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15 Jul 2012, 10.02PM
11 comments & replies
The World and Us
Singapore bought her first 100 tons of gold in 1968 at US$40/oz, when her foreign reserves were US$708 mil.
Our stockpile of gold has only increased to 127 tons after more than 40 years, while our foreign reserves stood at US$238 billion, not including the reserves from GIC (US$ 100 billion) and Temasek (US$150 billion).
As a fraction of the nation's reserves, Singapore's gold holdings has declined from 20% (at 1968 price) to less than 3% today (even at current price).
Under the current global financial instability, it is opportune time to purchase more real gold (even silver) NOW to protect the value of the Sing $ and our reserves, which are mostly records on paper only.
Many countries including China, Russia, Philippines,Thailand, South Korea, Mexico, Turkey have bought more gold to add to their reserves. We should not think that the Sing $ is good as gold, unless every single cent of it is backed by gold.
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16 Jul 2012, 3.34PM
Change to GOLD lah. SG dollars is screw. Time to buy in GOLD.
17 Jul 2012, 5.53PM
I disagree. Gold cannot generate income or create wealth. We should focus on developing business and acquiring business assets instead. Gold price is still being controlled by US dollar (America). Singapore dollar is as good as gold if everybody (especially Singaporeans) in the world is convinced Singapore is a rich and safe haven country.
17 Jul 2012, 6.59PM
Had Singapore allocated more of its reserves to invest in gold to at least maintain its original 20% gold to foreign reserves ratio, we would have even much higher reserves now. In contrast, GIC and Temasek investment returns over the past 20 years, as managed by the elite of the elites, have been performing poorer and poorer as seen from their diminishing annualised returns. In a world of much higher risk and volatility now, do you still have faith that the elties can generate annualised returns of 10-20% over the next few years for our reserves?
So you see, even though gold does not generate interest income, it offers the protection of our wealth by its very nature over the long term. Have the elites the wisdom to see why countries like China and Russia are stocking up more gold nowadays, they should take heed and follow their footsteps. No need to analyse and debate over what asset class or portfolio mix to invest in. Just buy gold and silver to match 20% of our total reserves. The world will have more faith in the Sing $ then and we will be better positioned to withstand the aftermath of the next economic or currency disaster.
23 Jul 2012, 4.14PM
You never see the big picture. Though the elties may not be able to generate annualised returns of 10-20% over the next few years for our reserves, they can generate many good overseas jobs for Singaporeans. You may also not aware many elite fund managers in western country also cannot generate 10-20% returns in the next few years (this is global problems). Imagine the money is converted to gold, it only collect dust in the safe and cannot value add to our economy.
23 Jul 2012, 11.09PM
Thank you for your comments. Please help me understand how, by not stocking up more gold reserves now, the government can then create overseas jobs for SINGAPOREANS with the country's foreign reserves. Do you mean with government investments in foreign countries, SINGAPOREANS will be hired to fill up positions in their businesses? Even if this is the case, how many SINGAPOREANS will the government be hiring to go overseas and fill up these positions (which is high paying I supposed, otherwise how to benefit SINGAPOREANS)? Few will benefit I think, unless the reserves are invested in labour intensive industries. Even so, demand for labourers will easily be met by the foreign population pool, so how to benefit SINGAPOREANS?
With your rationale, does it imply that Singapore should then sell all her gold away so as to maximise our reserves for foreign investments?
I am not suggesting that the government should be converting all its foreign reserves to gold, but at least the amount that represents the original gold reserve ratio when our late Dr Goh bought the first 100 tons for Singapore, i.e. 20%. There are still the remaining 80% of foreign reserves to play with if you will.
With our huge amount of foreign reserves, any drastic devaluation of foreign currencies will wipe out much of the value, especially since much of it is invested in American and European banks, which we are seeing greater risks by the day. Have we not learned from the last crisis how billions can be wiped out overnight? What jobs can we talk about if the value of our investments is wiped out? In contrast, gold will always retain its intrinsic value relative to the money supply in an economy throughout history, even though its price can fluctuate in the short term. It is the assurance of preserving our wealth as a country and individuals for the long term. This is the bigger picture.
24 Jul 2012, 3.55PM
Billions of dollar is wipe out because we focused to invest heavily in stock market and not in setting up new business to create jobs. If you invest billion dollar in setting up new business to create jobs for Singaporeans, there is no way the multi billion dollar investments can be wiped out overnight like our investment in western banks and stock markets. By investing in new business, beside creating good jobs, you also generate decent return like the stock market without incurring the stock market risk.
24 Jul 2012, 7.11PM
I think your reply is deviating away from topic and not addressing my earlier response questions at all:
" Please help me understand how, by not stocking up more gold reserves now, the government can then create overseas jobs for SINGAPOREANS with the country's foreign reserves. Do you mean with government investments in foreign countries, SINGAPOREANS will be hired to fill up positions in their businesses? Even if this is the case, how many SINGAPOREANS will the government be hiring to go overseas and fill up these positions (which is high paying I supposed, otherwise how to benefit SINGAPOREANS)? Few will benefit I think, unless the reserves are invested in labour intensive industries. Even so, demand for labourers will easily be met by the foreign population pool, so how to benefit SINGAPOREANS?
With your rationale, do you imply that Singapore should then sell all her gold away so as to maximise our reserves for foreign investments? "
If you have good practical ideas, you may like to start a new, separate topic like "How the government can invest our reserves to create good jobs for Singaporeans and generate better returns". I am sure many people will respond to you.
20 Jul 2012, 11.39AM
Very subjective - no right or wrong. Personally each of us needs to decide. Personally for me, its
, based on global assessment since 1996!
2 Aug 2012, 2.29PM
The Bank of Korea, which has the world’s seventh-biggest foreign-exchange reserves, boosted gold holdings for the third time since June last year, joining central banks from Russia to Kazakhstan in buying bullion to diversify assets.
17 Sep 2012, 11.32AM
Singapore gold reserve only 3%. I thought our Singapore gold reserve is 50%. Now we really going to lose money. After 3 QE, US dollar already depreciate quite alot. With 97% US dollar reserve our money start to "steal" away by the US.
If our gold reserve is 50%, any impact on the US dollar will not hit us hard. It is because gold is tied to US dollar. Whenever US dollar drop gold price will go up, it will counter balance each other. Now only 3% of gold we are losing 94% of our US dollar reserve.
24 Sep 2012, 9.55AM
Singapore prints the Sing dollar based on our foreign reserves so as not to devalue its worth. However, if our foreign reserves depreciates in value (due primarily to the weak Euro and US dollar), we will have less room to print money to meet the country's financing need. Hence, we are left only with one turbo engine called "economic growth". But this engine will falter as the population ages and now we can only make it up with mass immigration to boost the GDP - which we well know it is not a sustainable strategy for indefinite growth.
Had we maintained our original 20% gold backing to foreign reserves, the financial risks we face now would have been mitigated to a much larger extent. The government should really start stocking up more gold and silver now, when both precious metals (used as money for thousands of years) are still relatively undervalued now, while we still have the chance to protect our reserves. Otherwise, when we are forced to print more Sing dollars in the face of declining growth and falling foreign reserves in the future, then the value of our Sing dollar denominated assets is sure to plunge. We may not be the ones suffering, but our children and grandchildren are likely to be.
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