Guide To Investing In Gold and Silver With UOB Gold And Silver Savings Account

Gold is one of the best performing asset classes in 2021. A safe haven in times of volatility, fear or uncertainty, investors happen to be flocking to this asset class amidst the pandemic, pushing spot gold prices to a record high of US$2,063 an ounce on Aug 6. Currently, gold prices are hovering around US$1,915 an ounce, above its previous peak of US$1,883 in 2011. Given the current low-interest rate environment, gold will probably remain an attractive option like a good store of value.

If you'll have taken a shine to gold and its more affordable cousin, silver, UOB's Gold Savings Account and Silver Savings Account can be a way for you to get started.

What Is The Best Method to Invest in Gold And Silver?

While jewellery is our most common exposure to gold and silver, they are hardly the best way to invest in the precious metals. Not only are you paying for the design, craftsmanship and marketing for jewellery, you are also incurring Goods and Services Tax (GST).

In Singapore, you're exempted from paying GST around the purchase of gold and silver if it is the type of bar, ingot, wafer or coin that meets the criteria as qualifying as Investment Rare metal (IPM).

How Can I Buy Gold In UOB?

Currently, UOB may be the only bank in Singapore that offers 1) the sale and buy of physical gold, 2) the issuance of gold certificates and three) a savings account dedicated to either silver or gold. You do not incur GST if you buy gold through UOB as it qualifies as IPM.

To buy physical gold in the form of gold bars or bullion coins, you may either order online and collect from UOB Main Branch personally within 5 working days or purchase personally at the UOB Main Branch.

Gold certificates can be purchased in person at the UOB Main Branch in denominations of gold kilobars, up to a maximum of 30 kilobars per certificate. These certificates have no expiry and can be exchanged for cash or physical gold.

What Is UOB Gold Checking account And Silver Savings Account?

The UOB Gold Savings Account (GSA) allows you to buy and sell gold without physical delivery. This means you can circumvent the issue of safe storage while maintaining the authenticity of holding physical gold. The quantity of gold you hold is recorded in grams and the minimum quantity per transaction is 5 grams of gold. At the current gold price offered by UOB of $83.71 per gram, the minimum transaction is around $418.55.

Similarly, the UOB Silver Savings Account (SSA) allows you to buy and sell silver without physical delivery. The amount of silver held is recorded in ounces and also the minimum quantity per transaction is 10 ounces of silver. At the current silver price of $33.99, the minimum transaction is around $339.90.

Both the GSA and SSA allow you to transact online via UOB Personal Internet Banking or UOB Mighty from Monday to friday from 8 am to 11 pm excluding Singapore public holidays.

Note: Prices quoted have been in Singapore dollars and taken from UOB's indicative prices.

What Would be the Fees For Using UOB Gold Savings Account And Silver Savings Account?

While the sale and purchase of gold or silver are GST-exempt, the service charge is subject to GST and will be deducted from the account balance in either gold or silver.

For the Gold Checking account (GSA), the service charge is 0.25% p.a. from the highest gold balance each month, or a minimum charge of 0.12 grams of gold each month, whichever is the higher. The fee is calculated every month and deducted at the end of the year or at account closure in grams of gold.

For the Silver Checking account (SSA), the service charge is 0.375% p.a. of the highest silver balance each month, susceptible to a monthly minimum charge of 0.2 ounces of silver. The service charge is calculated every month and deducted after the year or at account closure in ounces of silver.

Both the GSA and SSA do not let you to withdraw the gold or silver in physical form.

Why Should You Use UOB Gold Savings Account (GSA) And Silver Checking account (SSA)?

Using UOB GSA and SSA allows you to buy and sell gold and silver without physical delivery. You don't have to worry about how to safely store the physical precious metals or how to maintain the integrity of the metal (silver is known to be prone to tarnishing).

Additionally, the rates offered under GSA is better than the rates offered for physical gold sales. During the time of writing, 1 gram of gold under GSA is $83.71 while 1 gram of physical gold (Pamp Gold Bar) is $112.

For those who are keen to buy and sell silver, the SSA may be the only accessible option offered by a nearby bank, without going into commodities trading and futures contracts. Those people who are keen on gold do have an alternate: the SPDR Gold Shares listed on the SGX.

How Does UOB Gold Savings Account (GSA) Rival SPDR Gold Shares (GLD) On SGX?

Similar to the UOB GSA, SGX's SPDR Gold Shares (GLD) does not permit you to take physical ownership of the underlying gold. However, the main difference is in the amount of gold you own under using UOB GSA compared to using SGX GLD.

The GLD is an exchange-traded fund (ETF) that is backed by physical gold. As of June 2021, the fund held about 36.49 million ounces of gold for any net asset value (NAV) of $63.43 billion. Each share of the ETF is worth 0.093995 ounces of gold. In comparison, every gram of gold you have in UOB GSA is worth a gram of gold.

The UOB GSA costs are quoted in Singapore dollars and based on UOB gold prices which are according to international gold prices and subject to foreign exchange fluctuations. SGX GLD is based on international gold prices and costs are quoted in U.S. dollars. If you prefer to transact in Singapore dollars, the UOB GSA may be the only choice though there is still an inherent foreign exchange risk.

In terms of fees, the GLD charges a 0.4% annual fee which excludes the fees you incur for buying and selling the GLD ETF counter on the SGX. In comparison, UOB GSA's service charge is 0.25% p.a. of the highest gold balance each month, or perhaps a minimum charge of 0.12 grams of gold (about $10) monthly. This makes the UOB GSA a better option when it comes to fees, especially for larger gold holdings.

If you're keen to invest in gold or silver, the UOB Gold Savings Account and Silver Savings Account are a fun way to step into the world of gold and silver while being backed by a reputable local bank.