Friday, January 16, 2009

Gold prices to increase further

Poh Kong expects gold prices to increase further

PETALING JAYA: Poh Kong Holdings Bhd anticipates further uptrend in the price of gold, given strong demand for the commodity.

Gold price hit a record high of above US$910 an ounce on Monday.

Executive director Siow Der Ming said the previous record price was during the 1980s – at US$850 an ounce.

“Many analysts have predicted the price will hit US$1,000 per ounce soon but we believe it will average about US$850, depending on the state of the US economy,” he said after the company AGM and EGM yesterday.

»We believe there will be more people buying gold (wafers) for investment« SIOW DER MING
Siow also said the weakening US dollar could help boost the demand for the precious metal.

Many investors are expected to switch to gold to hedge against inflation and the depreciating dollar.

“We believe there will be more people buying gold (wafers) for investment,” he said.

Backed by favourable external factors and the company’s expansion plans, Siow said Poh Kong expected to record a 10% increase in sales for its financial year ending July 31 (FY08).

The company reported lower net profit of RM18mil on sales of RM414.2mil for FY07 compared with RM26mil and RM372.1mil respectively for FY06.

It announced yesterday a final dividend of 6 sen per ordinary share, less income tax of 26% for FY07.

For the first quarter ended Oct 31, it made a net profit of RM8.8mil compared with RM7.9mil for the previous corresponding period.

On expansion plans, Siow said the jewellery retail chain would open two new stores by year-end – one each in Klang and Penang. Each store would cost about RM3mil, he said.

Poh Kong currently has 91 outlets nationwide.

“We aim to venture into Vietnam, Indonesia, Singapore and Thailand over the next two years to capture the high-end market,” he said.

The company recently signed an exclusive distribution and marketing agreement with German pearl trading company Schoeffel GmbH to distribute and market Schoeffel pearl jewellery in the region.

POHKONG : [Stock Watch] [News]

Sunday, January 11, 2009

Factors influencing the gold price

Today, like all investments and commodities, the price of gold is ultimately driven by supply and demand, including hoarding and disposal. Unlike most other commodities, the hoarding and disposal plays a much bigger role in affecting the price, because most of the gold ever mined still exists and is potentially able to come on to the market for the right price. Given the huge quantity of hoarded gold, compared to the annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production.

According to the World Gold Council, annual mine production of gold over the last few years has been close to 2,500 tonnes. About 3,000 tonnes goes into jewelry or industrial/dental production, and around 500 tonnes goes to retail investors and exchange traded gold funds. This translates to an annual demand for gold to be 1000 tonnes in excess over mine production which has come from central bank sales and other disposal.

Central banks and the International Monetary Fund play an important role in the gold price. At the end of 2004 central banks and official organizations held 19 percent of all above-ground gold as official gold reserve. The Washington Agreement on Gold (WAG), which dates from September 1999, limits gold sales by its members (Europe, United States, Japan, Australia, Bank for International Settlements and the International Monetary Fund) to less than 400 tonnes a year. European central banks, such as the Bank of England and Swiss National Bank, have been key sellers of gold over this period

Although central banks do not generally announce gold purchases in advance, some, such as Russia, have expressed interest in growing their gold reserves again as of late 2005. In early 2006, China, which only holds 1.3% of its reserves in gold, announced that it was looking for ways to improve the returns on its official reserves. Many bulls hope that this signals that China might reposition more of its holdings into gold in line with other Central Banks.

In general, gold becomes more desirable in times of:

Bank failures

  • When dollars were fully convertible into gold, both were regarded as money. However, most people preferred to carry around paper Banknotes rather than the somewhat heavier and less divisible gold coins. If people feared their bank would fail, a bank might have been the result.

Low or negative real interest rates

  • If the return on bonds, equities and real estate is not adequately compensating for risk and inflation then the demand for gold and other alternative investments such as commodities increases.

War, invasion, looting, crisis

  • In times of national crisis, people fear that their assets may be seized and that the currency may become worthless. They see gold as a solid asset which will always buy food or transportation. Thus in times of great uncertainty, particularly when war is feared, the demand for gold rises

Source : Wikepedia

Type of Gold Investment

Gold investement can be done through few channel;
  • Online trading
  • Gold Investment Account
  • Gold Bar Trading
  • Gold Coin (Dinar)

Online trading (Not Allowed for Muslim)

The investor need register online and buy the "gold" based on the international trade market price.
The investor will perform the trading process through online account and need to have close monitor on the gold price trending to ensure getting maximum margin. Below is some of the link where the online gold trading is performed

Gold Investment Account

With this type of investment, the investor need to buy the gold through bank and the bank will manage and secure the "gold" bought. The investor only need to have a saving account in the bank which offer the gold investment account. The investor will buy and sell the "gold" based on the international trade market price and all transaction will be recorded in the gold investment account book in form of grams of gold bought. The price for the investor to selling back the gold is based on the Bank's price. Usually the bank will buy the gold at lower price compared to the market (about USD$1 less).

A few banks in the world offer gold investment account as an alternative of investment. In Malaysia, there are 3 financial banks offer the gold investement account which is Public Bank, UOB and Maybank. Others bank in the world which offer gold investment account are ;
  • Zions Bank
  • Wakulla Bank
  • Wing Hang Bank

Gold Bar and Gold Coins Trading

With this type of investment, the investor need to buy the real gold in form of either bars or coins (Dinar) through bank or other gold trader. This type of invetsment require higher capital compare to the others type of gold investment. This is beacuse the investor need to think on the security of the gold. In term of trading, it is about the same with the others type of gold investment where the trading of the gold is based on the current market price.

Gold Investment - The introduction

During the economic crisis, gold is one of the alternative of investment. Gold is one of the precious metal that has been trade since 1900's.
This is because Investors generally buy gold as a hedge or safe haven against any economic, political, social, or currency-based crises. These crises include investment market declines, inflation, war, and social unrest. Investors also buy gold during times of a bull market to financially gain.

Below is the trend of the gold price over 10 years (source :

Based on the trending, the price of the metal was very stable and "very hard" to drop.The usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily (telephone) meeting of representatives from five bullion-trading firms. Furthermore, there is active gold trading based on the intra-day spot price, derived from gold-trading markets around the world as they open and close throughout the day. In Malaysia, the gold trade are based on the international market price.

Souce : Wikepedia, Kitco.Com,Gold Trading