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Hong Kong: still the cheapest place to buy gold coins

IMG 2415 300x225 Hong Kong: still the cheapest place to buy gold coinsOctober 4, 2011
Hong Kong

Still a bit bleary eyed from last night’s 12-hour flight from Johannesburg, I decided to walk off the jet lag this afternoon by taking a stroll down Queen’s Road in Hong Kong’s Central district.

If you’ve never been, the streets are lined with banks (and shopping malls), meaning there’s no shortage of places to buy gold. It’s commonplace in Hong Kong for banks to sell gold (same in Singapore, Austria, and many other countries), but what I continually notice here is that premiums over spot are among the lowest in the world.

Now, bear in mind that I just came from South Africa… perhaps the ‘goldest’ of the gold producing nations. I was hard pressed to find too many credible retail outlets in Johannesburg and Cape Town with Krugerrands selling gold for less than an 8% to 10% premium over spot.

Today in Hong Kong at the Bank of China main branch on Queen’s Road, I bought an ‘unsealed’ Maple Leaf (i.e. loose coin) for just 0.5% over spot; I also purchased a ‘sealed’ Maple Leaf (i.e. collector-ready) for an additional $60, or about 4.5% over spot.

IMG 0276 300x225 Hong Kong: still the cheapest place to buy gold coins

The 'sealed' Maple Leaf I purchased at 4.5% over spot; the unsealed go for 0.5%.

 

IMG 0277 300x225 Hong Kong: still the cheapest place to buy gold coins

This is an image of the gold prices that Bank of China was buying and selling at this afternoon. The gold price at the time was about 12,980 HKD.

Funny thing, it wasn’t even the best price in town. You can buy gold for as low as 0.2% over spot (practically a rounding error) in Hong Kong. Unfortunately, just about every bank was out of stock.

This is a special holiday week they call ‘Golden Week’; it’s one of those manufactured holidays that the government uses to encourage domestic consumption. Given the name, a lot of people traditionally scoop up gold bullion… they apparently think it’s lucky to buy gold during Golden Week. Go figure.

Needless to say, the banks start running out of stock and the premiums go up; if I had timed my visit a bit better, I could have gotten a better deal. Such is life.

Now, let’s be clear about something– I didn’t buy this gold as a speculation. I’m not constantly refreshing my screen so that I can run back down to the bank and make a quick profit. You don’t buy something that’s appreciated 10-years in a row and has increased 7-fold in the same period as a speculation.

If you want to speculate, buy ridiculously cheap assets that people hate. Buy things so that people will think you’re crazy for wasting your time… they’ll even get angry. Then let it sit for 5 to 10 years.

Gold isn’t really in that category anymore. Your friends and family probably won’t hold a group intervention session to stop you from buying a few ounces. Gold is not hated… by -most- people.

You know, on my flight to Hong Kong last night, I read an article in the FT entitled “Gold bugs beware– the bubble is finally bursting.” As you could imagine, the article goes on to say that gold’s $300 drop in the last month portends the end of a decade-long bull market in gold.

What a completely naive position. Amazingly enough, the author is a university professor who is responsible for shaping the minds of future business leaders. This fact alone is evidence that gold is not in a bubble.

Look, it’s extremely unlikely, almost impossible that gold could continue to go up year after year after year, as it has over the past decade. Nothing goes up (or down) in a straight line. But gold’s long-term strength is in its value as a currency alternative, not a speculation.

Gold remains one of the only true anti-currencies out there. The concept of a ‘print-at-will’ fiat currency is garbage… and in a way, the world owes a debt of gratitude to Ben Bernanke and the Eurozone for making this point abundantly clear to anyone who is paying attention.

As more people wake up to the unfolding disaster and watch their worthless paper currencies be reduced to British Thermal Units, the long-term prospects of gold make sense; for the foreseeable future, there are simply no liquid, internationally recognized, traditional, politically benign alternatives to paper.

So if you’re out there in the world, consider stopping by Hong Kong to pick up as much gold as you can; the premium savings alone may offset the cost of your trip. And, if you’re a creative, enterprising individual, consider coming to Hong Kong to buy gold for others (at a profit, of course). Start a trend– become the world’s first ‘gold mule’.

About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

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Comments on this entry are closed.

  • http://twitter.com/ryangoesabroad Ryan Goes Abroad

    Gold mule… haha. That’s great. Cheers, Simon.

    • Achanz

      Simon is gold mule?  I seriously don’t think so.

  • Karlmaloneshow

    Not the most accurate story, but the topic is one I really enjoy.  You don’t mention how much they pay to buy your gold.  This is important.  If the banks pay 98% of spot (as they do in UK for example), then buyers will lose a tad bit of that margin when they sell back.  

    Where I live (in USA) I can sometimes buy 1 oz maples for $30 over spot.  Usually it’s $50 over.  It depends on prevailing supply issues.  On the sell-side, a local shop always pays me $15 over spot for maples.  I bet that’s better than HK.

    Also, traveling with gold is a great way to save yourself a bit of money, and take away from banks.  For example, I travel to Thailand on a regular basis.  Rather than take $3000 in paper money to exchange in Bangkok, I take some gold coins.   I know of a shop that gives me 100% of the current gold price, in Thai baht.  I’ve studied the conversion, and it’s always exact.  If I exchange paper money, the bank gets at least 1% commission.  If I use debit cards, there are fees that take more than 1%.

    Gold is a great travel companion.  I don’t think Hong Kong has any great advantage though, as a buying destination, if you study your local market you can likely find a seller that will give the same deal or something very similar.

  • http://www.accessoriesformen.net/html/suits_in_hk.html Chuck B.

    I’m off to HK next month to plant a banking flag. I’ll be checking out Singapore & KL too.  

    Simon, what’s your opinion on the long term potential of the new developments happening in Johor Bahru, Malaysia across from Singapore?

  • Ed

    Do you have to pay “duty” on that gold when you leave Hong Kong or enter another country?

  • jayson

    Chinese buyers like coins to be “new” and sealed in the plastic.  The unsealed coin was cheap because nobody wanted it for the holiday. 

    You can easily buy maples at spot+$40 in rolls of 20 coins from the US dealer Tulving.com (free shipping included).  No need to fly to HK, you can be a “mule” with just a few mouse clicks.

    • Achanz

      Not necessarily so, as long as the coin is unscratched with no foreign marks on it Chinese buyers will pay premium price after burn test is past.  What’s the point of buying gold at low premium if you keep it at home with great chance of confiscation?  Why do you think politicians needs to stay at  war? (7 wars so far) They have “war” power to ask you to sacrifice your derrière! Who will be the mule then?

  • http://twitter.com/enderbea ender Bean

    How do you know that it is real gold and not tungsten etc?
    so many scams with even clothings, cosmetics,etc

    • Achanz

      Funny thing you mentioned that… the only half tungsten gold  found was in the shipment to China from Fort Knox.  Chinese and British inspectors discovered it in a London warehouse during transit inspection.

  • Nepoznati

    Do you leave your gold coins at some safe in Hong Kong, buried it in ground, or brig it with you some where ?

    • ismail

      i need to buy gold is ther gld in market at cheapest price

  • Gautam Swami
  • Achanz

    You can get great deals in Hong Kong if you know where to go.  However, I have not found any banks or goldsmiths in Hong Kong who will buy gold at spot price + 2% premium yet. 
    The important thing on buying gold in Hong Kong is to keep it offshore.  China (mainland) is the safest place to keep your gold.  Government there don’t want your gold; however, they’ll buy it from you if you want via their government owned banks such as Bank of China as Simon has purchased his Maple Leaf.
    Obama requested to place a criminal office at the Beijing Embassy with President Hu Jintao when he last visited China and all he got was a smile… Never. Now if you still don’t think China is safe then you should just keep your gold in Bank of America’s safe deposit box then kiss it good bye.

  • http://Carl1.goldfromkb.com Carl F Westminster

    Another relatively new to the US gold purchasing company is KB gold, based in Europe for 17 years now and going strong.  For those investors or just for citizens to purchase gold in increments of one gram, certified Swiss gold 999.9, the price is truly remarkable.  KB Gold is the exclusive marketer of incremental units of gold bullion of 1gram and up, the gold is imbedded in credit card sized plastic with serialized numbers and a hologram certifying it by the Swiss government. The best feature is that these small bullion cards are so easily transported on your person and is use in Europe as currency and anyone can now afford gold in these increments vice buying in tenth ounces as is currently available.  It’s where I buy my gold at and it’s shipped right to my front door with a nominal shipping fee.  It’s one of the best deals I’ve found thus far.

  • Achanz

    Hello Carl,
    KB gold is a MLM operation.  Are you an independent distributor?  Will you share your experience dealing with KB Vision. 

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