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| Buy real gold not paper gold |
What is
paper gold? Paper gold is a substitute
for real gold. Some institutions, usually
banks and Asian Banks in particular, offer an alternative to owning real gold
on the basis that it is easy, convenient, and safe. In fact it is usually very unsafe and not unlike
buying a gold exchange traded fund (gold etf) in which one does not actually own gold at
all. Paper gold is simply a piece of
paper that represents the gold value with no guarantees. It does not mean you
own gold but are simply a creditor of the institution who issued the piece of
paper (often a nice attractive certificate). This applies to pool accounts,
future accounts, the various gold exchange traded funds, Gold ‘passbook’
accounts and a myriad of other names for basically the same thing. A piece of
paper with the word gold written on it.
When it
comes to buying gold, there is nothing like the real McCoy.
Paper gold,
in fact, is considered by many analysts to be a tool used by banks to ‘manipulate’
the gold price, since it is easier to buy and sell paper gold with the press of
a button than to actually buy and sell real gold.
Important
advantages to buying real gold bullion are:
Gold bullion
cannot go bankrupt.
Gold bullion
retains its value regardless of the gold price.
Gold bullion
is valued all around the world.
Gold Bullion
does not depend on any other factors to retain its value. I.e. it cannot be
manipulated by buying and selling it.
Unlike paper
gold, real gold bullion can be redeemed.
Paper gold has the real potential to be subject to bankruptcy.
Gold is independent of states,
currencies, productivity and credit worthiness. Some economic or political
influences may affect the price of gold, but its value and its acceptability
remains independent of them.
Experts advise private investors to hold between 5 and 10%
of their wealth in the long term in precious metals. Experience has shown that
the regular purchase of gold coins helps to protect the smaller investor
against price fluctuations.
Gold has always been prized as precious and valuable. Over
the years gold has proven itself to be one of the most reliable stores of
value.
Despite possible price fluctuations on the open market, the
value of gold has remained remarkably stable and repeatedly demonstrates the tendency
to rise.
Gold is traded around the globe 24 hours a day. With gold
you possess an international currency which can always be sold around the world
at any time.
When you own
real gold bullion you OWN the gold bullion.
Not sharing gold with others and therefore suffer the potential of not
receiving your gold should you choose to redeem it, because ‘there is not
enough to go around.’
Trading in
paper gold is also considered a non protected deposit. Should the bank go bankrupt (and they do) you
can loose all your investment.
For example
the Hang Seng Bank offers a paper gold account but this type of account is NOT
protected by the Deposit Protection Scheme in Hong Kong. Further more, repayment
under the Accounts are NOT guaranteed by the Hong Kong SAR Government's
Exchange Fund.
You can find
this lack of protection for the account holder applies in all the respective
countries for the following banks including:
ANZ
Singapore - Gold Account
Bank of
China - Precious Metals Passbook Account
HSBC - Gold
Passbook
ICBC -
Industrial and Commercial Bank of China - Paper Gold Scheme
Maybank -
Gold Investment Account
Shanghai
Commercial Bank
UOB
Singapore - Gold Savings Account
In fact,
when it comes down to it, there is no substitute at all for gold and it is
highly recommended that, if you want to buy gold, you buy real gold, not paper
gold.
