Holding gold in a company structure, often through investment vehicles like family offices (FOs) or other business entities, can offer several advantages and may align with specific investment objectives and strategies.
Below, we are listing some reasons why individuals or corporations may choose to hold gold in a company structure:
Financial Benefits
Diversification: Gold provides diversification within an investment portfolio. Holding gold in a company, allows shareholders to gain exposure to the precious metal without the need for physical ownership. Diversification can help manage risk by reducing the impact of poor performance in a specific business line or asset class.
Liquidity: Physical gold is generally highly liquid. Investors can easily buy or sell via licensed dealers, providing a level of liquidity that may not be as readily available with other asset types (i.e crypto).
Cost-Efficiency: Holding gold in a company can be cost-efficient when purchasing and storing physical gold from a country like Singapore. Investors can enjoy the low spreads between buying and selling prices that exist in the physical gold market.
Accessibility: Gold ETFs and similar investment options make it easier for investors to access the gold market. Investors can buy and sell shares through brokerage accounts, providing a more accessible entry point to gold investing.
Practical Benefits
Transparency: Holding gold in a company offers transparency into such holdings. Shareholders can often track the performance of the underlying gold assets in real-time. They do that by using digital platforms provided by licensed dealers. They can also see the value of the assets when viewing company financial statements, enabling informed decision-making.
Ease of Management: Holding gold in a company managed by licensed dealers eliminates security concerns associated with owning physical gold. This can be especially advantageous for investors who prefer a more hands-off approach to managing their gold investments.
Dividends or Income Generation: Some gold-related hedging strategies, such as those involving derivatives like futures and options, may offer dividends or income streams. This feature can be attractive for investors looking not only for potential capital appreciation but also for price protection and income generation.
Speculative Opportunities: Investors may choose to hold other gold-related assets within a company to participate in speculative opportunities tied to the gold market. For example, investing in gold mining stocks may offer leverage to potential increases in the price of gold.
Tax Efficiency: In a location like Singapore, holding gold in a company provides tax advantages and is subjected to specific tax treatments that could be beneficial for the investor.
Conclusion
It’s important to note that while holding gold in a company offers certain advantages, it also comes with its own set of risks and considerations. Investors should carefully assess their investment goals, risk tolerance, and the specific characteristics of the investment vehicle they choose. Additionally, market conditions and regulations may vary, so seeking professional financial advice is advisable.
If you wanted to learn how to hold gold in a company structure, reach out to our team of professionals in the precious metals industry and they will guide you through the whole process.
