Some information on REGULATED gold transactions in Malaysia.
Gold Futures on BURSA MALAYSIA, which i touched a bit in this article here.
- Oct 2013 contract : RM132.15 per gram (-32 tick)
- Dec 2013 contract: RM132.38 per gram (-30 ticks)
Note: 1 tick is equivalent to RM5. Contract size: 500 grams.
Selected Banks' Gold Investment Account (per gram) - which were discussed here.
As at 2.30 on 11.10.13
KFH (Buy RM127.76; Sell RM137.76; Spread 7.8%)
Maybank (Buy RM129.03; Sell RM134.02; Spread 3.8%)
CIMB (Buy RM129.00; Sell RM134.60; Spread 4.3%)
Historical data:
As at 3 pm on 17.09.13
KFH: Buy (133.54 per gram) and Sell (142.82 per gram), Spread (RM9.28 or 6.9%)
Maybank : Buy (134.70 per gram) and Sell (140.56 per gram), Spread (RM5.86 or 4.4%)
CIMB: Buy (134.80 per gram) and Sell (140.40 per gram), Spread (RM5.60 or 4.2%)
PREVIOUS ARTICLE ON GOLD INVESTMENT
Gold Gold Gold... its glitter has captivated the greed of men and
women alike. And because of that, many has fallen victims to con-men and
con-jobs.
Don't get me wrong. I do advocate investing
in gold, just as much as you should save up. But it is not about the
gold, it is more about how and where should you invest.
1. Safety first!
A
lot of people ask me where to invest in gold and I always say to them
that I only deal with the banks that sells gold savings account. Why?
Because I think banks are safer than other non-regulated company or
institutions.
So, where can you get gold / gold savings?
i) Bank Negara Malaysia : they have gold bullion / emas kijang. Click here to get more info from BNM.
ii) Local and Foreign banks (click on the banks to get more info): Maybank, CIMB and Kuwait Finance House
Is
the deposits/ investment in Gold guaranteed by the banks? NO! But you
would expect that they should manage the risk and liquidity better since
they need to comply with the regulations, Bank Negara's audit and
internal risk management.
2. Liquidity
This
is an extension of safety above. Liquidity means that you can sell and
get your money back based on the market price of the gold. Again this is
why I would always prefer the banks compared to other non-banks gold
scheme. If there is a run on the sale of gold, you must be sure that the
person you are selling to have the cash to buy back the gold. Since
there is no regulated exchange for the gold, the only buyer of any gold
that you buy would be the original seller/counter-party. Therefore, the
creditworthiness of the original seller /counterparty is paramount to
the buyer.If the counter-party cannot honor the sale of your gold back
to them, you are screwed.
Granted, if the counter party
gives you physical gold for your purchase, you could technically go to a
goldsmith and sell the gold. However, there will transaction cost and
discounts that the goldsmith might impose, eating into your profit.
In
this case, the counter-party for all bank-issued gold savings would be
the banks itself and the chances of the bank going into default should
be a lot less than an non-financial company. The counter-party for Emas
Kijang BNM is Bank Negara Malaysia itself and if BNM default, then we
are completely screwed - we would have a much bigger issue to deal with
than the gold itself.
3. Spread
Gold is a
volatile assets and have no cashflow like dividend or interest.
Therefore in order to make money on gold is to trade it. Buy low and
sell at a higher price, hopefully.
However, as I
mentioned above, there in no retail exchange for gold therefore the
counterparty is the 'exchange' and whatever price they publish would be
the buying and selling price - no haggling. These counterparty makes
their money by the spread, the difference between the buying and selling
price. Therefore, a smaller spread means the cost of buying and selling
your gold is cheaper.
As at 3 pm on 17.09.13
Maybank : Buy (134.70 per gram) and Sell (140.56 per gram), Spread (RM5.86 or 4.4%)
CIMB: Buy (134.80 per gram) and Sell (140.40 per gram), Spread (RM5.60 or 4.2%)
KFH: Buy (133.54 per gram) and Sell (142.82 per gram), Spread (RM9.28 or 6.9%)
Of
course this spread is at the discretion of the banks so it might go up
and down; hence you must monitor your target to see the average spread
over time.
4. Tracking international gold prices
Gold
has no cashflow. It is a pure asset as good as a currency that does not
belong to any country. The price of gold goes up and down depending on
the market forces. And since gold is quoted in USD, the price of gold
in Malaysia is also dependent on the exchange rate between RM and USD.
And
since gold investing is the ultimate passive investment, it should
behave like an ETF, where the quality of an investment scheme depends on
how well does the price (quoted by the banks) reflect the movement of
the international gold price. The best one would need to have a very low
daily tracking error, meaning if the combination of gold and exchange
rate changes by 2% for a particular day, the price of gold quoted by the
banks should change by 2% or very very close to that, up or down. This
is called a tracking error, something the banks are not providing to us
yet. We just assume that they are being good boys and girls; giving us
the true reflection of gold prices, which they might be doing already.
So
there you have it. Some basic tools to consider before you think about
buying that nugget.Remember, this is NOT A RECOMMENDATION TO INVEST, BUY
OR SELL GOLD. Go ask your financial adviser for that. I am just sharing
knowledge.
Salam :-)
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