Gold is NOT an investment product…or is it?

I got this “From the Desk of CIO (Chief Investment Office)” letter I received in my inbox this morning, for my EPF investment scheme in a private managed fund. Basically, this option is more exotic than your normal investment withdrawal from EPF Account#1 to invest in EPF approved unit trust funds. Instead, this option actually transfers your EPF Account#1 to an EPF approved private fund manager which allows you to invest in KLSE stocks. Not going too much into detail on this but I just saw the CIO message on “Gold is not an investment product”.

From financial advisory standpoint too, we don’t normally recommend gold as part of client portfolio. If client insist on such option, we recommend against investing more than 5% of your total investment capital into due to it speculative nature. It wouldn’t be appropriate to call it something to “diversify” on. Instead, it is something to speculate on, if one can stand the “thrill”.

gold is not an investment

The price of commodity like gold is not something we could drill into their fundamentals, unless you are a commodity trader whose day job is to trade commodities. Between 12 to 15 April, gold price has plunged 14% – the sharpest decline yet in 3 decades. The luster of gold has faded , and therefore, the safe haven status for gold is now in question.

The all time high price of gold peaked at U$1,900 per troy, but since the 3rd quarter of 2012, its price has been inching downwards. No problem in the horizon yet, but gold investors’ faith is truly shaken during the recent sharp drop.

Can it still be a hedge against inflation, a good protection against currency depreciation and a preservation of wealth in turbulent times if its price could slide so much even in normal times, without any warning?

I met with a friend who’s holding onto his Public Gold investments, suffering paper loss, just last week. Also, I noticed a lot of people gathering to buy gold at Tomei Queensbay Mall lately – probably due to price plunge and the upcoming Mother’s day. Of course, there is this Genneva gold incident last year which created much ruckus.

Is there people making money from gold investing? Of course there is. But you couldn’t take these people as benchmark and ignore the rest of them who are losing money. They might be a commodity trader or they just happen to time the gold market right to enter and exit. You? If you have a full time job, or running your own business with a family to take care of, you would not have the time to do research on gold market.

The vital thing is to understand yourself and choose an investment vehicle that suit your time, personality and are within your area of knowledge. At least, when shit happens, you are answerable to your decisions having done all due diligence. That’s what me and my partner believe in, having educational+personal coaching programs like which helps your decision making process in analyzing the good companies or businesses to invest in.

Time may tell if I could be wrong when there’s someone who got into Forbes billionaire list, beating Warren Buffett,  just by investing in gold.

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