Gold in USD terms appreciated approximately 18% in the calendar year 2009 (source: http://www.kitco.com/).
When you compare it to Ringgit, the appreciation is still a respectable 12% (the author has painstakingly translated the above USD data into RM by looking up historical USD/RM values).
Why is it that the appreciation of gold in RM is less you ask? Well, the USD has depreciated vs RM by about 5% over 2009 (and if you believe some of the forex analysts in town, could continue to depreciate further this year).
Will the price of gold go higher? Who knows.. but one thing is for sure, it does offer an alternative investment compared to the usual stocks, bonds, fixed deposits, etc.
What I wanted to talk about today is the availability of gold investment accounts offered by banks. There are pros and cons to buying gold this way compared to holding physical gold bars:
Pros
- there is no cost of storage (if you held huge amounts of gold, it is conceivable you could require special storage for this at your own cost but when held with the banks, this is taken care of)
- no risk of authenticity of gold as your deposits are in standard measurements (eg grammes)
- bank backed
Cons
- you don't have access to the physical gold to touch and feel (well some people need to have that security)
- the buy and sell spread seems a little bigger than the traditional gold merchants but this is not excessive when you factor in cost of storage and security (including the ability to sleep well at night without worrying about whether you've locked that safe)
The 2 banks that I have come across offering this service are Public Bank and Maybank. What I've found is that they both offer similar buy vs sell spread of about 4% (see example of price difference below between sell, which is the price the bank SELLS gold to you, and buy, which is the price the bank BUYS gold back from you).
The main differences between the 2 are:
1. Public Bank does not allow withdrawal in gold form whereas Maybank allows withdrawal in gold wafers of 10, 20 and 50 grams but they will deduct charges for insurance and shipping (yeah, I don't know why shipping either)
2. Minimum opening amount for Public Bank is 20 grams (but allowed to subsequently fall to minimum of 2 grams) whereas Maybank is 5 grams
3. There is a bank charge of RM10 p.a. for Public Bank if your balance is below 10 grams, chargeable at the start of the calendar year whereas Maybank does not seem to have a similar charge.
In summary my verdict is Maybank seems to offer a decent product with more withdrawal options than Public Bank's and less charges.
