Investing in Physical Gold: Your Ultimate Wealth Protector

Man at the Helm
DATO’ LOUIS NG CHUN HAU. Founder and Executive Chairman of Public Gold Group of Companies

With Dato’ Louis Ng Chun Hau at the helm, Public Gold has been chalking up successes and its outlook continues to be bright and promising. Ng’s leadership and entrepreneurship have been credited with driving a team of more than 100 employees towards excellence and consistently delivering world-class service to customers. The company’s performance is noteworthy as it has been just four short years since its set-up in 2008.

Today, Public Gold has 18 branches nationwide (including its corporate office, which was officiated by Her Majesty DYMM Seri Paduka Baginda Raja Permaisuri Agong Tuanku Hajah Haminah). It has expanded its business territory into Singapore and plans to venture to Brunei and Indonesia soon with its recent rapid growth of 20,000 customers and 10,000 dealers.

In line with the brand’s tagline, “Ultimate Wealth Protector”, Ng has cut through boundaries in reaching out to the public and offering them opportunities to grow wealth through a safe and sound physical precious metal trading business model with the potential of securing a promising future. Ng’s stellar performance and dedication have been recognised with numerous prestigious awards that have further strengthened Public Gold’s position in the physical gold and silver trading industry.

Global Aspiration

Gurun, Kedah-born entrepreneur Ng’s working life began modestly enough. He was an electrical engineer by profession, but chose to become a remisier at the young age of 26. During a bull run in the stock market, Ng made his millions even before hitting the age of 30.
However, after being in the stock market for seven years, he felt that there would be an eventual bear market for securities and a bull market for commodities and came up with a business concept that would combine mutual funds, unit trusts and physical gold – a unique model which no one else had adopted as yet. Today, Public Gold has the enviable distinction of being the first local company to produce gold and silver bullions to international standard.

Ng is very much a hands-on leader who gives direction to the company in its planning, strategising and diversifying the business. He is proactive and focused on achieving success, often acting on his belief and strong instincts. Ng holds the view that success can only come with strong commitment and passion in striving after one’s goals.

Public Gold’s first office was located in Bukit Jambul on Penang island and opened in 2008. It branched out to Bishop Street on the island and to Bandar Sunway in Selangor in 2009. A year later, offices opened across other states in the country: in Kota Baru, Ipoh, Sungai Petani in Kedah, and Johor Baru. As at 2011, seven more branches were added, including in Kuching, Kuantan, Kuala Terengganu, Melaka, Seremban, Alor Star, and Ampang in Selangor. Three more branches are expected to open by mid-year. Rapid sales growth has prompted Public Gold to relocate its head office from Bukit Jambul to stand-alone premises in Technoplex, Bayan Lepas; the current Bukit Jambul building continues to operate as a branch.

Ng can take pride that his vision and acumen have seen the fruition of a stable international exchange medium, that is precious metals. His aspiration is to turn Public Gold into the world currency issuer and global leader in physical gold and silver trading as well as exchange centre. His vision and beliefs are perhaps best summed up in his famous quote: “To save your family, buy gold. To help your nation, keep gold. To follow your religion, use gold.”
Why Physical Gold?

In an exclusive interview with Money Compass, Ng highlighted the reasons why investors should seriously consider investing in physical gold. He started off by giving the background of how gold had been used to back the money or currency system of a country to provide economic and financial stability. However, the dispute over the fiat monetary system changed the entire economic scenario and triggered worldwide economic crisis and inflation.

Least Risk Alternative

Based on the investment risk pyramid outlined by Ng, physical gold is positioned at the bottom level – the least risk investment asset class – and upwards is bond, fixed deposit, property, stock, futures market, etc. Most investment portfolios are invested mainly in traditional financial assets such as stocks and bonds. However, investors are advised to diversify their investments to protect their portfolios against fluctuations in the value of any asset class.

A Different Class

Adding gold to a portfolio introduces an entirely different class of asset. Gold is unusual because it is both a commodity and a monetary asset. It is an “effective diversifier” because its performance tends to move independently of other investments and key economic indicators.

Recent independent studies have shown that traditional diversifiers such as bonds and alternative assets often fail during times of market stress or instability. Even a small allocation of gold has been proven to improve significantly the consistency of portfolio performance during both stable and unstable financial periods.

There are six primary reasons why investors should own gold:
  • 1. As a hedge against inflation.
  • 2. As a hedge against a declining dollar (FIAT Currency)
  • 3. As a safe haven in times of geopolitical and financial
  • market instability.
  • 4. As a commodity, based on gold’s supply and demandfundamentals.
  • 5. As a store of value.
  • 6. As a portfolio diversifier.

Signs of Inflationary Storm
Gold is renowned as a hedge against inflation. The most consistent factor determining the price of gold has been inflation: as inflation goes up, the price of gold rises in tandem. Since the end of the Second World War, the five years in which US inflation was at its highest were 1946, 1974, 1975, 1979 and 1980. During those five years, the average real return on stocks, as measured by the Dow, was -12.33%, while the average real return on gold was 130.4%.

Today, a number of factors are conspiring to create the perfect inflationary storm: extremely stimulative monetary policy, major tax cut, long-term decline in the dollar, a spike in oil prices, a mammoth trade deficit, and the US’ status as the world’s biggest debtor nation. Almost across the board, commodity prices are up despite the short-term absence of a weakening dollar, which is often viewed as the principal reason for stronger commodity prices.

Weakening Dollar
Gold is bought and sold in US dollars. So any decline in the value of the dollar causes the price of gold to rise. The US dollar is the world’s reserve currency – the primary medium for international transactions, the principal store of value for savings, the currency in which the worth of commodities and equities is calculated, and the currency primarily held as reserves by the world’s central banks. However, now that it has been stripped of its gold backing, international banks and countries are reviewing their currency reserve options.

As Safe Haven
Despite the fact that the US is the world’s only remaining superpower, there are a myriad of problems festering around the world, any one of which could erupt with little warning. Gold has often been called the “crisis
commodity” because it tends to outperform other
investments during periods of world tensions. The very same factors that cause other investments to suffer cause the price of gold to rise. A bad economy can sink poorly-run banks. Bad banks can sink an entire economy. And, perhaps most importantly to the rest of the world, the integration of the global economy has made it possible for banking and economic failures to destabilise the world economy. As banking crises occur, the public begins to distrust paper assets and turns to gold as a safe haven.

When all else fails, governments rescue themselves with the printing press, making their currency worth less and gold worth more. Gold has always risen the most when confidence in government is at its lowest.
Supply and Demand
First, demand is outpacing supply across the board. Gold production is declining; copper production is declining; the production of lead and other metals is declining. It is very difficult to open new mines when the whole process takes about seven years on average, making it hard to address the supply issue quickly. Gold output in South Africa, the world’s largest gold producer, fell to its lowest level since 1931 this past year as the rand’s gains prompted Harmony Gold Mining Co. and rivals to close mines despite 16-year highs in gold prices.

India is the biggest consumer of gold in the world. China has the fastest-growing economy in modern history. Both India and China are in the process of liberalising laws relating to the import and sale of gold in ways that will facilitate gold purchases on a mammoth scale. In particular, China’s economy – growing at 9% a year – is expected to become the second largest in the world by 2020, behind only the US.

Store of Value
One major reason that investors look to gold as an asset class is because it will always have intrinsic value. Gold will not get lost in an accounting scandal or a market collapse. Historically, gold has proven to be an effective preserver of wealth. It has also proven to be a safe haven in times of economic and social instability. In a period of a long bull run in equities, with low inflation and relative stability in foreign exchange markets, it is tempting for investors to expect continual high rates of return on investments. Sometimes, it takes a period of falling stock prices and market turmoil for the mind to focus on the fact that it may be important to invest part of one’s portfolio in an asset that will at least hold its value.

Portfolio Diversifier
The most effective way to diversify your portfolio and protect wealth generated from the stock and financial markets is to invest in assets that are negatively correlated with those markets. Gold is the ideal diversifier for a stock portfolio, simply because it is among the most negatively correlated assets to stocks.

Why Public Gold?
Public Gold provides an integrated range of gold trading activities, including minting and refining gold, managing gold exchange and trading centre, and offering safe facilities to the public. Not only that, Public Gold also trades gold dinar and dirham – the Islamic trade currency that enables Muslims to capitalise and save or pay their zakat with gold as a method of payment.

The name “Public Gold” is derived from Ng’s belief that the public should be given equal opportunity to own gold, for gold is stable and can be used as an international exchange medium.

Public Gold has made it to The Malaysia Book of Records as the first Malaysian corporate company to produce certified gold and silver bullion bars locally. To further enhance its quality, Public Gold engaged an independent assaying facility to conduct testing and certification of gold products to ensure consistency in high standards of gold purity. Not only that, Public Gold has also attained clearance letters from the Monetary Authority of Singapore to further strengthen the physical precious metals business and enable the company to legally mint and trade in gold, in particular gold bars and gold coins. Amongst the products offered by Public Gold are gold bullion bars, gold coins, gold dinar coins, silver bullion bars, dirham and jewellery.

In a nutshell:
  • 1. First locally manufactured certified gold and silver bullion bars (The Malaysia Book of Records).
  • 2. Minimal margin spread between buying and selling price.
  • 3. 24-hour online booking system (first in Malaysia).
  • 4. 24-hour live price online (www.publicgold.com.my).
  • 5. Guaranteed by bank (even scratched or bent).
  • 6. Branches throughout Malaysia (18 branches across Malaysia)
  • 7. All products certified by qualified assayer.
  • 8. Recipient of various internationally recognised awards.

Public Gold has very clear product specification details on its website (www.publicgold.com.my). The product range includes Gold Bars, Silver Bars, Gold Coins, Dinar, Dirham, Jewellery i-Series and D-Series. Investors can visit the various branches nationwide to enquire or contact dealers for live spot selling price in ringgit. Investors can also register and log in to the Public Gold website to make online orders.

Word of Caution

Ng rounded off the interview with a word of caution to investors on fraudulent investment schemes that promised high monthly returns for deposits in gold investment activities. He pointed out that Bank Negara Malaysia had begun investigation of companies which came under suspicion of conducting illegal deposit-taking and money-laundering activities.
**(Note: Check Bank Negara Website for list of companies that are under investigation)


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