Business Times - 07 Nov 2007
CPF members can put up to 10% of savings in gold fund
By GENEVIEVE CUA
CPF members can now buy shares in StreetTRACKS Gold exchange traded fund (ETF) - a move the fund's sponsors hope will boost volume. From today, members can invest up to 10 per cent of their CPF savings in the gold ETF.
StreetTRACKS Gold was listed on the Singapore Exchange in October last year as Asia's first gold-backed ETF. It is sponsored by the World Gold Trust and marketed by State Street Global Advisors.
CPF said late last year that members could invest in gold ETFs - but there was no gold ETF in the CPF Investment Scheme (CPFIS) at the time. State Street secured in-principle approval for StreetTRACKS Gold (GLD) in August this year.
Its inclusion in CPFIS has come none too soon. Gold touched US$819 an ounce yesterday, bringing it closer to its peak of US$850 in 1980. GLD ETF made its debut in Singapore when gold was at US$573 an ounce.
Gold's renaissance is thanks to a weak US dollar, rising demand, tight supply and geopolitical tension. A Credit Suisse report has suggested that while the weak US dollar provides a supportive backdrop, long-term diminishing supply could trigger 'quantum upward changes' in the gold price.
A JP Morgan report in June said gold could hit US$1,000 in the medium term - but it did not say just when this might be.
GLD ETF is priced at one-tenth of gold's spot price. It allows investors to invest in gold without the inconvenience of storage, custody and GST charges that go with the physical product.
The ETF holds 597.53 tonnes of bullion valued at US$15.45 billion. It has an expense ratio of 0.4 per cent.
Singapore investors who bought GLD at its inception in October last year would have reaped a return of 31 per cent, said World Gold Council director Albert Cheng.
Another avenue for those keen for gold exposure is a gold equities fund.
In this field, UOB Asset Management's portfolio manager for United Gold & General Fund, Alfred Wong, has just left the company. The new portfolio manager is May-E Leong, who has managed other UOB funds, including United Apec Equity and the Millenium Trusts. She will be supervised by UOBAM's deputy chief investment officer John Doyle.
BCA Research said in a note on Monday that gold has surged 13 per cent - amid record speculative interest - since the US Federal Reserve's rate cut on Sept 18.
Although positioning and short-term technicals suggest a consolidation is probable, the cyclical trend remains up, according to BCA.
It expects the Fed to continue to ease interest rates to support the US economy, and this suggests further weakening of the US dollar.
'In our opinion, gold is predominantly a global liquidity play,' BCA says. 'On the demand side, interest in gold ETFs continues to boom and central banks may boost their holdings as their distrust for the greenback grows. 1980's all-time high of US$850 is well within reach, and any break above that could spark a 'gold rush'. Bottom line: It is too soon to get out of gold. Stay long.'
CPF members can put up to 10% of savings in gold fund
By GENEVIEVE CUA
CPF members can now buy shares in StreetTRACKS Gold exchange traded fund (ETF) - a move the fund's sponsors hope will boost volume. From today, members can invest up to 10 per cent of their CPF savings in the gold ETF.
StreetTRACKS Gold was listed on the Singapore Exchange in October last year as Asia's first gold-backed ETF. It is sponsored by the World Gold Trust and marketed by State Street Global Advisors.
CPF said late last year that members could invest in gold ETFs - but there was no gold ETF in the CPF Investment Scheme (CPFIS) at the time. State Street secured in-principle approval for StreetTRACKS Gold (GLD) in August this year.
Its inclusion in CPFIS has come none too soon. Gold touched US$819 an ounce yesterday, bringing it closer to its peak of US$850 in 1980. GLD ETF made its debut in Singapore when gold was at US$573 an ounce.
Gold's renaissance is thanks to a weak US dollar, rising demand, tight supply and geopolitical tension. A Credit Suisse report has suggested that while the weak US dollar provides a supportive backdrop, long-term diminishing supply could trigger 'quantum upward changes' in the gold price.
A JP Morgan report in June said gold could hit US$1,000 in the medium term - but it did not say just when this might be.
GLD ETF is priced at one-tenth of gold's spot price. It allows investors to invest in gold without the inconvenience of storage, custody and GST charges that go with the physical product.
The ETF holds 597.53 tonnes of bullion valued at US$15.45 billion. It has an expense ratio of 0.4 per cent.
Singapore investors who bought GLD at its inception in October last year would have reaped a return of 31 per cent, said World Gold Council director Albert Cheng.
Another avenue for those keen for gold exposure is a gold equities fund.
In this field, UOB Asset Management's portfolio manager for United Gold & General Fund, Alfred Wong, has just left the company. The new portfolio manager is May-E Leong, who has managed other UOB funds, including United Apec Equity and the Millenium Trusts. She will be supervised by UOBAM's deputy chief investment officer John Doyle.
BCA Research said in a note on Monday that gold has surged 13 per cent - amid record speculative interest - since the US Federal Reserve's rate cut on Sept 18.
Although positioning and short-term technicals suggest a consolidation is probable, the cyclical trend remains up, according to BCA.
It expects the Fed to continue to ease interest rates to support the US economy, and this suggests further weakening of the US dollar.
'In our opinion, gold is predominantly a global liquidity play,' BCA says. 'On the demand side, interest in gold ETFs continues to boom and central banks may boost their holdings as their distrust for the greenback grows. 1980's all-time high of US$850 is well within reach, and any break above that could spark a 'gold rush'. Bottom line: It is too soon to get out of gold. Stay long.'
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