Why You Should Swap Your Old Gold Jewellery to Gold Bullion?

Why You Should Swap Your Old Gold Jewellery to Gold Bullion?

Objectives:

Bring forth a case of converting your “useless” jewellery to a form that’s more useful

I believe we have all experienced at least one of the situations below:

• Received Gold jewellery as gifts for wedding, baby full moon shower, special events etc, but you don’t wear Gold jewellery!
• Your current jewellery design is obsolete, or it can’t be worn anymore, broken jewellery, lost one side of the earring and etc
• Your once beloved jewellery is sitting in a box somewhere safely stored aside, but otherwise quite useless

 

In our eyes, all these represent under-utilized assets! So begs the question, is there a way to better utilize these “old jewellery” other than exchanging new gold jewellery or encash it?

Yes, there is. You can choose to swap your old gold jewellery to LBMA Gold Bars and investment Gold bullion coins.

Why not encash it to SGD and keep it in my bank account then?

Well, that answer boils down to your personal objectives. We all know that keeping all our assets in SGD cash is not the wisest way to invest. (We’ll leave the topic of financial portfolio diversification for another day), but if you see gold as a possible asset class to hold in your portfolio, then swapping your illiquid Gold jewellery to a standardized LBMA format could be a possible way of building up your gold holdings. The general rule of thumb is to have 5-10% gold exposure in your portfolio, but this depends on individuals’ risk profiles. Contact us to speak more about this.

There are generally 2 common forms that clients swap their jewellery to and we have listed them both here for your comparison.

	Costs of swapping to “New” Jewellery	Costs of swapping to LBMA Gold Bullion
Tax Rate	7% GST	Tax Exempted
Workmanship (Premium)	High	Low – Medium
Buy/Sell Spread	Wider	Narrower
Conversion Cost	High	Low – Medium

 

LBMA gold bullion are tax exempted in Singapore, you do not need to pay 7% GST for them. It is priced by spot price (market price) + premium (workmanship), which the conversion cost is relatively much cheaper compare to jewellery that has GST, marked up on gold price and workmanship.

The buy/sell spread for gold bullion is transparent as well, usually it ranges from 1% – 10%. Whereas the sellback of jewellery is normally given a discount of 15% – 18%, after adding 7% GST the spread will be more than 20%. And that does not include the different practices of different shops, such as levying additional administrative costs or having no transparency in the entire process.

An example based on indicative price:

GSC buyback price for 999 jewellery is at $70.10/g, the lowest premium 100g 999.9 gold bar is selling at S$7446.70. Jewellery shop 999 gold price is at $85.50/g. If you were to sell 100g of 999 jewellery and swap it into a 100g gold bar with GSC, you just need to top up $436.70. If you swap your jewellery to new 100g gold jewellery, considering the discount is only at 15% and you need to pay 7% GST, you need to top up $1,881 excluding the workmanship. The difference is obvious.

LBMA gold bullion has assurance of international liquidity. This is very powerful and essentially means that you are not tied to any bullion dealer should you wish to sell. (You could even bring the bar physically to an overseas country to sell if you wish to) When you do the swaps, you unlock more options in terms of how to utilise your Gold in compared to just wearing as jewellery. You won’t need to worry about fashion fads if you decide to pass your precious metals holdings to your children. Moreover, you are in the unique position of having your capital investment appreciate and being able to use that position to move to a better “investment form”, albeit the same asset class, Gold.

Wondering how much is your old gold jewellery worth now? Feel free to visit our website and retail store for free evaluation.