Exposure to Gold and Silver

With Gold prices plummeting in the recent weeks whereby it breached the 1200 dollars level, it certainly doesn’t seem like a good idea to be holding gold at the moment. It has corrected close to 40 % from their peak of 1900 level. For those whom believe “To buy when everyone is fearful” theory, it is perhaps time to consider accumulating a position on gold especially if you have more of a medium to long term time frame. 

Some reasons advocated by gold bulls had been that it could be looked as an alternative currency. It seems like a good angle to look at especially with the current limitless money printing and quantitative easing by the major nations such as US and Japan. Also, it tends to serve as a good inflation hedge. Currently, it has not been favourable for gold as inflation seems to be under control.

There are several methods to gain exposure to gold or silver (Have a more volatile nature). These are some of the avenues you can look into.

1)     Exchange  Traded Funds (There is a Gold ETF listed in SGX)

2)     Gold and Silver Exploration Companies Equities (eg: Barrick Gold)

3)     Futures and Leverage Spot Products (Not for those faint hearted)

4)     Physical Gold and Silver

Personally I have a small allocation to gold for my portfolio. I have exposure using two avenues.  Firstly I have invested in the exchange traded fund utilising my CPF gold limit. I am also vested in Barrick Gold which is listed in NYSE.

I will be looking into buying physical gold soon through UOB bank which I will touch on in another entry.  I am looking at a long term time frame for the physical gold (Hopefully I can resist the temptation to cash in when gold prices start shooting up) as I am intending to pass it on to my two kids.

If you have the notion that I am extremely bullish on gold, then let me just clarify, I am not. Gold is likely to remain range bound in the near to medium term time frame after looking at their price action. Any upside should be cap at the 1500 levels.

Lee