Category Archives: Investment

Postal Stamps: A long forgotten treasure

It had been years since I had looked at my stamp collection and while on vacation this year I wanted to spend some time ensuring that the stamps were still there and in good condition.

Collecting stamps was a childhood hobby and maybe something that was passed down the family (at-least in my case) – my Grandfather, Father, Uncle had all all indulged in stamps at some point or the other in their lives. As a kid I always wanted to have all stamps from all countries and felt the collection I had was not big enough – in retrospect I could nor be more wrong.

So on the second day of my holidays I pulled out the case with all my stamps.I must say it was pretty heavy (much heavier than what I had imagined) – There were many albums filled with stamps, first day covers, miniature sheets, postcards and various other postal items. There were stamps from Russia, China, America, Britain, Hungary and of-course India. Browsing through the collection I felt like a little kid who has been left in a candy store – everything was so pretty and brought back memories of childhood.

Having some time on hand I decided to catalogue the collection for future reference and started with the slow process of noting everything on a spreadsheet. The real challenge was to keep myself focused and not get carried away admiring the stamps. After many hours I had finally listed all the indian stamp sheets that I had and this was just a small portion of the overall collection.There were quite a few stamps of which I had more than one sheet and out of curiosity I thought of why not selling off the extra stuff to buy more stamps (once a collector, always a collector).

So here I was checking the listed prices of my extra stamps on auction sites – and what I saw was nothing short of complete amazement!!

Most stamps had shot through the roof and were selling at 50-100 times the face value.

It was hard to believe what I was seeing and initially I just brushed it aside as people ask crazy prices, but having seen the valuations I had to dig around a little more – after all, this could be a lot of money and what I found left me wide eyed. The prices I was seeing were transacted prices.

The stamp sheet from my collection that had appreciated the most were from 2003 – Aero India and Temple Architecture of India

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The temple architecture sheetlet set had 5 sheets which I had bought for Rs.80 each (~1.25USD) and they now commanded a price of Rs.10,000 each (~165USD) a massive 132 times appreciation in 10 years – yielding me a 55% annualised return.

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Similarly the Aero India sheet set o 4 sheets with a face value of Rs.600 (~USD10) was valued at Rs.40,000 (~670) an annualized return of 40%

Just as with China the valuation of Indian collectibles increased with the general growth in the country. I also found an old stamp from China which was valued at $50 in the international market and was again baffled to see that one could get upto USD 3000 for the same stamp in Mint condition (unfortunately mine was cancelled and used)

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Having looked at the valuation of some parts of my collection I am all re-convinced about stamps as an alternate investment. As with any investment there are risks and for stamps the 2 biggest risks are lack of liquidity and risk of destruction – after all they are delicate pretty thing on paper.

Next I had a look at some coins and they took me on another roller coaster ride of awe and disbelief, but that is for another post..,

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Low Risk Funds holding good in a falling bond market

 

Time flies and it’s over 10 months since we talked about the Low risk funds in Singapore – Good returns with Low Risk Funds. A lot has happened in the market since then with the talks of Fed tapering QE being the biggest news causing sell off in the Emerging Markets and Bonds.

However the funds that I talked about earlier in the year have been holding well with the exception of the Lion Global Singapore Fixed Income A fund.

Fund Returns

The fund has slipped in red for the 10 month period. The NAV has dropped by 1.49% but has paid off equivalent amount in interest/ dividends and is net flat.

The United SGD fund has been doing very well and is up 3.25% year to date, Fullerton and Nikko follow closely behind. In the coming year this strategy might still work as Singapore Dollar remains stable. I will be looking to re-balance my portfolio soon and will share some new ideas shortly.

Falling Gold and its YTD Performance in Different Currencies

Gold and Silver have been on a steady decline this year and having lost 17% and 25% respectively in USD terms got me curious to find out if there was any country where the value of these metals increased in the local currency terms.

After some research and marrying the Exchange Rates to the price of Gold and Silver at various points in time I got the below table ready…45 Currencies to look at :).

Gold Silver performance

I did not really find any country where the value had increased but Japan came very close to parity. Gold has lost only 2% value when measured in JPY. Given the massive weakness in JPY over the past few months the gold value has been able to off set the losses when measured in yen terms.

The second closest country was South Afria which has experienced similar currency weakness but not as large as the yen.

On the other extreme are countries like Mexico, China, Thailand and Malaysia where strengthning local currency and growth prospects of economy have aggrevated the losses for those holding gold or silver. Gold is down 22% in Mexican peso terms and 19% when measured in Yuan.

The stark contrast between Japan and Mexico does highlight how Gold and Silver could act as store of wealth when countries go through or are expected to go through inflationary periods or there is a general run on the currency.

Now you would be wondering what is my view on the metals?

Well i treat them as any other investment avenue and continue to have my exposure to these through collectible coins 🙂

Over 5% annualised return with Low Risk Funds in 3 months

Close to 3 months since I first talked about the Low Risk funds that are liquid and generate good returns in my post – Good returns and Low Risks with Funds that Invest in Singapore Bonds and its great to see that 2 funds have generated over 5% annualised returns in 90 days.

United SGD Fund and Fullerton Short Term Int Rt have gained 1.44% and 1.18% in this period clocking annualised gains of over 6% and 5% annually.

Fund Performance 3 months

My personal favourite Nikko AM has lagged behind at 2.64% annualised but still much better returns than a bank deposit, Though I must say that mid way I did re-allocate some money to United SGD and Fullerton Funds when the SGD crossed the 1.25 mark against the USD.

I have noticed that these funds generate better returns when SGD is strengthening. Looking at the returns in past 3 months I am going to re-balance my portfolio and move some money from US Equities to these funds before the “Sell in May, Go away” phenomenon hits the wall street. Till then enjoy the gains 🙂

 

Is Bullion really a store of wealth and hedge against inflation?

I hear it all the times that Gold and Silver are a hedge against inflation but they do not always maintain purchasing power…a very simple example would be comparing mcdonalds Burgers in various years with price of silver:

1955 Hamburger 15 cents, Silver 1 USD per ounce

1967 Hamburger 18 cents, Silver 3 USD per oune

1979 Hamburgers 43 cents, Silver 30-40USD per ounce

1995 Big Mac hamburger $1.99, Silver 4.4~6 USD per ounce

2002 Double cheeseburgers $1.00, Silver 4.25~5.1 USD per ounce

2013 Mcdouble cheeseburgers 99 US cents, Silver 29.95~33.5 USD per ounce

Interesting to note that while price of Burger rose from 43 cents to 1.99$ an increase of 5 times, the silver value fell from 35(average) to 4.75 USD.

If one could buy 81 Hamburgers using an ounce of Silver in 1979 the same one ounce of silver fetched only 5 burgers in 2002.

There was no period of negative inflation between 1979 to 2002 to warrant a reduction in Silver price based on the theory that bullion is hedge for inflation.

I have used Mc for the comparison as BigMC index is a commonly used index for estimating cost of living across various countries. There could be asset classes that could throw a different result and compounded with Exchange rates the results would differ for different countries.

Would be great if you could contribute similar data in comments and lets see if the hypothesis holds good?

Good returns and Low Risks with Funds that Invest in Singapore Bonds

With the low-interest rates in most of the developed economies in the world the bank deposits tend to yield low returns. Singapore is no different and one could get as low as .25% interest on Savings Bank accounts. Fixed deposits do slightly better and could yield up to 1.68% p.a.

This clearly is less than the inflation that the country experiences, below are a few funds that invest in short dated Singapore government bonds and have yields good enough to cover inflation.

As these funds invest in Singapore Bonds they carry relatively low risk. of course they are not as safe as a Bank deposit but the yields are favorable given the risk-reward ratio.

Fund Info

Lion Global Singapore Fixed Income fund has the lowest risk and yielded a positive return even in 2008 (during the financial turmoil). On the other hand United SGD fund gives occasional stellar returns like that in 2009 and 2012 yet still remaining largely in positive territory.

Nikko AM fund has managed to beat inflation in most years and is the one I prefer.

Investing in Collectible coins

Its been almost a year since I wrote about investing in coins – Investment of a different Kind Buy collectible coins.

Gold and Silver prices have sea-sawed in this timeframe. We saw Gold hitting lows of 1536 and highs of 1794 whereas Silver went to highs of 37.14 and lows of 26.35.

But what happened to the value of coins?

The Bullion category like – American Silver Eagles, Austrian Phila and Canadian Maple leaves have moved slong with the silver price. However the Australian Mint – Kookaburras and Lunar Series, Chinese Pandas and Canadian wildlife series have shown reaonable appreciation.

The 2012 Lunar Dragon 1 oz Silver coin that was launched at SGD$60 a piece now sells for SGD$75 or more (25% appreciation)

The 2012 1 oz silver Panda moved from SGD$53 to SGD$60 (13% appreciation)

Canadian Wildlife Wolf 1 oz silver that was selling for SGD60 in the last year now retails for over SGD90 – a whooping 50% increase.

Silver however has remained flat year over year (One could have bought these coins for cheaper when  the silver price fell to 26-27USD).

So which coins am I looking to invest in for the next year?

Australian Lunar series and Kookaburra is a favorite, 2013 is the year of the snake and mintage remains at only 300,000 pieces. Kookaburra mintage however has been increased to 1,000,000 pieces from 500,000 for 2012.

Canadian Wildlife series – Antelope – mintage of 1,000,000 and 5th coin in the series. Only one more coin to come

Somalia Elephants – These are my new favorites. The finish is proof like (shiny back surface) and mintage only 5000 coins, These coins have been around for a few years but have only caught on now. The past years have appreciated substantially and difficult o find. years 2011, 2012 and 2013 are still available at a reasonable price

Rwanda Wildlife – These are great coins with a mintage of 5000 pieces as well, Just like the Somalia Elephants the past years are hard to find. The 2013 Cheetah is already becoming difficult to buy and 2012 Rhino is in great demand. Previous years like Gorilla and lion retail for over 250SGD.

What I also like about Rwanda and Somalia coins is that these are minted in germany and have excellent quality. With the wealth of these nations rising in next decade or so the appreciation of older coins from these countries is bound to increase.

2013 Gold and Silver price prediction by Leading Banks

Just a quick consolidation of what leading banks are predicting for Gold and Silver in 2013. The table has been left blank where information could not be found.

2013 Forecast

The forecasts for 2012 can be found at the link –

Gold – http://www.lbma.org.uk/pages/index.cfm?page_id=142

Silver – http://www.lbma.org.uk/pages/index.cfm?page_id=142

The general consensus was for Gold to breach USD2000 and silver to stay above USD44 – neither of which has happened. Would be interesting to see if Gold and Silver can cross $2000 and $40 respectively this year.

The Fall and Rise of Indian Rupee: 45 days to lows, 45 to recovery

What a roller coaster ride the past 3 months have been!

The rupee was trading at 48.6 against in the US dollar on 31st Oct 2011 and precipitated to touch 53.70 on 15 Dec 2011, a 10% drop. These were the historic lows for the currency and with RBI’s policy changes the rate as I write is 50 against the dollar with RBI reducing the CRR rate and rupee gaining 7% from the lows.

Inflation, falling growth numbers, uncertainity in Europe (which by the way still exists) and political roadblocks to financial reform were stated as the reasons for the weakness. All the reasons held resposible for rupees weakness are still there. Yes, inflation has eased a bit but thats pretty much the only change.

Among numerous suggestions aired to aid the rupee was for RBI to conduct open market purchases in style of Indonesian Central bank which burnt 8-9% of its foreign reserves to stabilise the rupiah. RBI however refrained and relaxed rules to make term deposits attractive for Non Residents Indians – and NRI’s did bring in money into India.

Lets see how has rupee faired against the other currencies in the past 90 days

Surprised – right!! You did not expect to see these numbers, neither did I.

Interestingly after 3 months the INR has returned back to almost where it started against all major currencies and even managed a small gain against GBP and EUR

Against the USD the losses are paltry 2.6% which is close to long term volatility number. JPY on the other hand does come up as unexpected top winner against the Rupee with gains of 3.4%, but the real numbers are the ones shown in the last column.

Extreme volatility is what the data screams – with rupee having lost over 10% against USD and JPY and over 5% against the other pairs.

Question now would be are we expecting another such bout of swings in the market?

I would say unlikely unless a sovereign default event happens.

and how about the direction of Rupee?

I am putting my money on a stable to moderately strong outlook. The RBI has held the repo rates, the CRR ratio has come down and with a weakened currency there should be a a bigger impetus on exports which should all be Rupee positive. However the political instability and global financial turmoil could more than negate any positive factors so 49 – 51 against the USD is what I would  be looking at till end of 1st quarter.