How to invest in Gold in Malaysia

The past year has seen the value of gold go great guns in USD terms. Even in RM it has been a good run. See the charts below and you'll know what I mean..

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.

Stock exchange choices... yes please

I finally got myself to open CIMB's cross border trading account.

The platform to invest in HKSE, SGX, NYSE and NASDAQ is a good start as I am more inclined towards investing in H-shares for now. For those who don't know, a H-share is a term used on China stocks listed on HKSE.

My trading experience has been as such:

• Ease of funds transfer - for those with maybank2u or cimbclicks access, use the FPX option as this is free and does not come with the usual daily limits. I would rate this process as confusing for now as there are too many windows opened in the process which increases the anxiety of "what happens if the connection dies". The other thing is pop ups need to be disabled because of the numerous windows to be opened. You would need to disable this feature again after logging off if that is your preference.
• Trading - your trading limit is limited by the balance in your trust money x 3. However, there is also an overall trading limit to your account set by cimb, usually set to default at RM100,000. But the silly thing about this is even if your trust money balance x3 is more than RM100,000, your trading limit is still RM100,000. I managed to rectify this after a few calls to the traders to explain why this is not right and got the limit increased to RM200,000 for now.
• Settlement - I have so far only used the settlement via trust money and that is easily enough done on the website. But one word of caution though is that even though you have traded via itrade.cimbinvest.com, the settlement is at CIMB's Malaysian brokerage which is at www.itradecimb.com.
• Rights and other corporate action - I had a rights offer for one of my overseas stocks and the process for subscription is straight forward enough. However, in your portfolio you will not see these rights shares or entitlement appear unless you manually edit your portfolio. My question is what if you incorrectly entered the number of shares and over/under sold your shares. What do you do then?

At present CIMB's product seems to be the better of 2 (the other that I know of being the OSK product) online cross border trading platforms. But unless the user friendliness of that product is improved via fewer windows and seamless integration between itradecimb and cimbinvest, take up will be limited. Also, what about the other exchanges such as Thailand, Indonesia, India and Brazil?

Cheapest unlimited wireless broadband.. and what you could do with it

I've had my Palm Treo 750 for a good 3 months now but have only recently experienced real push-mail when I signed up for the unlimited data package from celcom for an unbelievable rm20/mth. Yes you read it right, I couldn't believe it myself when I walked into the nearest TM Point shop and asked about the various packages and they told me about this Streamyx + wireless broadband for RM108/mth.

As I already had a Streamyx 1MBps service I signed up and committed an extra rm20/mth to get the wireless broadband service at 3G speeds. Despite my initial hesitation about signing up to celcom, any doubts I had soon disappeared when the top of my screen showed the "3G" icon and sometimes even the "H" icon for HSDPA or 3.5G. Was it fast? Yes very. Reliable? Well more often than not it was. The odd few times I would have to retry to connect. But overall I'm a happy camper. But a word of warning though, it does not come with voice, only data. No problems using my phone as a modem which had very reasonable download speeds.

With that signed up I looked around for push email services and stumbled upon mail2web which has a free subscription for accounts ending with "@mail2web.com". The beauty of this service is it has a microsoft exchange server which means push mail capabilities on your device. I decided to forward my other email accounts to this address to take advantage of the push capability and found it to be extremely reliable and having very little lag if at all between the time the mail reached my actual email account and the time it was forwarded to my mail2web account. Try it and you would not be disappointed.

My only regret about my PDA phone? battery life.. With an always on data connection, the Treo 750 couldn't last the day. A setting of a pull every 15 minutes is what I'm living with for now, until I find a solution to the battery life.

Thats about all the joy I have for today.