Tan Kin Lian's Blog: Gold investment

Thursday, January 13, 2011

Gold investment

View posted in my blog:
Hi Sir,
My parents recently invested in this company 'The Gold Label' who promises a return of 1% every month. It has since closed down and a portion of their money has been wiped out. They do have some 'gold bars' as collateral though, but the value of the gold is merely 70% of the actual price they paid for. What is your take regarding Gold instruments then? Is there any way to help regulate such schemes? It seems like a Ponzi scam to me after my parents told me, but it's too late now.

My comments
So sorry to learn that your parents lost money. It is quite sad that people are allowed to operate scheme that was designed to cheat the public. The various government agencies claim that this is not their responsibility. It seems that no agency is responsible to stop this type of fraud, even when it was brought up to their attention.

I have written about this type of fraud a few times in my blog. I also helped an investor to avoid exactly the same kind of investment. But there is only so much that I, as an individual, can do. The government has the responsibility and the resources, and they do not want to act. It is quite sad.

8 comments:

zhummmeng said...: Another investment that exploited greed of high return...also gone liao.
I heard it is wound up and a police case now.
Recovering the gold bar? gold has 'store of value'? scratch the gold bar to see if it is not tungsten coated in gold. The big hype about gold as a investment asset class is a big bull. I have calculated the return of gold and I found the long term return of gold is below 3% hardly hedged against inflation also.
Don't be caught by the hype.. It is very speculative and the 'advisers' are salesmen out to make a big buck from you.
Report to police.; January 13, 2011 3:06 PM
Jamesneo said...: You are quoting wrong facts when you say gold is below 3% unless you are calculating from 1980 after it corrected. The bull run for gold only started in 2000 and the returns are impressive.Just go and see this website:http://goldprice.org/
On the left is the returns over past 5 years.

Anyway gold should not be treated as investment asset class, if you do so then you should not buy gold . instead it should be treated as savings( store of wealth), protection against indiscriminate devaluation of ones currencies by countries trying to follow the beggar thy neighbor strategy to improve their exports.

Anyway only physical gold should be bought and stored oneself and not for some investment scheme like then one said; January 13, 2011 9:58 PM
zhummmeng said...: If you had bought gold at US$600 in 1980 and sell now at US$1400 the return is only 2.86%. Is this a good return? If it cannot hedge against inflation it is a loss, right. Gold is a speculative investment, volatile and the suckers are usually the old folks who got conned and the unwary greedy.
Store of wealth? Try buying it at $1400 and store your wealth in the hard asset.They may turn to tungsten and sold as scrap. But if demand for tungsten is high it may turn to gold. Good luck...you need plenty of it.; January 13, 2011 11:56 PM
Tan Choon Hong said...: Singapore runs on a laissez faire economic system which is pro business with minimum regulation. In fact it has earned the world ranking as number two in economic freedom. It's not surprising the government rolls out the red carpet for any business that can help fill expensive office towers, provide employment and most importantly, tax revenue.

This translates into sometimes lax controls, resulting in the epidemic of dodgy businesses which even the financial experts and the "hands-off" regulators don't understand. The onus is passed onto the consumer under caveat emptor.

Capital rules the world and the rich makes the rules. To survive you have to be street smart. And always leave something on the table for the next guy, who would probably ending up holding the baby.; January 14, 2011 12:19 AM
silverybay said...: I bought gold in the 90's at US250+ per oz.

One of the best performer in my portfolio to date.

I also remembered buying some gold as wedding gift in 1996 and jewellery shops were quoting S$16/gram. Today I think its about S$58 to $60/gram.

Maybe I was just lucky ;-)

PS. I have started swapping my gold for silver over the past 2 years. Hope my luck is still there.; January 14, 2011 8:10 AM
zhummmeng said...: silverbay,
you were lucky...if you knew that gold would shoot up at around year2000 and put everything, your house, whatever you had , today you are very very rich...
Alas, there is no such thing as timing..if you knew...hahaha you won't be posting here.
try buying gold now...I bet you won't dare.; January 14, 2011 11:52 AM
Unknown said...: As I said, if you have been paying attention to what I wrote, I have been swapping gold for silver in this past 2 years, starting in 2008. So am I buying or selling gold in the past 2 years u think?

And yes, I know there is no such thing as market timing and that's precisely why I take 2 years and still in the process of switching gold for silver. I could have do it all at once when GSR was at 80 (gold silver ratio) but I know I can never be able to sell the top for gold and buy the bottom for silver, so I just keep swapping regularly to even out the prices.

Gold and silver is not an investment as it does not generate returns nor pays you dividend. That's why all these gold invetsment programs just dont make sense to me. Nobody pays you interest or dividend for holding gold. On the contrary, there is a carry cost if you are buying gold.

However, there is a reason why it is call "precious metals".; January 14, 2011 11:27 PM
silverybay said...: @zhummeng, read one more time my last 2 lines. What do you think that means?; January 14, 2011 11:29 PM