Gold's 10 percent gain in 2011

Gold rose 1 percent on Friday, rebounding from losses earlier this week. That meant that the yellow metal had made its 11th consecutive year of gains. The gain was 10 percent for the whole year of 2011 but if the comparision is taken from September, where it made its high of $1920.30 - then it would be a loss in its quarter in more than three years. Gold fell heavily in December, as hedge funds scrambled for cash to meet client redemptions and European banks trimmed their gold holdings to raise capital. It would be worth noting that U.S. February gold futures contract settled up $25.90 at $1,566.80, snapping six straight sessions of losses. However,despite a rally on Friday, technical factors suggested that gold momentum is in the bearish region:

Bullion's 20-day moving average dipped below its 200 DMA on Thursday, as short-term momentum has turned more negative than long-term momentum and could show that the current downtrend is pervasive.

How to buy Gold in Singapore and Not have the hassle of keeping them?

Want to invest in gold? But deterred by the risks and hassle of keeping physical gold bars? Then gold investment accounts, which allow you to buy and sell gold and keep track of your transactions through a passbook, may be for you.

As of June last year, gold investment accounts were only available at three banks — Kuwait Finance House, Public Bank and Maybank. Due to gold’s growing popularity, CIMB and United Overseas Bank (M) (UOB) have jumped onto the bandwagon as well. All banks, except for Kuwait Finance House, use Swiss Pamp as the underlying gold bar for their gold investment accounts.

Kuwait Finance House uses a generic gold bullion and UOB uses different gold bullions. Investors can select their preferred brand when making a withdrawal. You must have a savings or current account at the bank to open a gold investment account.

On Aug 23, gold prices hit a record US$1,911 (RM5,688) an ounce in Asia. On the back of rising prices, the buy and sell prices of gold investment accounts have also increased by about 30% over a period of 15 months.

A year ago, the precious metal’s purchase price (the price at which the banks buy the gold from customers) ranged from RM121 and RM123, and the sell price (the price at which the banks sell the gold) ranged from RM126 to RM128. At the end of August, the buy price ranged from RM174 to RM178, while the sell price ranged from RM180 to RM185.

To enhance your returns, choose an account that has the smallest spread (the difference between the buy and sell prices). New players such as UOB and CIMB offer the narrowest spreads, with UOB outshining its competitors with 0.55% and 1.1% for the Premier Gold Account and Gold Savings Account respectively. Kuwait Finance House has the highest spread of 4.45%.

As always, watch out for fees that will negate your returns. CIMB, Public Bank and UOB impose a fee if the minimum balance falls below a stipulated level at month- and year-ends. Kuwait Finance House does not impose any additional fees. Public Bank levies the highest fees; when customers make a withdrawal of physical gold, the conversion fees ranging from RM220 to RM270 are the highest among the banks.

Think about the type of withdrawals that you want to make from these accounts. Not all banks allow you to withdraw physical gold, and if it does, a conversion fee might be levied. For example, at CIMB, if you withdraw 10g of physical gold, you would still get the best nett return despite the conversion fee of RM1 for every gram of gold (based on bank’s buy-sell prices as at Aug 22).

Consider, too, how much money you can set aside for your investment. Maybank offers the lowest entry barrier with a minimum deposit of 1g. It also imposes the lowest minimum balance of 1g. In contrast, UOB requires the highest minimum initial deposit and balance, although it offers the narrowest spread. And there is a penalty, if there is a total withdrawal.

As with any other investments, do not forget to evaluate the risks. While such accounts permit you to reap favourable returns from appreciations in gold prices, you will make a loss if the price of gold plummets. These gold investment accounts do not earn interest income and the balance kept in the account is not protected by the government’s deposit insurance scheme, Perbadanan Insurans Deposit Malaysia (PIDM). Well, potential investors are reminded again that Gold investment is not without its risk. For analysis relating to spot gold price, please refer.

A call for another reserve currency

For most of the world, the never ending saga over the debt ceiling confirmed what many have long believed: The United States dollar is no longer worthy of its status as the world's reserve currency. This is re-inforced by the weakening US dollar against most currencies except the Euro.. The Euro is also badly tarnished at the moment. The yen is strengthening only because it is less tarnished, thanks to its "relatively less expanded balance sheet". And in the midst of all these, China - when it removes its restrictions on its capital account will be the most credible contender for the reserve currency status. Even if that does not come about, it will be most likely one of the basket of world currencies to be likely chosen as the alternative to US dollars. The US dollars continue to weaken irregardless.

which bank has the best RMB rate

With China looking to turn the renminbi (RMB) into an international currency, several banks in Singapore have begun offering renminbi deposit services. This article takes a look at the rates and details of the offerings from HSBC, Bank of China, DBS and UOB.

Making RMB deposits will involve the conversion of your currency into RMB. Different institutions offer different conversion rates, and these are subject to fluctuations. It is advisable to compare exchange rates at different institutions for better returns.

Similarly, interest rates on deposits vary among different banks, and over different time periods. Customers should consider both the conversion rate and interest rate offered by an institution in order to determine the overall returns on the investment (principal amount + interest earned). Comparing overall returns for identical deposit amounts and time periods at different institutions will help you decide whose services to use.

HSBC's RMB Deposit offerings

HSBC's Multi Currency Savings Account offers RMB deposits with tiered interest rates, so higher savings earn more. The initial deposit required is S$2,000 (or equivalent). This initial deposit will be waived for customers who have Dual Currency Plus and other investments with HSBC. Current interest rates range from 0.20 percent for deposits between RMB10,000 and 349,999, to 0.35 percent for deposits above RMB 350,000.

HSBC also offers RMB time deposits. HSBC Advance customers require a minimum of RMB 250,000 to open a RMB account while HSBC Premier customers require RMB350,000. Current interest rates for all deposit amounts are at 0.25 percent for one-month and two-month terms, 0.35 percent for three-month terms and 0.45 percent for six-month and twelve-month terms.

HSBC's Foreign Currency Deposits also offer capital gains if exchange rates move in the customer's favour. There is no capital gains tax in Singapore, and furthermore, for non-residents, the interest earned on Foreign Currency Deposits is not subject to Singapore income tax or withholding tax.

Bank of China's RMB Deposit offerings

Bank of China, the pioneer in providing RMB services in Singapore, also offers RMB services in its Multi Currency Savings Accounts and Time Deposits. The Multi Currency Savings Account requires an initial deposit of S$1,500 (or equivalent). In order to apply for the Multi Currency Savings Account, customers can visit any of the bank's branches with valid travel documents and proof of address documents, such as utility bills or bank statements.

Bank of China's RMB Time Deposit offers promotional interest rates until the 31st of July 2011, ranging from 1.78 percent per annum for a six-month time deposit of RMB10million (S$1.9million) and above, to a rate of 1.20 percent for a one-month deposit of RMB250,000 to RMB1 million. Deposits have to be fresh, not transferred from other RMB accounts with the bank, and must be by way of foreign exchange conversion at the bank's prevailing foreign exchange rate(s), from non-RMB denominated currencies.

The regular, non-promotional annual interest for RMB 200,000 and above for a six-month term is 0.45 percent, and 0.40 percent for deposits up to RMB 199,999.99. Customers can visit any of the branches with identification and proof of address documents in order to apply.

DBS's RMB Deposit offering

DBS's Foreign Currency Fixed Deposit Account allows the customer to set funds aside for a fixed duration to benefit from a fixed interest rate. Now, the customer can make RMB-denominated fixed deposit placements with a minimum deposit of S$5,000 or its equivalent. Interest rates range from 0.50 percent for bank balances above RMB 2.5million (S$750,000 approximately), to 0.385 percent for deposits below RMB 250,000.

Deposits into the Foreign Currency Fixed Deposit Account are chargeable. If the deposit amount is in RMB, a commission-in-lieu of exchange (min S$10) applies. If it is in a different currency, the notes are converted to S$ equivalent and then re-converted to RMB at the prevailing exchange rates.

UOB's RMB Deposit offerings

UOB has also introduced two RMB deposit accounts. Firstly, the UOB Foreign Currency Fixed Deposit pays interest rates ranging from 0.9 percent for a one-month deposit of at least RMB 250,000, to 1.45 percent for a 12-month deposit of at least RMB 5 million. No fees are required to maintain the account, which can be opened by visiting any of UOB's branches, or via telephone.

Secondly, UOB offers the Global Currency Premium Account exclusively to UOB Privilege Banking clients. The initial deposit and minimum average daily balance is RMB5,000, and the minimum balance fee, applicable when the account's average daily balance for the month falls below the minimum average daily balance, is RMB50. The interest rate is 0.50 percent for deposits less than RMB 250,000, and is automatically escalated to 0.75 percent p.a. for deposits amounting to RMB 250,000 and above.

Risks involved in making RMB deposits

Ensure that you are aware of the risks involved in making RMB deposits:

1. There may be a gain or loss when you convert foreign currency as exchange rates are subject to fluctuation. In addition, you may be subject to foreign exchange controls which may be imposed from time to time.

2. RMB is not a freely convertible currency and is subject to regulation changes initiated by China and/or local authorities. Apart from exchange rates fluctuation risk, customers face liquidity risk. It is important to choose a deposit tenor suitable to your needs.

3. If you withdraw your fixed deposit before it matures, a fee might be imposed, and you might earn less or no interest.

4. Foreign currency deposit accounts, unlike eligible local accounts, are excluded from insurance coverage under the Deposit Insurance Act.

So who offers the best rates? Well it depends on how much you have to deposit, but, at the moment, Bank of China's promotional rate of 1.20 percent is attractive if you have RMB250,000 and above to place.

If you are looking at long-term investments, it is advisable to choose institutions that have a suite of different RMB services that provide you with more options and minimise currency loss. It is also advisable to learn about fund-withdrawal procedures at each institution, as some may require you to make withdrawals in non-RMB currencies.

(Note: 1 CNY = 0.191584 SGD at the time of writing)

Etf's to play wheat

With the recent slide in the U.S. dollar, the U.S. suppliers not only became more competitive than their European counterparts but were expected to dominate the international wheat market. Everything should be going well for U.S. wheat exporters except for the rising freight costs. Supply disruptions could also put upward pressure on wheat prices. Already at elevated levels after soaring to two-year highs in the wake of Russia's ban on grain exports, analysts fear that any supply shocks could push wheat markets higher. Meanwhile, U.S. wheat futures at the Chicago Board Of Trade closed higher for the third day - on dryness threatening winter. ExportsTraders have become downbeat about the prospects for European Union wheat in recent weeks due to a tail off in demand due to waning supplies and high prices. Exports from the bloc started at near-record levels this week as suppliers scrambled to secure demand after Russia banned grain exports for the year. Market participants said that this move signaled the increasing dominance of the U.S. in export market.ETF Options for Wheat Investment. Although there are no wheat-specific ETFs, some of the ETFs worth considering to play the current wheat rally include:

ELEMENTS Rogers Intl Commodity Agric ETN Profile (RJA): The Index represents the value of a basket of 20 agricultural commodity futures contracts and is a sub-index of the Rogers International Commodity Index. The top holdings include: wheat (20%), corn (14%), cotton (12%), and soybeans (9%).Expense Ratio: 0.75%2.

ELEMENTS MLCX Grains Index TR ETN (GRU): The index is designed to provide a benchmark for the grains sector and for investment in commodities as an asset class. The Index comprises futures contracts on four physical commodities: Corn, soybeans, soybean oil and wheat. The Index is a total return index; thus it is designed to reflect the performance of a fully collateralized investment in the index components. The top holdings are: wheat (47%), corn (36%), soy meal (10%), and soy beans (8%).Expense Ratio: 0.75%Some of the other broad Agriculture related ETFs that include soft commodities having wheat futures contracts in varying amounts include:
PowerShares DB Agriculture (DBA): Wheat is 12.6%
PowerShares DB Commodity Index Tracking (DBC): Wheat is 5.6%