Is It Time To Include Physical Gold Into Your Personal Asset Allocation?

-

Recently, I watched the documentary by Channel News Asia on Singapore Reserves: The Untold Story Part 1 and Part 2.  As I watched in awe how the Singapore government handle and managed their reserves through 3 different agencies, namely Monetary Authority of Singapore (MAS), Temasek Holdings and Government of Singapore Investment Corporation (GIC), I noticed that very much like managing personal finances, diversification and asset allocation is also an important aspect.  In summary, Temasek deals with shorter term and riskier investments like equities in various industries, GIC deals with longer term, safer investments like overseas blue chips, bonds and real estate, and MAS deals with foreign reserves.  In the foreign reserves, what caught my attention is the vast amount of glittery shiny golden metal that Singapore has in their stockpile.

With Singapore being looked upon as a 'A1 student' in managing its reserves, at least in my opinion, it makes me wonder if I should really start considering to include gold in my retirement portfolio.  This is especially the case when recently in a financial program in Taiwan, the speaker mentioned that Singapore has started accumulating gold since December 2022 with USD 1.79B worth of gold, to USD 6.27B worth of gold in July 2023 (as shown below) in a span of 7 to 8 months, probably due to the lack in long-term confidence of the value of the US Dollar.  According to BullionStar, MAS bought 68.7 tonnes of gold in Q1 2023.

Gold has been the main 'investment' for my grandmother, and now, my mother (in the form of jewelry).  However, I was hesitant to 'invest' and accumulate gold, primarily because of what Warren Buffett said, and I fully agree: 

"Gold, has 2 significant shortcomings, being neither of much use nor procreative... Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end."

True enough, being a self-proclaimed dividend investor, I mainly invest for income through dividends, or even earned interest.  However, gold does not provide any of these returns, unless it's price appreciates based on people's expectations or strength of the US Dollar, and subsequently sold to realize capital gains.  Otherwise, gold does not provide any income stream nor compounding effect that dividends and growth stocks provide.

However, with all the action going on within the Singapore government, probably it is good for me personally to start some form of investment into gold, as a form of value protection, and as a form of diversification (nope, crypto is not for me).

I think I may start to slowly accumulate gold, starting from next year when I am 40.  I plan to purchase a small gold bar (50 gram) per year, for the next 20 years.  This serves as a form of diversification, and a form of value preservation in case currencies devalue in time to come.  Without any hiccups, I will be able to accumulate 1 kilogram of gold bars by 60 year old.  How is this plan going to work out, I have no idea.  However, what I believe is some form of diversification will be beneficial for the total portfolio.  Time will tell its effectiveness.  Even if the value of gold doesn't appreciate by leaps and bounds, its value will not go to zero.  Barista FIRE, here I come...!

Comments

Post a Comment

Popular posts from this blog

How Does SGD 200K Of Annual Dividends Sound To You?

-
Image
In the recent video by The Fifth Person, they interviewed the famous local blogger (and budding YouTuber) AK, author of A Singaporean Stocks Investor (ASSI) .  In his blog and in this interview, AK revealed that his portfolio has compounded and delivered an annual dividends of SGD 200K in 2022!  This is definitely eye-popping, a source of envy and admiration, and an inspirational figure whom I wish to follow. That is a goal that I would can only wish to reach, but currently it is definitely far-fetched, especially when my annual dividends is just 10% of that amount, and I am already planning to Barista FIRE in 3 years time.  Personally, aiming for 20% of that amount in annual dividends sounds more realistic and achievable to me.  However reading his blog and 'listening' to what AK says to himself is an enjoyment.  He has always preached his investing philosophy of 3P's, being prudent, patient and pragmatic.  In addition, his advice for investors with the mnemonics of "
Read more

2 Milestones Reached and A First-Time Income- BHS, 0.5M and SBL

-
Image
In this short post, I am updating on two milestones I finally hit, and a first time ever income received from an unexpected source.  As above, the milestones are that I have achieved the Basic Healthcare Sum (BHS) in my Central Provident Fund Medisave Account (CPF- MA), which is SGD 68.5K in 2023, and for the first time, my portfolio value has exceeded half a million in value (as of 31st July 2023)!  The first time income source is that I made some pennies from my Central Depository (CDP) from the Securities Borrowing and Lending (SBL) Program. Achieving BHS Earlier in April, I made the decision to speed up the contribution towards my CPF-MA by contributing to only my MA instead to all 3 accounts, aiming to hit the Basic Healthcare Sum (BHS) of SGD 68.5K in 2023.  Just for context, I am self employed so I can have the choice to which account in CPF I can contribute my income to. I am pleased that I have finally reached my goal and hit the BHS in August 2023!  A small milestone achieve
Read more

A Review Of The REITs' Quarterly Performances

-
Image
Back in January 2023, the interest rates reached 4.25-4.50%.  Since then, interest rates continue to gradually climb till 5.25-5.50% in July 2023, where it held constant till today.  As such, it is a good time to review how the crazy climb in interest rates in 2022 impact the performances of REITs, which are highly leveraged and more sensitive to interest rates compared to other listed companies.  In the comparison below, I only focused on the REITs and Trust I hold in my portfolio. 1)     CapitaLand Ascott Trust (CLAST)   " CLAST's properties saw strong demand as international travel continued to recover.  CLAST’s revenue per available unit (REVPAU) in 2H 2023 reached 103% of pre-pandemic levels in 2H 2019 on a pro forma basis, increasing by 10% y-o-y to S$157.  REVPAU also rose 23% y-o-y to S$148 for FY 2023.  In 4Q 2023, majority of CLAST’s key markets such as China, Japan, United States of America (USA) and Vietnam also registered y-o-y REVPAU growth.  CLAST’s gross profit
Read more