Long before stocks, bonds, ETFs, mutual funds, and other investment vehicles, there was gold. For over 6,000 years, gold has been traded, used as currency, and hoarded as a form of early investment. Today is no different. Despite the variety of assets available, each with varying risks and returns, pure Au continues to be the gold standard (pun unintended), boasting an average annualised return of 13.5% over the past five years.
Gold serves as an excellent inflation hedge. Gold has consistently retained or increased its value compared to traditional fiat currencies when it comes to purchasing power. Gold is also widely accepted anywhere in the world and is seen as a “crisis commodity” during times of geopolitical uncertainty, which is relevant in today’s world.
Gold: The Timeless Investment
How to Invest in Gold
So, how should you invest in gold, and where do you start? Is it as simple as buying gold bars and coins from shops and hoarding them under your bed? Technically, yes. In Malaysia, many stores sell physical gold in both bars and coin forms. Gold bars can weigh from 25 grams to 1 kg and are highly liquid. However, when you sell your gold bar, you must sell the entire bar, which can be cumbersome. Gold coins, on the other hand, are smaller, weighing between 2.5 grams to 25 grams, offering more flexibility. However, the cost associated with minting means you pay a higher price per unit of gold coin versus a larger gold bar.
Whether you’re interested in gold bars or coins, in Malaysia, you can typically purchase them from Public Gold (a subsidiary of Public Bank), Maybank, Silverbullion, or jewellery stores such as Habib, Wah Chan, Poh Kong, and Tomei.
While it can be exciting to hold physical gold, the novelty wears off, and the risks of storing gold at home become apparent. To safeguard your investment, you can use safety deposit boxes, but these can cost anywhere from RM310 to RM500 and above annually, depending on the size.
Modern Investment Options
For a more modern and accessible approach, consider investing in gold-related stocks, which offer exposure to the gold market without the hassle of handling physical gold. Popular companies include Poh Kong Holdings Berhad and Tomei Consolidated Berhad.
Another option is Gold Exchange Traded Funds (Gold ETFs), which are commodity funds that mirror the price movements of gold, eliminating the logistical challenges of storing physical gold. While many US-based gold ETFs are available, a safe bet for Malaysian investors is the TradePlus Shariah Gold Tracker, a local Shariah-compliant gold ETF.
Gold Investment Accounts (GIA)
Lastly, Gold Investment Accounts (GIA) offer a digital means of investing in gold. Offered by many local and international banks in Malaysia, GIA ensures 99.9% gold purity and can be easily liquidated. Some banks allow an initial deposit as low as 1 gram of gold, costing around RM250, making it accessible for small-scale or new investors.
While this article does not cover everything you need to start investing in gold, we at PEGH believe it provides a solid foundation for diversifying your portfolio with one of the most trustworthy and reliable assets in human history. No matter what the future holds, you can always count on a little bit of gold to have your back.
