UOB silver saving account

It seems that UOB silver saving account is the only one available in Singapore.

While this method allows savers to gain from the silver price without holding physical silver, there are some disadvantages to this silver saving account.

Let us look at the feature of UOB silver saving account in Singapore.

The minimum transaction is 10 ounce of silver each time.

With the current silver price of US$35 per troy ounce, 10 ounce of silver will mean more than US$350 per transaction.  The UOB bank sell rate is at S$44.01 per ounce.

That means the minimum to open this account is $440.10.

The maximum transaction limit is at 500 ounces.

There is no Goods and Services Tax for buying silver in the form of silver saving account.

The buyer does not have to worry about the storage of silver bars or silver coins.

If the buyer uses the dollar cost averaging method to build up his asset, silver saving account is definitely a good way.

However, there are many disadvantages to this scheme.

For one thing, there is a difference between bank’s buying price and selling price.

At the moment, when UOB bank sells you at S$44.01 per ounce, it buys back at the rate of S$42.99.  That is a 2% difference.

While it does not seem much difference in a single oz, imagine you have 500 ounces.  The difference in absolute dollar is great.

On top of that, there is an administrative fee.

The administrative fee is 0.2 ounce per month.

If the price stays the same throughout, that means you pay S$8.80 per month for administrative fee.  The minimum annual administrative fee is $105.60.

If the quantity changes due to buying or selling, the administrative charge is 0.2 ounce per month or 0.375% per annum based on the highest balance per month.

That means if you have 500 oz, and the price stays constant, you need to pay $165 in administrative fee.

This fee is further subjected to GST of 7%.

There is an administrative charge of $30 for closure of silver saving account within six months.

Another disadvantage is the fact that trading needs to do over the counter.

If you do not happen to live near the UOB branch, and do not visit the bank during operating hours, trading poses a difficulty.

Most people buy and sell frequently to lock in the profits.

While the volatility of silver makes it worthwhile to trade frequently, the problem is that UOB is the only bank offers silver saving account.

If there is at least one competitive bank offering the same product, the administrative charge will be lower.

Let us hope that foreign banks can fill in the vacuum.