Gold is the precious metal that people and countries stock up in times of economic turmoil. As the Coronavirus pandemic triggered the loss of thousands of jobs in Singapore and many more around the world, we’re expecting a severe financial crisis and a period of recession.
Many smart investors are already buying gold. For instance, the US has bought 15 times more gold in March than throughout 2019, according to Reuters.
If you want to be prepared for COVID-19 and its effects, read the article below.
The Long History Of Gold
The history of gold is as long as the history of civilization because this precious metal was used for rituals and jewellery for millennia. Ancient Mesopotamians, Greeks, Romans, and Chinese all thought that gold was the most precious material they could ore. The only civilization that disagreed to some extent were the Mayans, who liked jade better.
Gold also played a big role in Singapore’s history. Archaeologists found a lot of old gold jewellery on Singapore’s territory, from the Javanese period.
Even after the country was founded at the beginning of the 19th century, gold continued to be important in family traditions. As such, newlywed couples and newborns often received gold jewellery for luck. For example, The Singapore Mint produced a limited edition $150 commemorative gold coin to celebrate Singapore’s 150th anniversary in 1969.
So, as you can see, gold is still a precious metal today as it was five millennia ago.
The Numbers And Prices Of Gold
Gold is not just a strong symbol in Singapore. In the times when the global economy is turned on its head, more investors purchase gold as a safe asset. The reason is that gold has a high financial value, which peaks in the years that follow the beginning of serious financial crises.
Let’s look at the prices of gold during the past three decades to understand more:
Observe the years of financial recession. You can see that gold saw a 25.04% change in 2009 compared to the 3.97% change in 2008 when the US bank crises began. The 1997 famous Asian financial crisis also raised the change of gold by almost 23%. You’ll notice that gold cost 3.75 more in 2019 than it did in 1989. This steep increase within the past 30 years is the result of a series of economic crises, followed by periods of inflation, which were then followed by periods of wealth.
The conclusion is that people who purchased gold in 1997 and 2008, when those financial crises were just budding, were very smart people. Remember that nowadays, the US is also stocking up on bullion to navigate through the following crisis.
Why Investors Are Interested In Gold
Investors in Singapore lookout for gold. Gold is important to investors because it doesn’t devalue like most currencies, but becomes more powerful in times of recession. Here’s why:
Gold Never Loses Its Purchasing Power
Imagine travelling back in time with $500 in your pocket to the Roman Empire. Now imagine doing it with 500g of gold. So while currency fluctuates with the passage of generations and eras, gold remains equally valuable.
That’s why the purchasing power of gold is dubbed “the golden constant;” it remains mostly unchanged.
Fiat Currencies Lose Purchasing Power
Fiat currencies are the currencies used by the existing countries. You have your yen, Singapore dollar, euro, and so forth. Fiat currencies devalue in times of turmoil, unlike gold.
Each time the purchasing power of fiat currencies becomes smaller, the purchasing power of gold increases. The reason is that gold becomes more in demand and that its value in fiat currency is bigger.
Inflation Damages Fiat Currency
Inflation rate is high and increasing in Singapore. Inflation devalues fiat currencies as states start printing more notes. But inflation can’t damage gold because you can’t print it from paper. Gold becomes more valuable because it’s a scarce commodity and people around the world are willing to pay more for it.
Stock Market Uncertainty Increases Gold Price
When the global economy fails, people aren’t sure what stocks are trustworthy and profitable. That’s why stock market uncertainty increases the price of gold. Inflation, job loss, and fiat currency devaluation lead to a stock market crash, which leads to a gold price increase.
Supply, Demand, And Distribution
People want secure investments to weather financial catastrophes so that the demand for gold increases. Inflation, stock market uncertainty, and a bigger demand for gold elevate the price of gold, but the supply stays constant. Gold scarcity then triggers another spike in the price of gold.
Besides, the COVID-19 lockdown and distancing measures diminished the actual gold supply even more as people had to stay home instead of mining for ore. That’s why gold is going to cost a lot more than you expect in 2021 and 2022.
Why Recessions Such As Now Starts The Demand For Gold
Recessions such as the current one foreseen for August 2021 start the demand for gold because gold is a symbol with a constant purchasing power for millennia. As such, all people know instinctively that gold is their safety net. That’s when they start buying more gold, especially in Singapore and in the USA.
According to specialists all over the world, the COVID-19 pandemic will cause a crash in the global economy. Many are facing financial problems and applying for loans from licensed money lenders in Singapore to tide through. You can already see that millions of people lose their jobs all over the world, and many of them won’t have a job to come back to when the pandemic is over.
Besides, people’s purchasing habits have changed drastically. In particular, spending habits have changed whereby people are saving more. This causes a decrease in stock prices and property prices. Based on the circular flow of income, with a fall in consumer spending, the Gross Domestic Product (GDP) and national income will fall. That’s why financial experts foresee increased inflation and a continuous devaluation of fiat currencies.
How To Purchase UOB Gold In Singapore
You have various options to buy gold in Singapore:
- Gold bars or bullion coins. Some banks sell actual gold in the form of coins or bars. You can either take this gold at home or entrust it to a bank for safekeeping. This option is best if you want to purchase large amounts of gold at a reasonable price. You can purchase all sizes and qualities of gold bars, which are overall cheaper than coins. Websites such as BullionStar also sell a variety of gold, silver, bars and coins.
- Gold certificates. These certificates give you the ownership of gold without having the physical gold that has an increased risk of being stolen. You can get these certificates from many banks, and you can convert them into gold bars whenever you want.
- Saving account in gold. You can open this type of account with your bank. This solution is best if you want to do more transactions with your gold.
- Gold ETFs. These gold-related funds are better if you want to buy small amounts of gold. You can’t purchase one gram of gold bar, but you can purchase one ETF unit. Besides, these funds are tax-efficient and easy to transact with.
Facing the COVID-19 pandemic, it is even more important for Singaporeans to be prepared for rainy days. COVID-19 will be here for a while and the economic impacts will persist. Jobs and people’s daily lives will continue to be affected.
For those who were caught off-guard by the pandemic, they might be facing financial difficulties. Money is needed for food and daily necessities and bills still need to be paid. For those in need, Horison Credit is a reliable licensed money lender in Singapore that offers loans at quick approvals for your consideration. We have a high Google rating of 4.7 and highly positive reviews left by our happy customers.