Complete Guide to Buying Physical Gold in Singapore

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So, you know why you should buy physical gold.

But now, you are in a daze about how to go about buying it.

Fret not.

In this guide, I will tell you everything you need to know about buying gold in Singapore.

1. What is gold bullion?
2. Bar or coin?
3. Premiums
4. How many ounces
5. Verify your gold purchase
6. Storing your gold
7. Recommended gold bullion

8. Recommended dealers

What is gold bullion?

You will be buying what is called bullion, which is “physical precious metals of high purity that is often kept in the form of bars, ingots, or coins” as defined by Investopedia.

In essence, you will be buying gold that is in the highest form of purity there is. Gold purity for bullion is normally .999 or .9999 fine, which means 99.9% and 99.99% pure respectively.

At this juncture, both are essentially the same thing when it comes to purity. It’s like adding a grain of salt into water; it’s still water.

The distinguishment between .999 and .9999 bullion only matters when you are selling to someone that is not a dealer, who may actually care about the minute purity details.

Bars and coins are the most common form of bullion, and each bullion is denominated in troy ounces (which we will just refer to as oz), where 1 oz of gold is 31.1 grams.

Bullion can even be in fractional troy ounces like 1/2 oz all the way down to 1/10 oz. Some bars even come in 1 gram form.

In this guide, we will not talk about numismatics (collectibles) in this guide, that is a whole other topic.

Bar or coin?

Credits: Campbell's Coins

Bar versus coin? It doesn’t really matter. What matters is where the bar or coin came from.

Many gold coins (but not all) are minted in sovereign mints, which makes them more credible than bullion produced in private refineries.

The Canadian Maple Leaf (Royal Canadian Mint) and American Eagle (United States Mint) are prime examples.

Therefore you will realise that most coins hold higher premiums than bars.

But that doesn’t mean the bars aren’t credible. They hold a lot of credibility as well since most of the bars that come refineries are reputable like Argor Heraeus and PAMP Suisse.

Just don’t buy bars from a refinery that’s not well-known. Chances are high that dealers will not be very willing to buy them back from you.

Premiums

When buying any kind of physical bullion, the single most important thing to look out for other than its credibility is the premium.

Credits: BullionStar

The premium is the amount you pay over the spot price of the precious metal. Let’s say the spot price of gold is currently at $2500 / oz and your dealer charges you $2600 for a 1 oz gold bar. You are paying a $100 or a 4% premium over spot price for the bar.

Now, you want to sell your bar back to the dealer. Assuming the spot price remains the same at $2500 / tr oz, your dealer is willing to buy it back from you at only $2520. You have lost $80 in premium even though you are buying and selling your metal at the exact same spot price.

That is because the premium is mostly made up of the profit the dealer makes, inventory and logistical costs incurred by the dealer as well.

You won’t expect them to pay you back these costs incurred and profit made. They are lost to the gold bullion supply chain.

So, most of the premiums are actually upfront costs for you and you should not expect it to be paid back to you upon selling your bullion.

With that said, rather than being too concerned about the the spot price of the metal, you should be more concerned about the premium paid over spot since you will be losing most of it.

Always look for metals with the lowest premiums possible to maximise the number of ounces bought with every dollar.

But as we will see in the next section, low premiums aren’t everything.

How many ounces?

Since there are so many denominations of ounces for gold, from 1/10 oz all the way up to a 100 oz bar, which one should you buy?

The key here is to think about the balance between premiums and ounces.

Bullion with a lower weight normally carry a higher percentage of premium.

Imagine you have to travel from Pasir Ris to Jurong to collect two cakes for your mother. When you arrive home, your mother asks you to go collect one more because she decided to get another.

You collect a different number of cakes, but both journies from Pasir Ris to Jurong is equally tiring.

Same thing goes for premiums on gold or in fact, any other precious metal. It takes the roughly the same amount of effort to refine, transport and store a 1/10 oz and a 1 oz coin.

So if you buy a 1/10 oz coin, expect to pay roughly the same premiums as a 1 oz coin. The percentage premium on the smaller coin will hence be higher.

The inverse is true for a larger coin or bar. You would expect to pay about the same premium for a 1 oz bar and 10 oz bar, so the percentage premium on the bigger bar will be lesser.

Another thing to take note of is that dealers might not buy back a bar that is too big due to their own state of liquidity.

In times of financial instability, there is no doubt that people will start flooding bullion dealers to secure profits.

If you come upfront and present your dealer with a 100 oz gold bar ($253,000) to sell, they might not actually have enough to pay you on top of so many others wanting to do the same.

A good measure I like to use is to buy in denominations of 1 oz.

Not only it makes transporting and storage easy, it has a good balance of premium and salability to dealers.

Verify your gold purchase

Never ever walk out of a bullion dealer without verifying your purchases. You buy gold to insure yourself against a global financial collapse and to preserve your wealth.

With something so important, do not take any chances with your gold purchase.

There are many bullion counterfeits circulating within the market. They look and feel like the real thing, but they are not what they seem to be when you open them up.

Credit: Lois Bullion

But of course we can’t saw all our coins into half just to check if they are legitimate.

You can easily verify the validity of your gold purchase by using a Sigma Metalytics Verifier.

It uses electromagnetic waves to verify that your bullion is completely made up of the metal you are buying, and not a fake. It only takes 3 seconds with this machine.

Credits: Global City Bullion

Don't worry about buying the machine, every reputable bullion dealer owns a few of these.

Before you walk out of the store, just make sure they have verified your gold purchase in front of you.

If they insist on not verifying it or are not able to, don’t even bother purchasing your metals from them.

Storing your gold

There are a few ways to store your gold.

• Your own home

Storing your gold in your own home is the safest way to store your gold.

You face zero counterparty risk. That is one of the major reasons of buying gold bullion.

You don’t need a big, heavy safe to store your gold. All you need is a small box, preferably airtight.

Any of those airtight lunchboxes you can find in NTUC will do just fine.

Credits: Amazon

Pure gold is a very soft metal so they can get scratched or bent very easily. But you don’t have to go that far of the extra mile to take good care of your gold.

All you need is to ensure they have a layer of physical protection around them before putting them in your airtight box.

Don’t worry about moisture as well since gold is an inert metal. It hardly reacts to the moisture around it.

For bars, they usually come with an assay card. Do not remove them from the card. The card keeps your bar protected and holds proof of authenticity for your bar.

Credits: PAMP Suisse

For coins, you should consider getting individual coin cases for each of them. I recommend the brand Air-Tite.

The dealer you buy from should have them in stock so do get one for your gold coin purchase to protect your coin from physical damage.

Credits: Provident Metals

One more thing. Be quiet about your gold purchases and where you store it.

Perhaps you can tell only one or two people you trust just in case something happens to you.

The whole point about buying precious metals is to preserve your wealth, not to flaunt it.

When a currency crisis strikes, you won’t want everyone swarming to find you to help bail them out.

Keep a low profile about it and store your gold in a place nobody except you and a trusted few.

• Allocated storage

Most large verified dealers offer this option.

For the allocated storage option, your storage provider will take the gold you bought and store them under your name.

The serial number of your gold bullion will be tagged to your name, and you can check it at the vault anytime you want.

Credits: SWP Cayman

This is the next safest way to store your bullion. Although you are paying a high premium for this service, you know your gold remains yours legally.

You should only consider allocated storage if you have bought too much bullion to store it in your own home.

• Unallocated storage

Unallocated storage means you are entitled ownership to the amount of gold you buy within a large pool of gold in the vault.

Essentially, they back up your invested cash with the gold in their vaults, but you will never know if they use your ‘backed-up’ cash for loans or other investments since you are merely buying an entitlement, not the exact gold bullion that is tagged to your name by serial number.

Therefore, I do not recommend unallocated storage as this is exactly how banks store and use your cash by the fractional reserve banking system.

By going with unallocated storage, you will be going against a key reason why you might be buying gold bullion in the first place. You will want your wealth to be kept outside of the fiat system as much as possible.

By using unallocated storage, you are putting yourself back into the fiat system. Contradictory indeed.

Large bullion dealers might offer this in the form of Bullion Savings Programs (BSP). Every ounce comes with attractive, low premiums. But that is because you take on a lot more risk by leaving your bullion unallocated.

Recommended gold bullion

• Canadian Gold Maple Leaf

Canadian Maples are one of my favourites. They come from an extremely reputable sovereign mint - the Royal Canadian Mint.

These coins have several security features proving its authenticity and a respectable premium on top of them.

It was only recently that premiums on the Canadian Maples skyrocketed due to the overwhelming demand for bullion. However, this still remains one of the most credible and recognisable pieces of gold on the market.

Having your gold recognisable on a global scale is important as well when it comes to selling it.

Dealers like something recognisable and not something they have to waste time on verifying.

Needless to say, they are beautiful as well.

Credits: The Atlantic Gold & Silver Centre

• Argor Heraeus Gold Bar

Although not as pretty as sovereign coins, bars minted by Argor Heraeus have an extremely competitive premium.

Argor Heraeus itself is also extremely reputable in the precious metals space.

If you are looking to stretch every dollar to get as many ounces of gold as you can, look no further.

Credits: Experology Lifestyle Club

• Britannia Gold Coin

Britannia coins hail from the United Kingdom’s Royal Mint and has recently become a staple buy for gold bugs ever since premiums on the Canadian Maples rose.

With a reputable sovereign mint producing it and rising global recognition, this coin is a good buy if you are searching for a solid sovereign gold bullion with premiums on the lower end.

Credit: Sharps Pixley

Recommended dealers

This is not sponsored in any way. I am just sharing which few dealers are really worth a try in Singapore based on my own experience.

• BullionStar
• IPM Group
• Silver Bullion

All three bullion dealers provide impeccable service and good discounts on bullion from time to time.

However, I am biased towards BullionStar because of their price match policy.

If you can find any dealer that is selling the same product for a lower price, you can call in to BullionStar and get a price match.

They even throw in a gift for doing so.

Don’t say bojio.