Trading in Gold

I was quite frustrated with the low interest rate the banks offered and the high inflation rate we are subjected to. So I thought maybe it is a good idea to buy and keep gold and so I started to ask around.

I started with the Jewellery Shops for obvious reasons. When I am young, I was notice my parents generation buying Gold jewellery to keep. I can now understand the rational for doing that now. I approached SK Jewellery and asked if I were to buy the gold pendant from them (those of investment grade), how much would it cost. I was told that it will be at Market rate. Then I asked if I were to sell the gold back to them, what would the rate be then? The salesperson told me that it will be at 60 to 70% of the Market Rate. According to the sales person, it is better to sell it to the pawnshops because the value is slightly higher. 

So I proceeded to the pawnshop and asked. The proce quoted is also market rate when I buy from them. But when I sell, it was $12 difference against me (market price when I asked was $69 but they buy back at $57). That works out to be 17% discount. And I was asking about “Gold bars (in one grams basis) which is of investment grade. Then it dawned on me that it is not cheap to invest in gold because the spread is too wide. Even UOB bank which is well known to trade in Gold also priced the gold differently from the market rate.

Thus, it is important to find an expert to learn the best way to trade in Gold.