It’s crucial to understand how does spread works before we start investing in precious metals. Spread in short means the margin between the buying and selling price. The formula is as followed:
1 oz of Kijang Emas selling at RM5,060, buying back at RM4,864.
Apply the formula and therefore it’s: (5060 – 4864)/ 4864 x 100 = 4.03%
With that, the spread for 1 oz of Kijang Emas is 4.03%.
The higher the spread translate to the more ‘expensive’ it is to trade with the vendor while the lower the spread is the vice versa. Many of the time, we won’t feel the pinch immediately after purchasing our bullion. This is because most of the time, we don’t sell it back on that day same day that we bought. But if you happened to do that for whatever reason, you will immediately lose out the spread. This is where the vendor makes their profits.
Before I begin, I believes those who bumped to my blog would have at least know a salt pinch on precious metals. If you do not have any idea on precious metals, I would recommend you to watch the following four minutes video. The video will give you a quick 101 crash-course on the importance of investing in precious metals today.
Moving forward, I trust that you too would know precious metals includes not only gold and silver but platinum, palladium, rhodium, mercury and a few others. Aluminum was once a precious metal too when it was more difficult to extract it from ore compared to gold back in 1880s. With that, whenever I refer precious metals or in short, PM, I am specifically referring to Gold and Silver only. For now, I do not have interest in platinum (apart that that’s what my wedding ring was made of) or palladium (to be honest, I have no idea what it does) or titanium (which make a good bicycle frame) or any other precious metals – at least until further notice.
Now, back to the question – why am I writing under investsilvermalaysia.com and not investgoldmalaysia.com. I owned both the domain.
