Gold, the new way to make money in Malaysia

Gold, the new way to make money in Malaysia
Buying gold jewellery in Malaysia's Masjid India area, in Kuala Lumpur.

MALAYSIA - "All that glitters is not gold" goes the well-known adage, but the glitter of gold never fails to attract. Some like to adorn themselves with it and some hoard it in the form of bullions in their vaults, while there are yet others who like to trade in gold futures.

Indians from India are said to be the biggest hoarders of gold, as about 20,000 tonnes are in private hands. India remains the biggest importer of gold from Malaysia.

Last year, Malaysia exported RM7.1bil worth of finished jewellery, with Dubai as the biggest buyer. And up to July this year, RM4.6bil worth of finished jewellery has been exported. The figure could double for the full year.

Where gold bullions are concerned, RM9bil was exported in non-monetary form last year, and this year, it could scale up to RM12bil. Gold bullions are used to make jewellery and also function as an investment tool.

For an investor who wants to diversify his portfolio from fixed deposits, stocks and bonds, gold is an option. It is seen as a safe haven in volatile situations.

Hence, it comes as no surprise that there are many investment trading schemes involving gold in the country. However, some have fallen foul of the authorities, as they are seen to be illegal deposit-taking companies.

One such case involves gold trading company Genneva Malaysia Sdn Bhd, whose directors have been slapped with a record number of 926 charges for money-laundering and illegal deposit-taking charges, among others. A total of RM5.5bil in deposits had been received by Genneva from 35,000 depositors. This gives us a glimpse of the demand for gold in the country.

This is why come Monday, gold futures will, for the first time, be traded on Bursa Malaysia. It is a historic moment for Bursa, but Malaysia is really a latecomer in gold futures trading. It should have been introduced a long time ago.

Gold futures and options are trading across several markets, including the United States, Britain, Singapore, Thailand, Taiwan and Hong Kong. Gold for immediate delivery was being traded at about US$1,313.85 (RM4,198.41) an ounce as of yesterday.

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