For all new stackers who wish to start saving their hard earned money in physical metal, the first question usually arise would be:-
Buy physical gold or silver?
Well, firstly gold and silver are precious metals: rare, naturally occurring metal of high economical value. We have used precious metals previous as currency, such as coins and taels. With the creation of modern fiat currency, precious metals are now widely regarded mainly as investment and industrial commodities.
The best-known precious metals are gold and silver. There are other precious metals such as ruthenium, rhodium, palladium, osmium, iridium and of course, platinum. However, these rare precious metals are rarely traded and less liquid as the 2 most common precious metals known to us – Gold and Silver.
Let us focus on Gold and Silver, which are the popular precious metal in Singapore.
Gold Bars and Coins
Update: As of 20th June 2018, the spot price of gold is SGD $1728.25 per troy ounce (USD $1274.31)
Currently as of 16 August 2015, the spot price of gold is SGD $1567.53 per troy ounce (or USD $1114.30)
Gold is the most recognised, most liquid precious metal. Not only is it easier to buy, it is easier to liquidate for cash too. Gold is a popular jewellery, but for investment, we would only deal with investment grade gold, in the form of bullion bars or coins. You can buy pure gold coin or bars from bank, such as UOB head branch, or jewellery stores. These are usually a lot more convenient, almost any jewellery stores would have gold bars of different sizes for sales. Unfortunately, most of these gold bars and coins are sold at a high mark up. The high mark up is mostly because of the high rental costs and branding of the bank or jewellery stores.
Buying gold from bullion shops in Singapore
You can also visit shops that specialise in bullion gold / silver, the markups are low as they specialise in bullion products and generally has less recognition power compared to UOB or big brand jewellery name like Poh Heng Jewellery. A quick search would reveal many bullion shop such as Gold Silver City in Singapore or Gold Silver Singapore.
Gold bars and coins easy to sell and buy
Most importantly, the reason why Gold is the top choice of many investors is because it is so recognised in value and easy to liquidate. You can sell gold easily, without too much loss in value. Most banks and jewellery franchise buyback, though they cut a commission for themselves. You can sell to bullion shops, majority of them buybacks. You can visit any pawnshops in your neighbourhood and you can get cold hard cash easily. If you bother to use forums, eBay, carousells or other avenues, you can even get a slightly better price. It is that easy to convert your investment into cash.
The biggest disadvantage of gold is that it is so costly, and it may be difficult for cost averaging when one small gold coin of 1 ounce costs $1600. Thankfully there are gold bars and coins that are smaller. For investment, gold is a bit more demanding on the pocket.
Silver bars and coins
Update: As of 20th June 2018, the spot price of silver is SGD $22.16 per troy ounce (USD $16.34)
Currently as of 16 August 2015, the spot price of silver is SGD $21.52 per troy ounce (or USD $15.30)
As you can see, the biggest advantage of stacking silver is that it is light on the pocket. One ounce of silver costs you only a meal at a causal restaurant in Singapore.
Robert Kiyosaki calls for buying silver
That is also why Robert Kiyosaki of Best Selling Book “Rich Dad, Poor Dad” strongly allocates buying silver, even for workers who are struggling to meet the challenges of rising costs of living. One can afford to stash away a few coins or bars monthly to save up for the future, rather than splurging on movies or costly meals.
Another advantage is that many silver investors find silver to be a higher potential in risk-reward ratio than gold. As the price of silver is so low currently, the chances of it doubling or tripling is a lot more likely than gold. ($1600 SGD double to $3200 SGD is a lot harder than doubling from $22 SGD to $44 or $66) Also there is a good chance the gold silver price ratio may move towards more silver. There are increasing industrial demand for usage of silver in our smartphones, solar panels etc. Hence, there is a lot more speculative return potential on silver.
Silver bars and coins less easy to sell or buy
The biggest drawback of silver is that it is harder to buy or sell. Most jewellery stores do not sell silver, neither do banks. Bullion shops that specialise in precious metals would definitely sell silver coins or bars for investors. In Singapore there are many bullion shop such as Gold Silver City in Singapore or Gold Silver Singapore. It would be difficult to buy silver from convenient locations such as jewellery stores or banks.
If you like to sell your silver for cash, it is definitely more challenging than selling gold. Banks, jewellery stores and most pawn shops do not buy silver, so your only choice is via bullion shops that buy back. You may also sell them via forums and ebay. Thankfully silver is starting to get more recognised, and there are some pawnshops that are beginning to buy and sell silver. Silver would definitely get more traction.
Gold vs Silver Advantages and Disadvantages
In summary here are simplified pros and cons of gold and silver.
|Gold coins or bars||More recognised and loved by consumers.|
Easy to buy and sell.
|Higher dollar investment per ounce.|
77 times more of silver
|Silver coins or bars||Lower dollar investment per ounce|
Higher potential risk-reward ratios.
More industrial demand
|Less liquid- less locations to sell off.|