Gold is an interesting asset in that it doesn’t generate regular returns. Well, not in the conventional sense at least. Unlike shares, gold does not pay out any potential dividends or interest after your initial purchase.
If this is what you’re looking for in an investment, then gold is not for you.
However, if you view investment as owning a stable asset class that has long term value and maintains its value by keeping up with inflation, then you’re in the right place.
In this case, savings in gold can be seen as long-term investments.
The next question to ask is whether gold is safe to save as an investment. This question boils down to what kind of gold you’re saving in:
In the case of HelloGold, we talk a lot about how our gold is allocated and insured.
Simply put, allocated gold is gold that belongs to our customers, secured in a vault. This is similar to putting your valuables in a safe deposit box. Just like paying a monthly fee to rent a safe deposit box, gold owners pay a nominal fee to have their gold stored in a vault.
Secondly, you would want peace of mind that your gold is safe and accounted for. Allocated gold is audited regularly by a specialist to ensure:
- Your gold is safe in a vault
- No one has switched your gold out by checking the serial number of the bar against our records
- Your gold is weighed and tested on its purity
Thirdly, HelloGold’s allocated gold is insured. In the event your gold is destroyed, stolen or lost, you will receive compensation.
Allocated gold may cost more than unallocated gold, but it’s the safest way to own gold.
On the other hand, unallocated gold is gold you don’t physically own; it remains the property of banks/gold dealers. You are an investor of the gold and essentially a creditor of the banks/gold dealers.
This means that even if the bank or gold dealer actually has gold in its custody, it doesn’t belong to you. It belongs to the bank or dealer, and you are simply a creditor; in other words, you don’t own the gold and this is what makes unallocated gold a cheaper alternative to many.
If the bank or dealer were to go bankrupt, the gold you purchased may be lost. When bankruptcy happens, the bank or dealer owes you the gold but the chances of you getting your gold back depends on whether the bank or dealer is capable of doing so after it has paid off all its creditors. In other words, you are a creditor and will then rank in line with all other creditors to get your cash or gold back.
As you can see, there are different risks involved between allocated and unallocated gold.
The third kind of gold you can get is leased gold. As the name states, you can lease your gold to another party and earn an interest.
Typically, leased gold is not a retail product but an institutional product between bullion banks to other bullion banks which they lease out to. Another common practice is for banks to lease unallocated gold out to corporate customers and generate a return on it. This is the most common and genuine way to make a return on physical gold.
It’s very important to note that gold on its own can not create any interest or return and there’s definitely no such thing as guaranteed returns. If there are any schemes that guarantee a return on gold or even promises some kind of return on gold, you should be very careful and check to see if it is a scam.
Your Savings Are Safe With HelloGold
At HelloGold, our one guarantee is that the gold you purchase is real, safe, insured and accounted for 24/7.
Gold has held lasting value as the longest financial asset in history. With this is mind, why not start saving with Malaysia’s trusted gold savings app today?