Options for Owning Gold: Which one is for me?

Throughout history, gold has represented wealth and power due to its rarity and beauty. It is also mentioned in the Quran, highlighting its significance in Islam (Surah Al-Imran 3:14). This fascination with gold has remained consistent over the centuries. In the realm of wealth preservation and investment, gold has long been considered a safe haven during times of economic uncertainty because of its enduring value and characteristics.
‍

‍

In today’s modern world, owning gold has become increasingly accessible in all shapes and forms.   Many people still consider owning gold to preserve their wealth and as a way to diversify an investment portfolio. This is telling to the price of gold that surged by 88% over the past five years (12.9% per annum) as we saw many periods of economic and political instabilities during this time.

For someone who's new to gold, you'd might ask "What's the best way for me to get my hands on gold?"

‍

What are my options to own Gold?

There are countless ways for you to own your first gold - from downright buying physical gold to a more pragmatic approach of having exposure to gold price instead of keeping one. Different forms have different appeal and perceived value to each individual.  In this article, we will explore the difference methods of owning  gold.

‍

Going Old School - Keeping Physical Gold

‍Gold Bars

Many manufacturers worldwide produce small cast gold bars, weighing 500 g and less. The most popular weights are 500 g, 250 g and 100 g. At the time of writing this¹ - that's at least USD7,800 (RM34,628.10)  for the a 100 g bar. Gold bars generally have higher gold purity compared other forms of gold.

‍

‍

Gold Coins

Gold coins come in different sizes as well, and it typically range between 2.5  to 25 grams. This means you’ll have better liquidity (smaller pieces than gold bars) to sell making owning and keeping it more convenient. Coins comes with a premium (more expensive per gram of gold compared to gold bars) for its designs and fabrication.

‍

‍

Jewelry

A more common or famous way of owning gold is gold jewelry. It’s any women’s kryptonite. You would see it in the form of rings, bracelets, necklaces and it has strong ties to our Malaysian culture. Although it is easy to buy and sell, the level of purity and subjective aspect of craftsmanship and design may make it more expensive (when buying) or less valuable (when selling).

‍

‍

If you’re old school, here’s where you can buy physical gold:

• Maybank Islamic Gold Account-i:
  Maybank offer users to invest in physical gold that is Shariah-compliant and backed by 999.9 purity gold. It allow users to buy, sell and convert gold into physical form.
  ‍
• Public Gold:
  Public Gold is a platform for purchasing and investing in physical gold, including variety of products such as gold bars, coins and dinars, which are available for direct purchase or instalment plans.

• Silver Bullion:
  Silver Bullion can be used as a medium for gold investment through platforms that allow trading between different precious metals. It allows users to trade or exchange silver bullion for gold from other dealers.

• Jewelry Stores:
  Jewelry stores typically offer the option to trade in or exchange gold jewelry for other forms of gold. It comes with different designs and fabrication, usually for cosmetic purposes.

‍

A Practical Way of Owning Gold

Don’t fancy owning physical gold? You can practically own gold without ever needing to store or see it. This way you’re still the legal owner of the amount of gold you purchase, but you’ll leave the safekeeping and managing it to others who’re specialises in doing so. Those who’d like to have gold as part of their investment portfolio would prefer this method mainly for convenience.  You may consider these methods of investing and having exposure to gold:

Exchange Traded Funds‍

Exchange traded fund is a financial product that tracks the price of gold. It’s a convenient way to gain exposure to gold’s price movements without owning physical gold. It has higher liquidity compared to physical gold, and you don't have to pay for a premium which could go up to 20%. You can also invest in small amounts, and don’t need to concern yourself with storage and security risks.

Platforms like Wahed allow you to invest in gold this way and have it part of a diversified portfolio.

Gold Investment Accounts

Another way for you to invest in gold is opening a gold investment account. This way allows you to own fractions of physical gold and stored by a financial institution. You can even choose to redeem your physical gold but it comes with a cost (spread) that could eat up your potential investment returns.

Gold-related Counters

Investing in gold-related stocks is a way to benefit from gold prices without holding physical gold. Companies like Poh Kong Holdings Bhd, Tomei Consolidated Bhd, and Bahvest Resources Bhd have shown strong performance. However, it's important to be mindful of the risks associated with the market and individual company performance. Although gold is often seen as a safe haven, investing in gold-related stocks carries a higher level of risk.

‍

Here are your options to invest in gold on online platforms:

• Bursa Gold Dinar:
  Bursa Gold Dinar by Bursa Malaysia offers users to buy and trade gold online but they impose additional fees including 0.50% annual admin fee and 0.20% purchase and sell fee.

• The TradePlus Shariah Gold Tracker:
  It’s an Exchange-Traded Fund (ETF) that tracks the performance of gold prices and provide returns that closely correspond to the performance of gold bullion. It’s a way for investors to gain exposure to gold without physically owning it.

• Poh Kong Sdn Bhd, Bahvest Resources Bhd:
  You can purchase gold related counters through a brokerage such as M+ trading platform or banking trading platform which allows you to gain exposure to the gold market through company stocks. While they can benefit from rising gold prices, the performance if these stocks also depends on the company’s performance and carries higher risk

• Wahed:
  Wahed is a digital portfolio manager that automatically manages your investment portfolio. It offers a diversification strategy where gold allocation is adjusted according to your risk profile, or investors may choose a dedicated gold Thematic Portfolio.

‍

With all this information, which one is for me?

For the cost-conscious:

If you are concerned about cost, investing in online platforms such as ETFs or Wahed is the perfect solution for you. You don’t need to worry about storage, and still gain exposure to gold, providing a layer of diversification and wealth protection. Using Wahed to invest in gold, you don’t have to worry about anything. Put your money in and our fund managers will automatically manage your investments, including buying and selling, at the same time keeping your costs at a minimum.

For those who appreciate the look and feel of gold

Nothing beats actually holding and owning gold.  But you may need to be mindful of its cost, authenticity and  gold purity. Additionally, purchasing physical gold requires you to invest in its safekeeping (such as a safe, or vault) for security measures.

For those who wants to make sure that it is fully shariah-compliant

Although gold in itself as a product is halal, you may need to be mindful of the service that offers you access to it.  Wahed for example is a fully Shariah compliant and licensed Islamic Digital Investment Manager by Securities Commission Malaysia. That means, that not only is the product is shariah compliant, but all the dealing, process and organisation that manages it is fully certified by an independent Shariah Body.

‍

Start here now.

‍