Guinness Yue

    RECENTLY, Guiness Yue has been receiving phone calls from Hong Kong investment companies pushing her to buy paper gold.

    Not much can be earned on mainland stock markets or real estate markets now, but if you don’t catch up with the gold markets, you could miss a rare chance to earn a sizable profit, they said.

    Paper gold can be traded just like physical gold and has a lower market entry level — anyone with about 300 yuan can buy one gram of gold at some Chinese banks and start to trade. In China, paper gold can only be purchased at banks.

    One needs a personal identification card and a bank card to open online bank and activate paper gold transaction. The online bank has live bidding and asking prices.

    It is considered a better and cheaper way for anyone trying to make a profit from gold price fluctuations.

    But experts remind investors not to rush into the market when gold prices are already too high. Those interested should first have an understanding of the political and economic factors affecting gold prices, as well as the skill of analyzing gold price trends.

    Physical gold is the most common form of investment and it is considered a better way to protect wealth particularly against dangerous trends.

    Physical gold usually refers to gold bars, coins and jewelry, which are sold by the Shanghai Gold Exchange, banks, gold companies, or jewelry shops. They can be investment gold or souvenir gold featuring the Asian Games, World Expo, or animal signs.

    Prices of investment gold are based on live gold prices on the Shanghai Gold Exchange plus processing costs.

    Experts advise investors to keep in a safe place gold certificates offered by banks or gold companies, otherwise they will not be able to trade what they have bought. Not all physical gold can be traded and investors need to make sure before buying.

    Customers should keep an eye on the color, weight, hardness and certificate of authenticity when buying, and take into consideration transaction fees to secure a higher profit, experts said.

    Most investment analysts agree that gold should constitute less than 20 percent of any diversified portfolio and investors should not have all their eggs in one basket because where gold is headed next is still anyone’s guess.

    Jiang Shu, a gold analyst with the Industrial Bank Co. in Fujian Province, said there had been a common misunderstanding that profits from gold investments were in proportion to gold prices.

    “Most gold investment products are structured financial items and the profits are set in a specified range. So investors may not be able to enjoy all the expected profits during the entire growth of gold prices.”