If you are working in Singapore, you’ll want to make sure you are maximising your earnings through savvy savings and investments. Online investment platform Bunker Gold&Silver shares regular advice with Expat Living. Here they look at money matters relating to precious metals.
Why buy gold bars rather than coins?
Gold products follow this rule: the smaller the product, the higher the premium. The premium is the margin added by the seller on top of the standard gold price. A competitive premium for gold is around 1 percent. For coins, the premium can reach 20 percent! If the price of gold on the international market is US$100 per 2.5 grams, you will pay US$101 for this amount of gold in bars, and US$120 by buying coins.
So, from an investment standpoint, bars are more appealing. Above all, their liquidity – that is, the ease for customers to sell them back – is high. Bars previously had low liquidity since their standard weight was a very heavy 12.4kg (around US$500,000 value); this is why coins became popular. But now with the availability of small bars – 100 grams, for example – it’s easy to find buyers for your product. The best bullion dealers can propose a 1 percent premium for 100g bars.
Coins have specific characteristics (for example, a type of animal stamped onto the coin) that make them popular among collectors. However, the demand for a specific product can differ between countries. So, the coins you paid a high price for in the UK because of certain characteristics may have less value in Asia. For bars and especially LBMA bars, the price is standardised around the world.
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