What is bid/ask spread?

The bid/ask spread is the difference between the price quoted by bullion dealers (Ask price) selling certain Precious Metals and the price that investors are willing to pay for the Precious Metals (Bid price).

For example, for Gold, if the bid price is US$1788 and the ask price is US$1790, the spread will be US$2.

What are determining factors for the spread size?

1. Trading volume: The higher the liquidity of the Precious Metals, the higher the trading volume. Precious Metals that are highly liquid will have narrower spreads as many dealers or investors are looking to buy(ask) or sell(bid) with the best price. Precious Metals such as Rhodium have a wider spread as they are less liquid and more volatile when compared to Precious Metals such as Gold or Silver.

2. Volatility: Prices may fluctuate when volatility in the Market is high. The bid/ask spread is usually widened for bullion dealers or market makers to manage market risks. For example, when compared to Gold and Silver, Platinum has a wider spread as it is more volatile.

How it affects you as an Investor?

As an investor, you would want to execute a buy or sell order closest to the Spot price. With a narrower bid/ask spread, you can get the best price with the market order itself.

However, a wider bid/ask spread will impose an indirect cost in trading, especially for huge orders. A wider spread will equate to a higher premium for investors. To minimize trading risks, placing a limit order will therefore be a better option. GSC Live! allows you to place a limit order at your desired price with narrower spreads at anytime, anywhere!

Read more about GSC Live!

If you have any questions, feel free to contact us at enquiry@goldsilvercentral.com.sg or +65 6222 9703.

Evon

English Version: Why are your Spot prices different from other bullion dealers or platforms?

“为什么你的现货价格与其他贵金属交易商或平台不一样？”。这是我们在门市常遇见的问题。所以今天我们就来大约讲解这个问题。

1. 价格取决于网站的更新速度。

贵金属的价格是以毫秒为单位来更新的。可是网站却无法负荷如此频密的更新速度，而每秒更新的速度也会致使整个网站瘫痪。因此，网站的更新速度通常没有那么频密，甚至可能在几分钟后才更新。金银中央网站的价格是每两分钟更新一次。

2. 所有的贵金属交易商或平台都有不同的流动性提供者或价钱来源。

流动性提供者会以最小的差价提供价格给各贵金属交易商或平台。不同的流动性提供者所提供的价格未必相同。因此，每个贵金属交易商的现货价格都会不一样。更何况现货价格在国际上是以美元为单位来交易，这必须转换成当地的货币单位例如在我们的情况下就是新元。这汇率换算也会造成一些差价，差价大小取决于贵金属交易商所使用的外汇流动性提供者所提供的汇率。在大多数情况下外汇流动性的提供者会是银行，而银行会从兑换率的差价中赚取利润。这样层层堆叠上去就会扩大本地货币（新元）的现货价格。

不同的因素如市场需求、市场情绪、买卖商数量等都会影响或决定现货价格。即使是一样的贵金属（金银条，硬币），在不同的国家以及不同交易商所在的地区也会影响它的售卖价格。我们将在以后的文章进一步讨论这些课题。如果你有什么疑问，欢迎你向我们咨询更多详情！防疫期间，注意安全！

Evonne

中文翻译： 为什么你的现货价格与其他贵金属交易商或平台不一样？

“Why are your Spot prices on your website different from other bullion dealers or platforms?”. This is a question that we often hear from our retail clients. So, today we will be answering this question briefly.

1. The prices are dependent on the frequency of price updates to the website. Precious Metals’ prices fluctuate every millisecond. However, websites are not able to handle the frequent update of prices and setting it to update every second will crash the site unless a lot of resources is set up just to support this and this in turn will be very costly. Thus, the refresh rates for websites are usually less frequent and it might only be updated only after a few minutes. Prices on GSC website are updated every 2 minutes.

2. All bullion dealers or platforms have different liquidity providers or price source. Different liquidity providers will provide different prices with minimal spread. Thus, the Spot prices would not be exactly the same for different dealers. Moreover, spot prices in different currencies (depending on home currencies of dealers) for example in our case SGD, will also need to be converted from USD to SGD as Gold is traded in USD predominantly. This would also incur some spread and depending on the forex liquidity provider that the dealer uses for currency exchange, in most cases banks, there will be a spread as the bank will have to make their margins. This will widen the spot prices quoted in the local currency, in our case SGD.

Spot prices can be affected or determined by various factors such as market demands, sentiments, number of buyers and sellers and more. Even location of the dealer and thus the cost of bullion can differ for the same bar or coin in different countries. We will further discuss these in future articles. If you have any questions, please feel free to contact us to understand more! In the meantime, stay safe!

Evonne

Did you know, other than purchasing Precious Metals outright through our e-commerce site or over-the-counter, you can also accumulate precious metals gradually. Take your time to save and accumulate the asset and then redeem it whenever you decide.

Accumulating (Precious Metals) gradually allows you to average out your cost and spread out your funds just like the current trending way of purchasing, BNPL (Buy Now Pay Later). Just that in this case you can only take delivery after you saved the full weight of the physical precious metal you want. You can have a peace of mind even if you do not have the time to monitor prices in order to decide when to buy in. GSC Savings Accumulation Program (GSAP) is designed to automatically purchase for you daily, based on your stipulated amount you would like to save into precious metals monthly.

At any time during or after the accumulation, you may redeem the precious metals by selecting your desired physical products – bars, coins and/or jewellery. Based on your accumulated weight at that point of time, you can browse through GSC and Kim Gold product range to select what you would like to redeem. After you have decided, GSC will share more on the premium/Kim Gold Fee to top up.

Jewellery with different purity will be calculated accordingly when redeeming them. If you have queries on this, please do not hesitate to contact our team to understand more.

Don’t miss this good “lobang” as we Singaporeans like to say it in Singlish. This means don’t miss out on this good opportunity on our very own Precious Metals BNPL Program aka GSAP!

Suzane

“Spot prices dropped by over 4.00% in a span of 60 minutes before rebounding back 2-3 hours later.”

The above situation sounds like how BTC typically behaves with its extreme volatility. (For those of us who doesn’t track BTC, BTC’s price fell by over 55.00% in a span of 2 months recently, with the biggest drop being 49.00% within 2 weeks.)

That’s akin to saying your million-dollar HDB flat is now worth only 500k on the market. Ouch.

But guess what, the above situation refers to our safe haven asset known as Gold and it happened just this week, 9th August 2021 (Incidentally when Singapore celebrated its National Day holiday.)

The massive dip occurred just after 0700hrs local Singapore time, a time where most people were just starting their day. The dip lasted for an hour before rebounding back upwards 2 hours later towards levels of US$1740.

GSC Morning Call

The big money question is “Why?” And we at GoldSilver Central, have laid out several possible scenarios as to what might have happened.

Background

Coincidentally, on the 9th August, two major Asian markets were closed. Singapore was celebrating its National day and Japan was observing its Mountain Day holiday in lieu. With both markets closed, the depth of the commodities market was shallow, and liquidity obviously was not as readily available. There were probably fewer traders physically on desk as well.

Scenario 1:

A large legitimate sell order was placed. As traders were mostly off desk, the order could have been placed out into the market instead of a manual cover by an actual trader. And due to the lack of liquidity in the market, prices dipped accordingly to fill up the glut caused by the large sell order.

Of course, there are several follow-up questions in this scenario. Would prices really dip that much? Would this big dip happen again? What can I do to prevent margin calls for my account?

The truth is, we will never know with certainty. Unless we are the actual parties involved (The dealer who got the sell order or the actual customer with the sell order), we can only “guess” based on the available data that we have on hand. And the one thing is clear, Gold dipped by over 4.00% in an hour to hit a low of US$1684.72 between 0700 – 0800 hr local Singapore time on 9th August 2021.

Would it happen again?

We don’t know. From our experience, big orders are usually spread out across several days due to its sheer size to avoid large slippages and market movements. Hence, they are usually done Over-The-Counter, directly between market participants. This prevents unnecessary shocks to the markets. From the looks of the markets right now, it seems that we are out of the woods with gold prices hovering around the US$1750.00/oz levels. But can we say with certainty that prices will not cross below US$1700 in a shock dip like what we just experienced? No, we cannot be certain.

Scenario 2:

High-frequency trading probably exacerbated the drop triggered by stop losses.

Due to the prevalence of high frequency trading these days, large volumes of trades can be pushed through in a shorter span of time now. There is debate as to whether HFT ultimately contributes to increased market volatility and sharper spikes and crashes. However, we will leave that to another day for discussion.

What we wish to bring up here is that the quick pace at which the price dropped that morning probably didn’t even leave time for most traders to adjust their stop losses accordingly. Each lower price level would likely have triggered further stop losses, thus resulting in a negative spiral downwards until more and more traders caught wind of the situation and managed their positions accordingly.

Well, what should you do now?

NOTHING.

Ever heard of the saying “Don’t try to catch a falling knife?” The same principle applies here, you weren’t in the right position before the event occurred. So don’t try to chase after something that is just simply not meant to be.

Reacting to an unexpected situation is never a good thing and we won’t know for certain what is going to happen next. If anything, stick to your gameplan. There are always opportunities in the markets.

If your initial position was a buy position, then see this as a good chance for accumulation. And do it wisely. GoldSilver Central offers you the tools to do so. We have:

1. GoldSilver Central Savings Accumulation Programme

Dollar Cost Averaging Strategy is the crux here, and when you onboard the GSAP, accumulating daily is stress-free. Think of it as automated disciplined savings for your purse strings. It allows you to break up your purchase into daily smaller bite sizes, spreading out the price risk that you must bear. More discipline in your life isn’t such a bad thing.

2. GSC Live! Mobile platform

A mobile friendly application that is a powerful tool for investors. You now have the capability to view and transact based on live streaming market prices. Yes, that is right, you can buy / sell anytime and anywhere that you find convenient. So if prices were to crash once again, you would be able to take action immediately. And the best part? It’s 100% physically deliverable. Yes, let me repeat, 100% physically deliverable. You can exchange the pool allocated gold in your GSC Live! Account for physical bars & coins at our retail shop.

If you wish to learn how GoldSilver Central can add value to your portfolio, let us know and we’ll give you a call at your convenience.

Jason

It has been a busy week, you didn’t have much time to look at your Precious Metals (PM) investments during the week. Now that it is coming to the weekend, you decide to purchase some LBMA Good Delivery gold bars as prices having been dipping throughout the week.

BOOM. Wrong move there. You might have been better off waiting for Monday. To understand why, we first must understand the price components of a gold bar and why weekday prices are different from weekend prices.

If you are unfamiliar with the below equation, get familiar with it first!

Price = Physical Premiums + Spot price

(For more information, refer to “Cheaper a bit can a not?” Why your gold bar should NOT be cheaper.“ Article)

“Wise and successful businesses properly manage risks.”

For GoldSilver Central, we adopt a Hedging-based model approach where we ensure that we are not exposed to price fluctuations on our clients’ orders. This approach allows us to serve our clients without any prejudice on prices and ensures that we are not adversely affected by massive rise/drop in prices. To put things in perspective, a $200 increase in gold price will not equate a $200 increase in profits for selling a gold bar, as we do not take any positions on the gold spot price.

Under normal market conditions, where there is deep liquidity available and market participants aren’t afraid to quote prices for buying/selling, the difference between the selling price and buyback price (Also known as the buy-sell spread) is narrow. This is a natural function of efficient markets, where conditions for performing transactions are very fluid and has less or no friction. This is what usually transpires on a weekday where many market participants are available, and dealers are active also.

However, on a weekend, this is not the case. Market participants are inactive and do not quote prices. Hence a bullion dealer who deals on the weekends will instead, take the trade onto their own books. This creates exposure and a higher risk for the business itself, come Monday when markets are once again open. To deal with this increased risk, the buy-sell spread is widened to account for any possible fluctuations between the current quotes and the Monday market prices. This widening could be reflected in either the physical premiums or the spot prices itself.

A fun fact: Never try to compare prices of brokerages on a weekend. The adjustment of the buy-sell spread differs for each brokerage and you will end up with an inaccurate comparison.

How is the buy-sell spread determined on the weekends?

Reputable bullion dealers will have their own price risk assessment and structure. They consider several factors, such as the current market volatility, and price accordingly. Hence, you may observe that the buy-sell spread for the weekends may differ for different products.

This is also why some bullion dealers do not take in large orders on the weekend, as this increases their risks to an unacceptable level.

This sounds so unfair! Why should there be a wider buy-sell spread?

It is not a question of “fair / unfair”. Rather a more appropriate question to ask yourself should be “am I willing to deal at the current quoted rates?” Reputable bullion dealers widen the buy-sell spread to account for the increase in risks that they undertake. If they do not, they expose themselves to unacceptable risks and may even go out of business if the risk is not managed properly. However, if a dealer widens the buy-sell spread too widely compared to others, savvy investors know not to take it up and the dealer effectively prices himself out of the market. GSC offers services such as GSC Live! and price alerts/limits that assist our clients to monitor their desired price levels.

So why transact on the weekends?

It depends on your objectives!

If you are a regular investor and are now in the accumulation phase of your investments, you may wish to avoid placing weekend trades to avoid any major fluctuations in your accumulation. Slow and steady as some call it.

However, if you are a gun-slinging sniper looking for short-term opportunities from minor movements in price, and you foresee that prices are poised for a big movement come Monday, then yes transact on the weekends and lock in those prices. There are also investors who see that the current weekend prices meet their desired levels and are happy to sell at these levels. There is nothing wrong in that too.

Ultimately, GSC’s role is provide liquidity to our customers at fair and transparent rates. We also have value added services such as GSC Live! that make it easier for clients to achieve their objectives. The choice to transact or not, has and always will be the client’s to decide.

Till the next time, have a good weekend.

Jason

Have you ever wondered how do bullion dealers come up with the price of your physical gold bar? Is it true that bullion dealers make a lot of profits? Today, we look at the breakdown of a gold bar and why it is important to get a value deal instead of a cheap deal.

Essentially, the basic 101 formula is this:

Price = Physical Premiums + Spot price

Physical Premiums

Precious Metals Investors know that when they buy physical gold, they must pay a markup known as a physical premium.

For instance, on our GSC website, an Argor Heraeus Cast Gold Bar 100g is selling at S$8050.00 with the spot price of S$2450.80/oz. This translates to a physical premium of S$170.50 for the bar now.

This physical premium includes all the various costs components incurred in the minting of the gold bar. Some of these components include, but not exclusive:

1. Refinery Minting costs
2. Logistics Costs for delivery
3. Insurance Costs
4. Storage Costs
5. Profit Markup

We covered this in a previous article also:

What are Physical Premiums? Why are they important?

You can see in the above example, it is inaccurate to say that the bullion dealer earns $170.50 from selling the Argor Heraeus Cast Gold Bar 100g. The bullion dealer incurs costs when it decides to bring in inventory stock from refineries and typically the local SEA market competition is very stiff. It is not far-fetched to say that for a 100g gold bar retailing at S$8000+, the dealer could only be making S$10+ from it.

However, it is accurate to say that the retail investor’s “additional” costs of owning the physical bar is $170.50. It is an unavoidable cost incurred for the eliminating the counterparty risks and having the additional security of the physical asset. (We will discuss this in greater details in another article. PM us for more details!)

Spot Price

This is commonly known as the price of gold which may be bought and sold at this moment. What determines the spot gold price? The simplest answer is demand and supply of the market participants. However, there are many alternate theories about it which we will not delve into. We must note that the spot gold price differs slightly from region to region for many practical reasons, considering the geographical location and the time lag.

So, why should I not want my bar to be cheaper?

The more appropriate question here would be “What’s the opportunity costs I have to forgo here?”

Just imagine this, a dealer who is solely focused on “a race to 0” as we affectionately term it, is likely not going to be focused on value adding to its customers. Its main goal would be to try and attract as many customers as possible by virtue of its “lowest prices possible” strategy and hope to attain enough market share to be a dominant player. We know that does not work in the bullion industry, as seen from the numerous players initially making a big entrance in the precious metals industry with “low premiums inventories”, only to shut down shortly after with huge losses.

Price should not be your only comparison.

Instead, you should be looking for a dealer who is not only price competitive, but also able to value add to your portfolio investments! We’ve spoken on the importance of having an expert to guide you in your precious metals holdings in this article here (All Precious Metals investors fall into 2 categories. Which are you?)

Personally, I would absolutely be willing to top up the extra $10 in premium costs if in the long run, the dealer is able to value add to my portfolio. The costs savings would be much more than the $10 I put up now. Think of it as a minor investment in ensuring you get a better deal rather than a cheaper one. As Warren Buffett says:

“Price is what you pay. Value is what you get.”

And I would choose value over price anytime of the day.

Till the next time.

Jason

Inflation refers to the rise in prices of most goods and services of daily or common use. Whenever there is a higher demand than supply, prices will be increased and therefore, leading to inflation.

Investors holding on to tangible assets, such as property(s), may like to see inflation in the Real-Estate sector, as that will cause the value of their assets to increase. On the other hand, as whenever there is a negative in the Real Rates of Return in the Equity, Bond, or Real-Estate markets, investors will purchase Gold regularly as it is an asset that maintains value. This is because Gold, Silver, and other Precious Metals have both intrinsic and industrial value, cannot be printed at will like currencies; therefore will not be affected by inflation in the same way as food or personal services

However, investors will have to take note that the volatility of these assets can turn down the benefits of their insulation from rising prices, especially if it is only used for a short-term investment.

Deflation is when the inflation rate falls below 0% (a negative inflation rate). Inflation will cause the value of the currency to decrease over time however, sudden deflation will increase the value of the currency. This will mean that more goods and services can be bought with the same amount of currency than before this sudden deflation.

Usually, deflation happens when there is a high supply (excess production) with low demand (decreased consumption), or when supply of money is decreased (sometimes in response to a contraction created from careless investment or a credit crunch), or because of a net capital outflow from the economy.

If deflation is exacerbated, it can throw an economy into a deflationary spiral. This will happen when a decrease in price leading to lower production levels, and therefore to lower wages. This will cause a lower demand by businesses and consumers, and the price will decrease further due to the lower demand. Unemployment rate will also increase if consumers delay spending in anticipation of falling prices, as it will eventually lead to a falling economic activity.

What we see today, the big increase in money supply in support of the global economies due to the effect of the pandemic, the low interest rate to spur lending and spending, inflation seem more like a plausible event moving forward. At this moment, a portfolio with a slightly higher allocation to Precious Metals might be good as we are bullish in the longer term and this period (current price levels for Precious Metals) might be a good window to enter the market and accumulate more.

Always remember that a diversified portfolio will be important to tide investors through inflation and also remember to constantly rebalance your portfolio to achieve the best results!

Suzane

A recently reported fraud news in Singapore involving physical Gold bars unfortunately showcased the often used asset of choice by fraudsters, fake con artists and money launderers. This plagues the industry from time to time and gives a bad name to precious metals investing for serious investors and trusted dealers.

The Financial Action Task Force (FATF), is an inter-governmental body that sets international standards aimed to prevent money laundering and terrorism financing (ML/TF). Similar to other important financial centers globally, Singapore is a member of FATF and has taken action to tighten regulations and reduce the harm caused by these illegal activities to society.

For the precious metals sector, Singapore had passed the Precious Stones and Precious Metals Act (PSPM Act) in April 2019 that introduced an anti-money laundering and countering of terrorism financing regime to strengthen Singapore’s overall efforts to counter money laundering and terrorism financing.

GoldSilver Central Pte Ltd (GSC), as a regulated and trusted dealer in Singapore registered under the PSPM Act, complies with and performs the required customer due diligence (CDD) and enhanced customer due diligence (ECDD) processes.

Regulated dealers under the PSPM Act are prohibited from performing any transaction if the required CDD process is not completed or fulfilled. And for cash transactions, regulated dealers are further required for compliance reporting for amounts above $20,000 to the related regulatory bodies.

All regulated dealers have also been advised to display prominently the Ministry of Law’s Notice for Customers (as shown below).

The World Gold Council (WGC) is the market development organisation for the Gold industry. The WGC recently produced the Retail Gold Investment Principles (RGIP) which provides high level, best practice guidance for providers of retail Gold products. GoldSilver Central, which is also a corporate member of the Singapore Bullion Market Association (SBMA), supports and adheres to the guidelines found in WGC’s RGIP.

You may learn more about the RGIPs here.

As a regulated and responsible dealer in our industry, we want to always support and help build trust in our precious metals community for a safe and responsible trading environment for our clients and business partners.

GSC Compliance Team

Missing out on the joy of joining your once-in-a-lifetime graduation ceremonies in-person? Trying to reward your loyal staff but can’t hold any meaningful physical ceremonies? How about having fixed your wedding date and made all the preparations for a intimate experience only to be affected by the volatile uncertainty caused by Covid-19. That’s exactly where a gift in the form of a Gold Bar or Coin will be a memorable and significant one.

At GSC, we consistently source for products suitable for investors all around the world, each looking to fulfil a different need in their portfolio. During this period of Covid-19 pandemic, where we all need to be practising social responsibility and distancing, GoldSilver Central sees the need to still remember and commemorate special events in a meaningful way.  Virtual interactions and celebrations can’t be avoided, but let’s continue to celebrate that important milestone in our lives.

Gift of Finance

Graduation ceremonies traditionally signify passing into the adulthood, so why not get a physical gold bar or coin as a first real financial investment for your graduating child? Celebrate that parental love you have with your child by imparting to them life’s eternal lesson: the importance of personal finance.

Gift of Loyalty

Similarly, reward your loyal staff who have been going above and beyond their roles by gifting them a gift that signifies a store of value. Show them you value their contributions and celebrate the bond you have built up over the years.

Gift of Value

And what else can we say about arguably the most important event in most of our lives? We should never underrate the joy of the matrimony of a couple. And a pure gold investment bar will make for a solid beginning of a relationship. Display it prominently in your new home and remind each other daily the importance and value of your marriage. Or if you are gifting it for your son and newly official daughter in law, this is a good opportunity to share with them the value of long-lasting assets in the relationship.

We have curated a catalogue of suitable gifts for you. Here are some of the products you can consider.

Feel free to browse the catalogue. For corporations, we are able to customize portfolios to suit your needs as well.

Thank you and lets all keep safe

Jason

Today, as I was sharing the merits of having Gold in your investment portfolio, a mid-30s male came up to me and asked me this, 

“How much should I invest in Gold? How do I even go about doing it?” 

A good question. 

We operate a precious metals business. Will we ever say  

“You are buying too much Gold! Stop buying!”.  

ABSOLUTELY, YES WE WILL SAY THAT.  

Because the alternative is just simply wrong. No one should ever have 100% of your assets into any 1 basket, that is a gambler’s mindset. (In which case, we can point you to the nearest Casino, they should be welcoming locals with open arms at the moment, given the lack of tourism still in Singapore.) Even Warren Buffet diversifies. So should you. Period. 

Hang on, did a Precious Metals Market Leader just mention not to buy Gold? YES we did! And that’s because having too much Gold weightage in your portfolio may not always be a good thing. Let’s dig deeper. 

 There are 2 main reasons investors buy into Gold as an asset. 

Capital Appreciation  

Wealth Preservation 

Which reason do you belong to? 

Lately, we hear a lot about how Gold prices have gone up more than 50% and that it will continue to have a “meteoric assent to the moon and Gold will have taken a leap for mankind” (we jest but just hear some of the stories that we have heard…) Would Gold shoot up to $10,000 per oz? MAYBE, but that will most probably not happen in 2021 or for the next 5 years for that matter. If you are investing to earn capital appreciation, you need to ask yourself THE important question. 

What is my timeframe? 

(We’ll discuss this in greater details next time, subscribe to us for the latest updates. Or simply call us to ask.) 

Once you’ve identified your reason for investing in Gold, comes the next part in deciding how much to invest. Ask yourself this very simple yet straight forward question, 

Can you sleep at night? 

Every investor’s “sleep tolerance level” is different, one may be comfortable with putting in 20% of their portfolio into Gold and possibly see it shrink by 10%. Another may be anxious with even a 5% dip when they’ve only put 10% of their portfolio. And you know what, there’s nothing wrong with it. Which is why here at GoldSilver Central, our purpose is not to sell you more gold, more silver, more platinum… Our purpose is not even to tell you “investors should put 5-10% of your portfolio into Gold. This is historically proven to be the best portfolio weightage according to experts…”  

Our purpose is to ask you this,  

“Will investing in Gold lead to better sleep for you? If so, lets discuss what is the most cost efficient way to get into it. If not, you should consider why are you even thinking about investing in Gold.”  

Are you buying too much gold? Speak to us to create the portfolio tailored specifically for you to have a good rest at night. 

Till next time. Sleep well. 

Jason

2020 was the banner year for Gold, hitting US$2074.96/ounce in August 2020. Silver has hit its high since April 2011 at US$29.795/ounce and Platinum has hit US$1075.699/ounce since August 2016.

Based on the GSC 10 a.m. Reference Price, Gold has increased 24.93%, Platinum has increased 47.44% and Silver has increased 47.54% in 2020.

The lowest price for all metals occured in March for the year 2020. This is also the period when the pandemic started to proliferate globally.

The pandemic has accelerated the rally for investors who are looking to protect their wealth, and this led them to stockpile precious metals, the known safe-haven. In addition to the increase in demand, the pandemic has affected the supply chain for the precious metals due to lockdowns. All these led to an increase in the premium of physical stocks.

With the huge government debt, negative real returns on bonds, low or negative interest rates and threats of inflation and market turbulence, what would your precious metals forecast be for 2021?

Will the silver continue to outperform in 2021? Will the basis of positive blast from the green transformation driving increased industrial demand, and the expected economic recovery?

Below is the chart that shows the Gold, Silver and Platinum spot price (SGD & USD) movement line for the year 2020. Based on the charts below, it shows that Gold and Silver are in tandem and have a closer correlation as compared to Platinum hence a diversification across different precious metals might be a good idea for a more robust portfolios.

Price based on GSC 10am Reference Price

Suzane

I believe most have read about the recent Reddit group that has spurred on many other retail investors to short squeeze stocks that hedge funds have big short positions in. The idea is to drive prices of the stock high enough to force the hand of these hedge funds to buy back the stocks they have borrowed to sell, at a loss.

Why didn’t this work with the Silver Market?

The commodities market doesn’t work the same way as the stock market. The shorts reported by CME or Commitment of Traders Report (COTR) does not mean that all of these shorts are speculative positions or positions that traders have placed to bet that prices will go south for them to make a profit. Most of these short future positions are to hedge physical Silver exposure or miners to secure prices in the future to deliver mined Silver against. In other words, these short future positions are being offset with physical bars and coins held in their inventory.

Another point to note, we do not know what is on the trading book of each bank and they might have positions not pushed out to the market yet as they have taken on a big position. For example, the trader in a bank has bought a sizable amount of Silver from a fund and yet to sell it out in order not to move the Silver price too drastically. This ride up in Silver prices allows them to hedge out their risk at a much higher profit and due to the larger number of buyers available, it will also allow them to get out of their positions even earlier and at a tidy profit.

Bottom line is, we do not see the full picture from the reports provided via CME or COTR.

The financial institutions raised margins to prevent Silver prices from soaring, is this true?

Margins were raised by 18% by Comex but this was not because the institutions wanted Silver prices to stay low. Many brokers followed suit. Margins for trades is a function of volatility. The higher the volatility the higher the margins required. This is for risk management and also to protect the interests of investors. This will happen for any asset class not only for Silver. This often has been misconstrued by many to think that the institutions did this on purpose for their own gains.

Physical Silver premiums shot up sharply, does this mean there are not enough physical Silver?

Physical Silver premiums came up at least 30% or more but it does not mean that physical Silver have all ran out. The sudden sharp increase in physical demand from clients globally due to this Silver squeeze coupled with the Covid-19 measures implemented in mints and refineries lead to a short term tightness of physical Silver bars and coins. There are still large Silver bars available in many vaults around the world but they are not the preferred choice for retail investors.

The manpower restrictions due to Covid-19 also meant that production schedules for Silver finished products have to be extended especially with this huge increase in demand. These factors led to the increase in premiums and it will ease once the Silver orders backlog has been met.

Brian

If you are reading this, you are likely interested in Precious Metals. At GoldSilver Central, we take care of your needs. This means we actively find ways to value add to your portfolio. And we’ve discovered that Precious metals investors can be categorized into 2 categories:

1. Profit & Loss
2. Asset on your Balance Sheet

Let’s analyze this further.

1. Profit & Loss Category

To you, gold is like any other investment, you want to achieve capital gains from it in the shortest time frame possible. Of course physical gold has additional physical premiums on top of the market spot price, but if you foresee the demand will exceed supply in the near term and given the increasing rate of uncertainty in the economic market, having exposure to gold, the world’s oldest asset and it being a safe haven, is a no brainer for you. And you will make a quick profit once prices have risen to your desired levels.

So what then?

As we said, we’re here to take care of you! Here are a few ways we can do so.

• GSC Live! (Download here for Free!)

A mobile friendly application that is a powerful tool for investors. You now have the capability to view and transact based on live streaming market prices. Yes, that is right, you are able to buy / sell anytime and anywhere that you find convenient. And the best part? It’s 100% physically deliverable. Yes, let me repeat, 100% physically deliverable. You can exchange the pool allocated gold in your GSC Live! Account for physical bars & coins at our retail shop.

• Retail Services

Surprise! Its not just a place for you to collect your online purchases or see what gold bling lights up your eyes. Here, we are specially trained to pinpoint weaknesses in your precious metals portfolio and identify ways to bolster up your holdings. To maximize your purchases, speak to us to see what is the best way to go about it. There’s various ways, for example from reviewing your portfolio balance, aligning your risk profile, etc.

• Collateral Loan

Trust us, we mean serious business when we say you should consider utilizing Collateral Loan services. Its not just about braving occasional social stigma and “pawning” your jewellery for urgent funds, it’s all about obtaining credit lines while retaining ownership of your assets for the capital gains via price appreciations. Serious investors know what we’re talking about. If you’re not sure yet am interested to find out more, just reach out to us and we’ll help you become one.

2. Asset on your Balance Sheet

You belong to a very select group of customers where it’s not always just about making money. Sometimes, you are planning for your future, or maybe even your children’s future. And you want to give them the best in their lives. Maybe even a good head start in their financial journey. Some Singaporeans buy flats under their children’s name, you buy precious metals for them. After all, its internationally recognized and much more liquid.

We also have ways to value add to you!

• Storage

When it comes to your physical assets, we believe security concerns shouldn’t even be a pain factor. And yet, precious metals investors face issues such as insurance headaches, safety deposit boxes gross weights and size constraints. Just thinking about it gives me a headache already, how about you? That’s why our storage program is an all-in-one solution and provides the full suite of services you will need. From the day of your first purchase, till the day your grandson/granddaughter wishes to sell it off, we maintain your account and offer you a direct line to us. Especially if you are located overseas.

• Perth Mint Certificate Program (PMCP)

Investing your funds in the world’s only Government Guaranteed program for Gold is a no brainer for a serious investor. Perth Mint holds itself to the highest of standards when it comes to vault security and transparency. When you choose PMCP to be part of your portfolio, you needn’t worry about not leaving behind the best legacy. It’s not just a paper certificate, it’s a mobile and internationally recognized asset you can put in your pocket wherever you travel to.

• GoldSilver Central Savings Accumulation Program (GSAP)

When I purchase an investment, I face this issue. How do I know the price I purchase at is a “low price”. The truth is nobody knows. And that’s why it’s so important for you to leverage upon financial wisdom. Dollar Cost Averaging Strategy is the crux here, and when you onboard the GSAP, accumulating daily is stress-free. Think of it as automated disciplined savings for your purse strings. More discipline in your life isn’t such a bad thing.

Earlier, I mentioned that investors fall into the 2 above categories. Truth be told, you feel that both categories do apply to you right? And that’s so true! It all depends on your life stage and goals. So I implore you, get in touch with us to find out how we can maximize each category in your portfolio.

Jason

Technical analysts use support and resistance levels to identify price points on a chart where

1. Buying force concentrates and exceeds selling force – Support level
2. Selling force concentrates and exceeds buying force- Resistance level

The support and resistance levels can be identified on charts using trendlines and moving averages based on the historic price movements.
In terms of technical analysis, the simple resistance level can be obtained by drawing a line along the highest highs for the time period being considered. In contrast, the support level can be obtained by drawing a line along the lowest low.

There are 2 scenarios that may happen when the price level,

1. Bounce; or
2. Break through

During the “Bounce”, investors usually:

• Buy when the price falls towards support.
• Sell when the price rises towards resistance.

During the “Break Through”, investor usually:

• Buy when the price breaks up through resistance.
• Sell when the price breaks down through support.

Please feel free to speak to us at bullioninsights@goldsilvercentral.com.sg or call us at +6562229703 to speak to our in-house analysts and they’ll be happy to share more with you!

Suzane

Despite being the ultimate “safe haven” asset, Gold prices has been very volatile since the coronavirus outbreak. The intensifying fears over the coronavirus along with the U.S presidential Election and the highly anticipated relief bill have been the main drivers for the exacerbation of Gold’s volatility. The phenomenon of a time discrepancy between the gold price and the point in time clients receive information of the price hike has been common this year. Owing to this, clients are selling their holdings after gold prices have retreated, missing out on the best possible returns.

GoldSilver Central offers efficacious solutions for your sale of gold, ensuring you are informed of your desired price level with minimal effort. Price hikes of Gold prices are opportunities for you to benefit from and we are here to lend a helping hand.

• Let GoldSilver Central Monitor the Prices for You

Having to take time off your busy schedule to monitor the price movement of gold prices can be a hassle, to say the least. Root out this inconvenience by making use of our price alert function and let us monitor the prices for you. Simply fill up a form, indicate the price you are looking to sell at, and we will do the rest. Once the indicated price is reached, you will be alerted with an email and you can head right over to liquidate your assets.

• Prices at your Fingertips, Sell your Gold Holdings anytime and anywhere at your Convenience

As technology advances in this age, the approach to dealing with precious metals has changed too. By converting your gold jewellery or bullion into Pool allocated holdings on GSC Live!, you are able to breathe new life into your Gold. By doing so, it provides you with the ability to keep track of market movements and enable you to sell instantaneously at the time and place of your convenience.

Sin Pong

“Gold is Gold! Who cares about the brand, as long as its Gold, you can definitely sell it off! Don’t need to worry!”

Have you heard of that statement before when you purchase Gold? Perhaps a family member with good intentions was just sharing with you his/her thoughts, or a savvy sales person was pushing a seemingly cheaper product. We at GoldSilver Central have definitely heard of that before and even more so in 2020.

Why? Because, In 2020, Gold prices have increased by 36% since the opening price, brightening the spotlight shining upon the yellow metal. Many investors who previously bought physical gold during the last peak in 2011 have stepped forward, eager to finally sell off their holdings, having seen a dismal 8 years of decline in their precious metals portfolio. Some of them, glad to offload the metal at their initial purchase price, never mind the fact that they have lost 9 years worth of interest/opportunity costs along the way.

New investors on the other hand are also searching for alternative investments, with the slowdown in economy, departure from traditional assets such as shares and bonds, and also the generally dismal interest rate worldwide, as a general financial environment. The 36% increase in Gold Prices YTD 2020 , translates to 48% annualized returns, and this is assuming Gold prices remain at current levels instead of rising upwards, lending strength to investing in Gold.

What this means is that interest in the Physical Gold market is being revitalized, as more demand, together with more aboveground supply flows back into the market. With this interest comes more “varieties” of physical gold, notably non-LBMA Bars and Coins.

Refer to this link to find out more about LBMA

https://www.goldsilvercentral.com.sg/blog/what-is-lbma-and-why-is-it-important/

Why do People purchase Non-LBMA Gold?

To be fair, people purchase non-LBMA Gold such as bars or coins for various reasons. They trust the seller to a certain extent or that they believe gold is gold and that its liquid everywhere. For example a popular local jewellery shop could be minting gold bars for local retail consumption. After all, its highly popular in the local populace, everyone would recognize it anyway. Or the gold coin being retailed could be a special limited edition item with a popular design, don’t miss out on getting it now while stocks last! It doesn’t matter who mints the coin, private mint or sovereign mint, Gold is Gold after all right?

People could also purchase non-LBMA Gold because the price discount offered is way below the general market price and it’s a “great bargain”.  In some cases even, they know that it is a “ticking time bomb” as there are schemes that guarantee a monthly return from the non-LBMA Gold they purchased but they believe that they can “exit” before they get burnt.

Either way, it does not necessarily always work out well.

Not all Gold is liquid

In the past few months, articles linking international refineries to allegations of tainted gold sourcing have surfaced. These refineries have long standing histories and have been esteemed players in the industry. In recent times, there have been increased scrutiny on refineries, as consumers of Gold are demanding to know that their purchases are ethically sourced. Refineries have thus become more strict on the above ground gold that they buy back from distributors.

Closer to home, a refinery that regularly purchases gold from dealers/consolidators in the region published a notice stating that it would not accept certain types of bars. As a general background, such broadcast lists are quite common and do not usually differ much. Interestingly, the brand “Genneva” is included also in this round’s broadcast. (If you are unfamiliar with Genneva, click here to read more about it.)

For those who previously bought Genneva branded Gold, you know that throughout the years, you may sell it and it is recognized as “Scrap Gold”, meaning you would have a higher discount on it but you still would be able to offload it. However, now with its inclusion into the Non-Approved Gold list by the refinery, metals dealers may not even wish to accept the bars, no matter the discount as they have an increased probability of being unable to sell it off. No respectable dealer operates their business this way and holds ticking time bombs in their inventory. It does not make financial sense.

Suddenly, we have this situation where Genneva Gold that was once accepted as “Gold” but now is no longer seen as “Acceptable Gold”. Overnight, your Gold is no longer acceptable “Gold”. (Bear in mind your Genneva Gold still has a purity of .9999 and its weight did not decrease one bit.) But now, your Gold asset is worth nothing, seeing that you can’t get a price quotation on it. I would postulate that this risk of not being able to exit your investments is too large for a savvy investor.

So if you are holding on to non-LBMA Gold currently, set up an appointment with us to explore your options. We’re not saying you need to sell off all your Gold as quickly as possible, but at least you will know all your options then.

So that’s it. A quick look into whether “Gold is really just Gold”. Stay tuned for more updates.

Articles on Allegations of Tainted Gold Sources

https://www.ft.com/content/4c569519-a3f2-48a7-a267-a639c450ec42

https://www.swissinfo.ch/eng/valcambi-refinery-denies-sourcing–dirty–gold-from-dubai/46019668

Jason

Today, we briefly explore a different topic – the merits of Fractional Ownership in Precious Metals

Do you legally own half a home with your spouse? Do you have friends “co-owning” a private yacht? That is fractional ownership, where the ownership of an asset is shared by several parties. This form of partial ownership allows them to share the benefit that comes with the asset. Typically, this occurs most often when a sole owner does not require usage of the asset 24/7. Simply think of “your yacht” in Singapore, it’s highly unlikely you will wish to sail 24/7. Of course, there are other reasons to pursue fractional ownership, such as inability / reluctance to own the full asset.

The application of Fractional Ownership to Physical Precious Metals (PM) is not new. A common form would be Pool Allocated Gold where the physical gold is set aside in a segregated pool and clients have the option to purchase smaller denominations. A group of PM investors coming together to co-own a pool of physical Gold. Sounds like Fractional Ownership doesn’t it? For eg, clients can purchase 0.1oz Pool Allocated Gold on our GSC Live! Platform and they will own 0.1oz worth of physical Gold (either bars or coins) within our GSC Vault Network.

So, if the concept of Fractional Ownership in PM isn’t new, what is the big deal then?  Well, the key is seeing how we can apply the concept of Fractional Ownership to our PM strategies. How does Fractional Ownership help a PM investor achieve his objectives? It is simple. By converting a specific piece of physical gold to a pool allocated format, we have taken that first step (and arguably a tough one) of converting your inflexible gold to a form that offers more flexibility. And this flexibility brings about more options. Let us explain what we mean.

Imagine being able to sell 0.1oz of gold at a time instead of the whole 1oz gold bar; and being able to set aside funds on a monthly basis to accumulate your gold bit by bit, without incurring the huge markup premiums of small denominated physical gold. (Of course, one can argue that you can achieve the same results and receive gold exposure by going into ETFs but that depends on its structure. You may not be really holding Gold after all. This is an exciting topic for another time!) Fractionalizing your Gold allows you to “enter/exit” the market at multiple price points and that itself opens a lot of options.

Clients multiply their single traditional option of “buy low sell high” to many more options on what to do with their PM assets. For instance, instead of only being able to sell 100% of my Gold bar at the current price, I could instead opt to sell 50% of my Pool Allocated Gold and leave the remaining 50% for continued price exposure. If I am on a monthly budget (setting aside $200 every month), I could also be applying a strategy to buy $200 worth of Gold monthly and accumulate up to 100g worth before taking delivery of 1 x 100g gold bar. This allows a PM investor to stack up their purchases at minimal costs. Previously, an alternative would be to buy a physical 2g gold bar monthly and incur huge premiums. (If you are interested, check out our GSC Savings Accumulation Programme where our clients perform minimal-premiums accumulations automatically on a DAILY basis!)

One thing to note though, just by fractionalizing your gold into tiny bits does nothing for you. It’s about how you use that ability of fractionally dividing up your assets that makes it powerful.

So that is it, a short discussion on Fractional Ownership in Gold. We have only touched the tip of the iceberg here. Stay tuned for more updates and discussions.

PS:

To keep this article short, we did not discuss the various differences between Pool Allocated and Allocated Gold. There are many online articles available but if you are interested in a deeper conversation, please feel free to approach us via email (enquiry@goldsilvercentral.com.sg) or phone (+65 6222 9703).

Magnetic Bullion Tester

What is the 10 am GSC Reference Price? 

The 10 am GSC Reference Price is an electronic snapshot of the Gold price at 10.00 am Singapore time taken directly from our price servers. GSC also uses the reference price as a confirmed price that clients can check and refer to transparently, that was used for the dollar cost averaging for their GSC Gold Savings Accumulation Program.

Click here to find more about the GSC Gold Savings Accumulation Program.

https://www.goldsilvercentral.com.sg/goldsilver-central-savings-accumulation-program/

Are there other types of reference prices used in the Gold market

Yes, there are a few known reference prices worldwide, with the LBMA Gold Price (previously commonly known as the London Gold Fix) being the most well known in the industry. The LBMA Gold Price is now currently being administered by the ICE Benchmark Administration (IBA).

More information about this can be found at this link here:

http://www.lbma.org.uk/lbma-gold-price

The GSC Reference Price is published on GSC’s website (historical data available for download) and updated also on GSC’s Reuters page 0#PREC=GSCP.  This facilitates easy price data accessibility, transparency and provides a daily indication for Loco Singapore Gold prices.

Can clients use the 10am Reference Prices for their bullion purchases/sellback?

Yes you may. Please contact us to find out how can this be done.

Disclaimer:

In spite of GSC making every effort to ensure that the information displayed is accurate and complete, GoldSilver Central Pte Ltd is not liable for any errors, omission, inaccuracies, interruption, defect or delays in content or transmission, or for any actions taken in reliance thereon. Under no circumstance will GoldSilver Central be liable for any damages, including without limitation direct or indirect, special, incidental, punitive, or consequential damages, losses or expenses arising out of or relating to the use of the information, or decisions made by any persons or body based on the information provided therein.

In addition, GoldSilver Central Pte Ltd reserves the right to censor the Reference Price if GoldSilver Central Pte Ltd is of the view that the Reference Price was incorrectly, artificially or erroneously effected, obtained or manipulated to not truly reflect the true existing prevailing market prices at that point in time. Any edits done will be recorded with full data pre and post price snapshots disclosures with accompanying evidence to support this decision.

Why You Should Swap Your Old Gold Jewellery to Gold Bullion?

Objectives:

Bring forth a case of converting your “useless” jewellery to a form that’s more useful

I believe we have all experienced at least one of the situations below:

• Received Gold jewellery as gifts for wedding, baby full moon shower, special events etc, but you don’t wear Gold jewellery!
• Your current jewellery design is obsolete, or it can’t be worn anymore, broken jewellery, lost one side of the earring and etc
• Your once beloved jewellery is sitting in a box somewhere safely stored aside, but otherwise quite useless

In our eyes, all these represent under-utilized assets! So begs the question, is there a way to better utilize these “old jewellery” other than exchanging new gold jewellery or encash it?

Yes, there is. You can choose to swap your old gold jewellery to LBMA Gold Bars and investment Gold bullion coins.

Why not encash it to SGD and keep it in my bank account then?

Well, that answer boils down to your personal objectives. We all know that keeping all our assets in SGD cash is not the wisest way to invest. (We’ll leave the topic of financial portfolio diversification for another day), but if you see gold as a possible asset class to hold in your portfolio, then swapping your illiquid Gold jewellery to a standardized LBMA format could be a possible way of building up your gold holdings. The general rule of thumb is to have 5-10% gold exposure in your portfolio, but this depends on individuals’ risk profiles. Contact us to speak more about this.

There are generally 2 common forms that clients swap their jewellery to and we have listed them both here for your comparison.

LBMA gold bullion are tax exempted in Singapore, you do not need to pay 7% GST for them. It is priced by spot price (market price) + premium (workmanship), which the conversion cost is relatively much cheaper compare to jewellery that has GST, marked up on gold price and workmanship.

The buy/sell spread for gold bullion is transparent as well, usually it ranges from 1% – 10%. Whereas the sellback of jewellery is normally given a discount of 15% – 18%, after adding 7% GST the spread will be more than 20%. And that does not include the different practices of different shops, such as levying additional administrative costs or having no transparency in the entire process.

An example based on indicative price:

GSC buyback price for 999 jewellery is at $70.10/g, the lowest premium 100g 999.9 gold bar is selling at S$7446.70. Jewellery shop 999 gold price is at $85.50/g. If you were to sell 100g of 999 jewellery and swap it into a 100g gold bar with GSC, you just need to top up $436.70. If you swap your jewellery to new 100g gold jewellery, considering the discount is only at 15% and you need to pay 7% GST, you need to top up $1,881 excluding the workmanship. The difference is obvious.

LBMA gold bullion has assurance of international liquidity. This is very powerful and essentially means that you are not tied to any bullion dealer should you wish to sell. (You could even bring the bar physically to an overseas country to sell if you wish to) When you do the swaps, you unlock more options in terms of how to utilise your Gold in compared to just wearing as jewellery. You won’t need to worry about fashion fads if you decide to pass your precious metals holdings to your children. Moreover, you are in the unique position of having your capital investment appreciate and being able to use that position to move to a better “investment form”, albeit the same asset class, Gold.

Wondering how much is your old gold jewellery worth now? Feel free to visit our website and retail store for free evaluation.