Options for short-term plays to tempt the still willing punter
Although the case for investing in gold is weak, there are always tactical reasons for having a punt, possibly in times like these, when investing in equity markets remains highly volatile without firm direction and the alternatives offer insubstantial returns.
So, what is the best way of making a gold investment? Most personal investors will be daunted by the cost and storage implications of buying gold bullion but may be attracted to gold coins that are issued by countries and sold by banks.
There is, however, no need to take physical delivery of gold, and Hong Kong banks are happy to open gold accounts for customers. This means online trading is available, which adds to convenience.
Nowadays, many smaller investors are attracted to exchange traded funds (ETFs), which offer exposure to the gold market by mirroring prevailing gold prices and are backed by physical gold holdings.
ETFs offer small investors the chance to purchase modest amounts. The world's biggest gold ETF, SPDR Gold Trust, is listed in Hong Kong.
Those of a more adventurous disposition will probably be attracted to gold futures contracts, which will be launched in Hong Kong by the Mercantile Exchange at the end of the year but can be accessed now via major US markets and are traded in India and Dubai. Gold options and warrants are also a possibility for sophisticated market players; however, this is very much a buyer-beware form of investment requiring some basic knowledge of metals trading.
Another way of getting into the gold market is to buy shares in gold mining companies, an alternative to direct investment in gold that offers both dividends, the possibility of merger and acquisition activity and, in some ways, a leveraged investment in gold that does not require the investor to perform any leveraging on their own account.
The Hong Kong stock exchange has a number of gold miners, notably Sino Gold, which has its main listing in Australia, and more recently Real Gold Mining.
The hesitant investor might prefer a more diversified option offered by funds such as BlackRock World Gold Fund, covering a wide range of gold companies on every continent.
All these options should not be considered 'buy and put away' investments but short-term, opportunist plays that are attractive given current market conditions.
