Presenting The Case For Buying “A Little” Bullion

Last Monday, I braved the heavy thunderstorm to visit BullionStar’s shop front near Clarke Quay MRT. Even with an umbrella, I was more than half drenched and I guess the lady in the shop probably thought I was just a pesky passer-by coming in to seek shelter from the rain.  😉

But nope, I came in with a specific agenda and she was quite surprised as I quickly made a small purchase to buy 25 pieces of Canadian Maple silver coins. At that time, each coin costs slightly less than $25 and this was my first-ever bullion purchase.

To be fair, there was a time when I despised these hard assets. After all, I was a firm believer that stuff like gold and silver were basically unproductive assets. And I was corroborated by none other than Warren himself and he explained his best with this quote:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”

So seriously, why did I buy those silver coins? 

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A Collectible?

I have a special affinity towards the Canadian Maple Leaf! If Singapore were my wife, Vancouver has to be the mistress. 😆 Having stayed in this amazing city for half a year during my undergraduate days, I would always unknowingly break into a smile when I recall those amazing times.

And what better way to remind myself of those wonderful memories by taking a look at this beautiful coin.

And it also helps that these coins need little maintenance compared to those old notes of Singapore that my mother has collected over the years.

A Doomsday Hedge?

Once in a while, I would imagine how my portfolio of stocks would do if war breaks out in Singapore. Then I start telling myself I need to branch out and maybe invest in the Hong Kong, US or Australian markets to combat this risk. But then I go further and imagine what happens when these markets or even currencies fail.

Before you label me a paranoid weirdo, there’s actually people who believed that the fiat currencies would fail back when the gold backing was removed which was eons ago. And most recently when the US government started printing truckloads of money, many felt that the sky was falling.

Naive and silly me thinks that if the above scenario unfolds, the silver coins could come in handy as payments for a boat ride to Malaysia or Indonesia. Probably I can survive there with some subsistence farming activities?  🙄

An Investment?

Ok, I understand that gold doesn’t generate cashflow like dividend stocks or rental properties. But I am not exactly a purist and I do believe that anything that provides me with a potentially good capital gain can be considered an astute investment. Imagine you have the umbilical cord of someone like Michael Jackson.  😆

On a more serious note, almost 4 years ago in March 2011, the spot price for silver was hovering at about US$50. Right now, it’s closer to US$15. I really don’t know if the price has reached rock bottom at this stage but what I do know is that I am more likely to achieve a good capital gain buying now as compared to 4 years ago. 

Moreover, the performance of bullion has traditionally been the opposite of stocks. Therefore, they are a useful instrument to have in a more conservative portfolio. Their values tend to hold up or even appreciate when the stock market crashes and they could help to cushion the overall losses in the portfolio which might help you to sleep better at night. (google “permanent portfolio” for a better understanding)

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P.S. As seen from the title (“a little”), I am definitely not advocating you to pour everything into bullion. That could be a very risky move, especially if one did it a few years ago. (Sorry, can’t resist having a slight dig at those who went all-in on bullion. 😉 )

Some additional words on BullionStar:

I had a good experience at the shop. Openly marveling at how responsive the price changes were during the transaction, the lady knew I was quite a noob and she was also kind enough to explain to me the advantages of signing up for an account with them. Instead of having to brave the elements, I could lock in the price and collect the silver on another day.

Nonetheless, I still prefer an immediate transaction and skeptical me highly doubt I would ever be comfortable with storing my bullion in a vault with the organisation who sold me the product.  😕

Anyway, if you’re interested in purchasing some bullion from BullionStar and would like to find out more, GMGH (a fellow local personal finance blogger) has written a pretty good review on BullionStar. And if you enter BullionStar through his site, and you buy anything, he gets a small commission with no apparent downside on your part.  🙂 

Additional Disclaimer: I am in no way affiliated to BullionStar or getting paid to do a positive review or in the midst of arranging a partnership or got a discount with my purchase with them or… you get the idea. I also doubt GMGH would buy me a coffee if his commission spikes in the coming week although I would like to be proven wrong.  😉