That was just a few days ago, when the spot gold price was about $1640 per Troy ounce.
I was very tempted to buy the Pamp Suisse gold bars, especially the 100 gram gold bar.
The markup was about 20% over spot rate.
It was considered relatively low, since Malaysia did not have a sales tax.
Over here in Singapore, the sales tax of 7% will hike the gold price higher.
The problem is that I have to declare and pay the sales tax if I bring the 100 gram Pamp Suisse bar over to Singapore.
The manager was a very experienced guy.
He was not pushy at all, but every word was calculated to make sales.
For example, when I hesitated to buy, he said that based on his experience, the gold price would increase due to demand on year end.
The period from Deepavali to Chinese New year is traditionally a period for the surge in gold price.
He was talking about the price of physical gold, but the spot rate might increase substantially too.
The demand comes from the major consumers in the world.
For example, Deepavali is a major festival for the Indians, and Indians love gold.
Christmas is a major festival for the Christians, and buying gifts is part of the custom of Christmas. Even though not many people will buy gold bar, they would buy items that use gold as a raw material.
For example, jewelries contain varying degree of pure gold.
Chinese New Year is definitely the most important festival for the Chinese.
Wearing gold jewelries is part of the custom.
It makes sense that demand for gold during year end will push the gold price up.
However, I did not buy the 100 gram Pamp Suisse gold bar.
When I asked about the buy back policy, he mentioned that the shop would buy back at spot rate.
That means the moment I walk away with the 100 gram Pamp Suisse gold bar, I have made a 20% loss.
Theoretically, I can sell to private collector at a premium over spot rate.
The problem is that if I buy the gold bar in Malaysia, the investors in Singapore may not want to buy it.
100 gram Pamp Suisse gold bar is not the easiest item to liquidate.
While there are smaller sizes of Pamp Suisse gold bars, the premium over spot is too high for profitability.
After a night of sleep, I decided not to go ahead with the purchase. If it is a mistake, then let it be.
The only question I have is: will gold price increase due to higher demand on year end? If yes, by how much?
I would be surprised if spot gold price increases to $2000 per Troy ounce. The current price is just slightly over $1700.
With the market sentiment, when investors stand on side line, it seems too optimistic to expect gold price to go beyond $2000.
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I think it's a very hard decision to make on your part especially if you really want to invest in that Pamp Suisse, but yes, I think you've made the right decision. You might bump into one which has much value in the future. :)
ReplyDeleteI think its good to invest and I wanna give it a try.
ReplyDeleteI can ensured you that you have make a right decision. By the end of this year you will be surprised with amount that you have make compared to all other investment that you have at present.
ReplyDelete