SINGAPORE: Gold dealers in Singapore have seen sales of physical bars and coins soar in the first four months of the year.
In the first quarter, Singaporeans bought 2.5 tonnes of gold bullion, a 35 per cent increase compared with the same period last year – the biggest on-year jump since 2010.
Despite the precious metal’s spot price breaking US$3,000 (S$3,900) in March and surging to US$3,500 less than two months later, buyers do not appear deterred and sales are still going strong.
Analysts said part of the rush to purchase gold is due to hedging against economic risks, as rising global uncertainty pushes investors to go for a safe haven asset.
Mr Gregor Gregersen, founder of The Reserve – a high-capacity vault for the storage of gold and silver in Changi – said some ultra-high net worth clients are switching over to physical gold.
"(They’re) buying, let's say, S$60 million to S$70 million worth of gold. (Some) clients are doing it because they want to materialise the gold.They might be having large positions in paper hold and they're getting more worried about what might happen,” he said.
“They're saying, ‘I'd rather… get physical gold, put it in a safe place, and essentially reduce my risk’."
Mr Shaokai Fan, the World Gold Council’s head of Asia-Pacific and central banks, said gold has proven its resilience during periods of instability.
“It's also a relatively liquid asset, so I think that's what caused a lot of investors to still invest in gold despite the fact that the price is relatively high,” he noted.
He added there are growing concerns about the future of traditional safe haven assets like the United States dollar and US Treasuries.
“When you don't have those safe haven assets available, you're left with a few others … (such as) government bonds and gold. Many investors have … turned to gold as a way to brace themselves against an uncertain world,” he said.
But not all gold assets are being snapped up.
Demand for gold jewellery fell 20 per cent on-year in the first quarter, partly due to the record price environment.
Gold dealer Brian Lan said jewellery tends to cost more as there are labour costs involved in crafting pieces. Jewellery is also subject to goods and services tax (GST), unlike investment-grade gold bullion.
“So, comparing both, if you want to look for investment, of course more people will look at physical gold instead of jewellery,” said Mr Lan, who is the managing director of GoldSilver Central.
“Many people see it as a universal currency. People (also) think they can melt the gold, if required, and change it into jewellery.”
For the rest of the year, analysts said the appeal of gold with central banks will underpin demand, pushing prices to fresh all-time highs.
Mr Fan pointed out that central banks have been buying huge amounts of gold for the last three years.
“Central banks are ultimately much more sensitive about some of these political developments that we've been seeing. They, like other investors, also need to find ways to build more resilience,” he said.
Analysts said that with growing volatility in the world, the rush to gold looks set to continue in the mid- to long-term.
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In the first quarter, Singaporeans bought 2.5 tonnes of gold bullion, a 35 per cent increase compared with the same period last year – the biggest on-year jump since 2010.
Despite the precious metal’s spot price breaking US$3,000 (S$3,900) in March and surging to US$3,500 less than two months later, buyers do not appear deterred and sales are still going strong.
Analysts said part of the rush to purchase gold is due to hedging against economic risks, as rising global uncertainty pushes investors to go for a safe haven asset.
SNAPPING UP GOLD
Mr Gregor Gregersen, founder of The Reserve – a high-capacity vault for the storage of gold and silver in Changi – said some ultra-high net worth clients are switching over to physical gold.
"(They’re) buying, let's say, S$60 million to S$70 million worth of gold. (Some) clients are doing it because they want to materialise the gold.They might be having large positions in paper hold and they're getting more worried about what might happen,” he said.
“They're saying, ‘I'd rather… get physical gold, put it in a safe place, and essentially reduce my risk’."
Mr Shaokai Fan, the World Gold Council’s head of Asia-Pacific and central banks, said gold has proven its resilience during periods of instability.
“It's also a relatively liquid asset, so I think that's what caused a lot of investors to still invest in gold despite the fact that the price is relatively high,” he noted.
He added there are growing concerns about the future of traditional safe haven assets like the United States dollar and US Treasuries.
“When you don't have those safe haven assets available, you're left with a few others … (such as) government bonds and gold. Many investors have … turned to gold as a way to brace themselves against an uncertain world,” he said.
NOT ALL GOLD GLITTERS
But not all gold assets are being snapped up.
Demand for gold jewellery fell 20 per cent on-year in the first quarter, partly due to the record price environment.
Gold dealer Brian Lan said jewellery tends to cost more as there are labour costs involved in crafting pieces. Jewellery is also subject to goods and services tax (GST), unlike investment-grade gold bullion.
“So, comparing both, if you want to look for investment, of course more people will look at physical gold instead of jewellery,” said Mr Lan, who is the managing director of GoldSilver Central.
“Many people see it as a universal currency. People (also) think they can melt the gold, if required, and change it into jewellery.”
For the rest of the year, analysts said the appeal of gold with central banks will underpin demand, pushing prices to fresh all-time highs.
Mr Fan pointed out that central banks have been buying huge amounts of gold for the last three years.
“Central banks are ultimately much more sensitive about some of these political developments that we've been seeing. They, like other investors, also need to find ways to build more resilience,” he said.
Analysts said that with growing volatility in the world, the rush to gold looks set to continue in the mid- to long-term.
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