Gold Premium Currency Investment

Benefits

Set the Target

conversion rate

Attractive Interest

rates you can enjoy

Availability of Short

tenors

Investment Features

What is a Gold PCI?

A PCI is a structure or customised investment product linked to USD paired with Gold (XAU). The tenor of this PCI can range from one week to three months with minimum investment amount of SGD30,000.

All you have to do:

Choose a base currency to pair against gold (XAU); it can be AUD, USD or SGD

Agree on a Target Conversion Rate (TCR) to be applied between the XAU-Currency Pair
Decide on your placement tenure

On maturity, you will get both the principal and coupon in either the base currency or XAU, depending on the exchange rate as compared to your chosen TCR.
This investment is ideal for you when

You wish to enjoy higher potential interest in either the base currency or XAU potentially above fixed deposit rates
Take advantage of gold strengthening against your currency deposit, which you can earn interest from
You seek superior real-time pricing, flexibility of tenor and control over your investments
You don’t mind holding on to gold when the XAU price declines below the TCR

On maturity, you will get both the principal and coupon in either the base currency / commodity, depending on the USD/Gold rate as compared to your chosen TCR.

Who is it for?

Gold Premium Currency Investment is suitable for investors who:

Seek higher rates on funds
Don’t mind receiving payment in the form of gold
Feel that the USD will weaken, so higher interest earned may buffer against the fall in the currency’s value.

What are the benefits?

You stand to gain from interest rates considerably higher than that of conventional deposits.
You can set the target conversion rate at a level that you are comfortable with.
Besides SGD, you can also choose to invest in other base currency from the major currencies e.g. AUD, USD.
You can start investing with a minimum deposit of SGD30,000, while larger amounts can be placed for tenors of just one week.

All you have to do is:

Decide on the placement tenor and base currency to invest in
Agree on a target conversion rate to be applied between gold and the base currency

At maturity, you will get back both your principal and the interest in either the base currency or gold, depending on whether there is any conversion.

Details

With a Commodity Linked Premium Currency Investment linked to gold, you can enjoy the potential benefits associated with gold because:

Gold is a precious metal that typically maintains its value during times of economic and market uncertainty
The investment can improve your hedge against certain currencies and inflationary pressures
The investment helps diversify your investment portfolio

What are your available options if you are repaid in gold?

You can:

Hold on to it and wait for gold to appreciate in value
Enter in another Commodity Linked Premium Currency Investment with gold as your Base Instrument to gain potentially higher returns
Sell it off at the prevailing rate

Show Less

Here is an example:

Let’s assume:

a. You have funds of USD100,000

b. You don’t mind holding on to gold (XAU)

c. The spot price of gold is USD905

You will then:

Agree on a target conversion rate of USD890
Select a tenor of one month
Be informed of the guaranteed interest rate that you will enjoy. In this case, let’s assume it is 10% p.a.

On fixing day, which is two business days before maturity, it will be determined if you’ll be repaid in USD or in gold (XAU).

Scenario 1	Scenario 2
Gold trades at USD910 per troy ounce. As the USD weakens against gold, you’ll get back your principal + interest in USD.	Gold trades at USD880 per troy ounce. As the USD strengthens against gold, you’ll get back your principal + interest in gold.
You therefore receive: USD100,000 + USD833 (i.e. 10% / 12 of 100,000) = USD100,833*	You therefore receive: (100,000 + 833) / 890 = XAU113.30**

* Figure has been rounded to the nearest dollar.

** XAU denotes per troy ounce of gold and XAU figure has been rounded off to the nearest two decimal troy ounces of gold.

Currencies Available

Let’s assume you have funds of SGD100,000 and you don’t mind holding XAU.

Let’s say the Spot Rate between these SGD and XAU is SGD2,500. One possible Target Conversion Rate (TCR) is 2,475, and assuming SGDXAU does not go below 2,475 at fixing date, you will receive interest in SGD.

As you don’t need the funds for the next month, you choose a one-month tenor.

At this stage, we will inform you of the guaranteed interest rate that you will enjoy. In this case, let’s assume it is 7% p.a.

On Fixing Day (two business days before maturity), it will be determined whether your funds plus the guaranteed interest will be repaid in SGD or XAU.

Scenario 1	Scenario 2
Gold trades at SGD2,510 per troy ounce. As the SGD weakens against gold, you’ll get back your principal + interest in SGD.	Gold trades at SGD2,450 per troy ounce. As the SGD strengthens against gold, you’ll get back your principal + interest in gold.
You therefore receive: SGD100,000 + SGD (i.e. 7% / 12 of 100,000)= SGD100,533*	You therefore receive: (100,000 + 533) / 2,450= XAU41.03**

* Figure has been rounded to the nearest dollar.

** XAU denotes per troy ounce of gold and XAU figure has been rounded off to the nearest two decimal troy ounces of gold.

Disclaimer

A Commodity Linked Premium Currency Investment (CPCI) is not a deposit but an investment product. Unlike traditional deposits, a CPCI has an investment element and returns may vary. The returns of a CPCI will be dependant, to at least some extent, on gold prices and on movements in specified currency exchange rates. A wide range of factors may affect the price of gold and currency exchange rates. Investments in gold are subject to price fluctuations which may provide both opportunities and risks. A CPCI involves an option exercisable by the financial institution, which confers on the financial institution the rights to repay the proceeds of the investment at maturity in either the base or alternative instrument, which can then be converted into a currency of your choice. No physical delivery or physical deposit or withdrawal of gold will take place. You should consider carefully whether any gold investment is suitable for you, in view of your investment objectives, financial means and risk profile. Investments in gold are not deposits.

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