How to Invest in Gold in the Philippines

Last Updated Jun 22, 2020 @ 11:12 am

Gold reserves have long been considered as an alternative investment to stocks or bonds. And with the recent pandemic, there have been reports indicating an uptick in the number of wealthy people across the globe — Filipino “dollar millionaires” included — buying gold to protect their wealth.

But in case you’re wondering, “Is it true that investing in gold is only for the rich and wealthy?”

In this article, we’ll take a closer look at the underlying mechanisms and principles surrounding gold investments to get a better understanding of how it works.

Why Should You Invest in Gold?

It Diversifies Your Portfolio

When it comes to investing, we’ve been told over and over: “Don’t put all your eggs in one basket”. 

Investing in gold is one way of spreading and reducing the risk in your overall asset allocation strategy. 

It gives you another place to invest your money. And when it comes to investing, it’s considered less risky in general if you’re more diversified. Similar to other investments outside of the stock market (real estate, business, etc.,), your investment in gold won’t be directly affected by the volatility of the market.

You Can Liquidate It Easily

One advantage of physical ownership of gold is that it can be liquidated (sold) fairly easily when you want or have to. While real estate property and stocks can be sold or traded, your ability to quickly sell these assets (and for how much) will be significantly affected by market trends. 

Gold is unique in this regard because of its intrinsic and historical value. Compared to other forms of investment (like the ones we mentioned earlier), gold is considered to be easier to liquidate in uncertain financial market scenarios.

Hedge Against Inflation & Deflation

Gold has been commonly used as a hedge against inflation because its supply doesn’t change much unlike paper money, which can be produced at will if needed (but affects its value).

Gold has been also known to move higher in value as economic conditions worsen, which can be leveraged as a tool for diversifying a portfolio and as a store of value asset (maintains its value without depreciating).

Generally Positive Historical Trend

This chart reveals that gold has a generally upward price trend over the last 100 years. Gold bought in June 1991, for example, is now worth more than double its original price today.

And the same can be said even if you move to an even earlier period or to a more recent one. And while this can be attributed to several factors, the bottomline is that gold has maintained its appeal and value throughout the decades. 

Geopolitical Unpredictability

A crisis such as the current pandemic affects the financial status of the markets worldwide.

During periods of such tensions, gold typically becomes a go-to investment especially when the general economic outlook is bleak.

Gold is known to increase in price during such times as demand from more people increases, due to the public’s store of value perception of it.

Increasing demand

Demand for gold has been significantly higher in the last 10 years. It’s used in jewellery, technology, and kept in stash by both central banks and private investors.

In some of the world’s largest countries like India and China, there’s a consistent demand for gold as it’s deeply embedded in some of their most important traditions and ways of living.

Around the world, many investors turn to gold during times of recession as they perceive it to hold its value better compared to other types of assets.

Supply constraints

Compared to other forms of valuable and tangible investments, gold production remains relatively modest and highly-dependent on the ability to mine.

This means that sourcing gold is no easy feat and could be difficult to obtain especially since global central banks started reducing the amount of gold they are selling, most notably in 2008.  

Pros and Cons of Investing in Gold

Like all other investments, gold comes with its own set of advantages and disadvantages. Here are some important things to consider before investing in gold.

Pros

  • Provides another way for protecting your wealth
  • Diversifies your investments
  • It’s relatively easy to obtain
  • It’s an actual, physical asset (if you purchase jewellery or gold bars)
  • Highly liquid investment

Cons

  • Does not generate cash flow or income
  • There are regulations and fees that comes along with purchasing, maintaining or selling gold

How to Invest in Gold in the Philippines

Investing in gold does not always necessarily mean buying actual gold products or gold bars. In fact, those of you familiar with investing in the stock market are probably aware that you can invest by profiting from changes in gold prices.

Investors can buy stocks which have dealings in gold (mining companies and other similar areas) or purchase funds that are composed mainly of gold-related industries or niches.

There are 3 main ways to invest in gold:

Gold Investing via the Stock Market

As mentioned above, investors can purchase shares of companies that have dealings with businesses and operations in the gold industry. While you’re not buying the gold directly, it can still be considered as a way for investing in gold. 

Gold Investing via CFDs

Contract for Differences, or CFD, is a way for investors to generate a profit through changes in price movements. They won’t own the underlying asset within the stock or similar investment, rather, they can earn by exchanging the difference in value of the investment between the contract’s opening and closing time. 

Investors can speculate on the price movements (similar to Forex trading’s concept) of gold and earn from it without actually buying shares. CFD investing is considered a more complex type of trading so it’s usually more suited to experienced traders.

Buying Actual, Physical Gold

Last but not the least is the option of buying and selling physical gold. You can get them in the forms:

  • Gold bars – The most expensive and hardest to obtain. These gold bars typically range in size and weight depending on the cast or minting process used.
  • Gold coins – Easier to obtain and also relatively easier to liquidate compared to gold bars. 
  • Jewellery – Perhaps the most common practice or option for investing in gold. Since it’s easy to purchase, gold jewellery is a popular choice for people wanting to “invest” in gold.

How to Check the Price of Gold in the Philippines

You can easily determine the current price of gold via this website. Here you can determine the price of gold by a particular currency, unit weight, and Purity (Karat). 

For those into gold trading, the site will prove useful as it shows current bid, ask, today low, today high, and current gold prices. It also shows the price of gold within the last 7 days via a chart and a table.

Or you can also use this live tracker below:

Today's Gold Price in PHP (per gram)

How to Sell Your Gold in the Philippines

In this section, we’ll discuss how you can liquidate your gold properties or assets.

If you went the stock trading way, you can simply sell any gold-related shares you have. It’s no different from liquidating any other type of stock.

If you “invested” in gold via CFD trading, then you don’t really have gold assets to sell. Rather, you can simply stop speculating on any gold-themed funds or stocks.

If you own actual, physical gold (bars, bullions, coins), your first option is to sell them  to the Bangko Sentral ng Pilipinas via its Gold Buying Program. The BSP refines the gold they purchase into forms that are acceptable in the worldwide gold bullion markets.

If you want to sell gold jewellery, then there’s plenty of ways to do it. You can transact with pawn shops and gold and jewellery establishments. Just make sure to do your due diligence and deal with reputable ones to avoid any problems.   

In Conclusion

Gold’s perceived “safe haven” trait as an investment is what makes it a popular option to investors especially during times of economic uncertainty.

Based on historical pricing, however, it shows that its price doesn’t always move up and several factors still affect its position (when markets are strong in particular, gold is not at its best position). 

Physically owning gold comes with certain fees and maintenance so do take note of that as well. 

All things considered, gold is definitely a viable option for people looking to invest their money outside of the market (if they want to physically own it). It’s one way of diversifying your portfolio.

Gold has retained its status as a valuable physical asset throughout the centuries and during these trying times, more people are considering investing in it.   

About Amiel Pineda

Amiel is the lead business & finance columnist of Grit PH. He escaped from the shackles of BPO life and now pursues his dream of writing full time. He shares his best tips and insights for aspiring homebased workers and freelancers on his site: Homebased Pinoy

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