Buying and Storing Physical Gold in Hong Kong
If you are one of the many people who feel uncertain about the direction of the global economy and stock market, you should be looking for other options to preserve and grow your wealth. Cryptocurrency is obviously one option, but with the high volatility that comes with it, some people may prefer more traditional stores of value. In this article, we will guide you through exactly how you can buy and store physical gold in Hong Kong, widely regarded as one of the best places in the world to buy gold.
Bars, coins, or jewelry?
If you are buying gold as a pure investment, it is always a good idea to buy your gold as close to the gold spot price as you can get. For gold jewelry, there is always a big premium added on top of the gold spot rate to pay for the design, brand, marketing, etc. Traditional gold coins also carry a premium for their fancy design of up to 7% over the spot market value of the gold.
The best way to buy gold for investment purposes is gold bars, big or small, depending on your budget. Generally, the larger gold bar you buy, the lower the premium over the spot price will be.
Where can I buy gold bars in Hong Kong?
I personally consider Hong Kong to be the best location for buying physical gold. It is first of all a nice city to visit if you haven’t been there, prices are low, and the staff you deal with generally speak English.
As you walk down the streets in Hong Kong, you will see gold and jewelry shops on almost every corner. Competition is fierce, and the buy/sell spread on the physical metal is therefore among the smallest you can find anywhere in the world.
In addition to very tight spreads, Hong Kong has no sales tax on gold (or anything else for that matter), keeping the prices you pay as close to the read market rate as possible. And let’s not forget that it is also an excellent place to store your gold once you have purchased it.
While gold smiths and jewelry shops in Hong Kong generally offer much better spreads than in other countries, it is still important that you make sure you don’t pay more than you need to. It is generally recommended to stick to the well-known and reputable shops. Some of the more reputable jewelry shops in Hong Kong are:
- Chow Tai Fook – mostly bars with fancy design available at higher premiums
- Luk Fook – similar to the above
- Chow Sang Sang – cheapest among the jewelry shops, see the list of their up to date buy/sell prices for gold
While these jewelry shops are the easiest and best known places to buy gold in Hong Kong, the most cost effective way is actually to go straight to the bank. In Hong Kong, several banks actually let you buy gold bars and coins directly over the counter, at least at their main branch in the city. The ones that are most often recommended are:
- Hang Seng Bank: Go to their main branch at Des Veoux Rd in Central where they will let you buy physical gold, see the list of their up to date buy/sell prices for gold. UPDATE APR 9, 2018: Hang Seng Bank’s main branch in Central has a desk for buying and selling of gold on floor B2, but as of 2017 this service is only available to Hang Seng Bank’s own customers.
- Bank of China’s main Hong Kong branch in Central also sell physical gold over the counter at good prices.
For a full list of the banks that offer this services, as well as their prices, take a look here.
How should I store my gold?
When it comes to gold storage, there are again many options available. For smaller quantities, you may choose to store your gold in your home. If you happen to have a high quality safe, it may even be totally fine to store larger quantities of gold in your home.
For most of us, however, it is preferred to store gold and other precious metals in a safe location other than your house or apartment. You could choose to bring it back to your home country to keep in in a safety deposit box in your bank, but keep in mind that you may be liable to pay import duties on gold purchased overseas when you bring it across international borders. Each country has different rules pertaining to gold specifically, so make sure to check this first if you want to bring it home with you.
My preferred option however, is to store the gold safely offshore at designated gold storage facilities. Note that this should in most cases not be the same place as you bought the gold, due to risks of default, segregation of your gold from the shop’s own gold, etc. An exception to this would obviously be if you buy your gold in a bank and store it in a safety deposit box in the same bank. In that case you know that your gold is safe and kept separate from other people or the bank’s own gold.
Designated gold storage facilities in Hong Kong will usually charge you about US$75 per year to rent a safety deposit box. Another common way to price it is as a share of your asset value, for example 0.72% of asset value per year.
There is no doubt that Hong Kong, perhaps together with Singapore and Dubai, is one of the best places in the world both to buy and store gold. If this is something you have been thinking about, I recommend taking a trip to check it out for yourself. After all, Hong Kong is a great city that is worth a trip regardless of whether you choose to buy gold there or not. And as we’ve written about previously, why not open a company and bank account while you are there?
Featured image from Valcambi.com