gold prices are commonly quoted in US dollars, so make sure you compare the price offered by a dealer with the current price of gold in Singapore dollars.
• Delivery. Find out how and when the gold will be transported to you or to its place of storage. Is it insured if anything goes wrong during the delivery process?

Storing your gold

Once you’ve purchased your gold, you’ll also need to find a safe place to store it. There are several options to consider, including the following:

• Bullion dealers. Many gold dealers will also offer a storage service where you can keep your gold bars or coins for a fee, so ask about the storage options available when you make your purchase.
• Safety deposit boxes. You can rent a safety deposit box at a bank to securely store your gold bullion.
• Secure vault storage. For high-level security, you may want to research vault storage companies near you and the storage options they offer.
• At home. You can also choose to store your gold at home. This obviously may not be as secure as some other options, so you may want to get a home safe installed. You’ll also need to update your home and contents insurance to make sure your precious metal is covered by your policy.

Things to consider before buying gold

If you’re searching for ways to protect your wealth or diversify your investment portfolio, gold may be a practical solution. However, please be aware that just like any other type of investment, buying gold comes with certain risks.

Do your research to make sure you understand the risks involved in buying gold, including the costs of storage and security as well as the fact that the returns may not match those provided by other investments. This will help you make an informed decision about whether buying gold is the right choice for you.

Thinking of investing in physical gold? Make sure you consider the pros and cons first:

Frequently asked questions

• Is it safe to buy gold in Singapore online?

  Yes, it is safe to buy gold in Singapore online, provided you’re purchasing from a reputable gold dealer. Make sure you thoroughly research the legitimacy of any dealer. Checking if they’re accredited with any trade associations, find out about their reputation and operation history before deciding whether to buy.

• What are other ways to make money from gold?

  Aside from purchasing physical gold, there are other ways you can potentially make money from gold. For example, you may invest in exchange-traded funds that track the price of gold or invest in gold mining companies. Of course, these options also come with risks, and there’s no guarantee of making a profit.

• Are there any taxes on gold bullion?

  If you buy gold in Singapore as an investment form (gold of at least 99.5% purity), GST is not payable. However, if your gold bullion increases in value from the time you buy it to the time you sell it, capital gains tax may apply. Contact the IRAS or your accountant for more details.