WARREN BUFFETT

Warren Buffett said, gold does not has economic value, you just dig it out, and make it into jeweleries and some industrial usage as well as accepted as "reserve" by central banks and kept into the vaults.  Unlike a business, you can build it from small into huge biz.

Despite what he said, gold, like it or don't like it, in the mind of many (including investors and central bankers) deemed it as a type of assets.  Hence, Warrent Buffett is not a big fan of GOLD.

My view:

For me gold is a comfort "assets" to store value when the fiat money depreciate.  From the perspective of Malaysian investors, it is nothing wrong of keeping gold as an asset class.  

We are here not to debate about whether it is an asset class, but to evaluate, is it worth a while to allocate part of your portfolio into GOLD.  If we compared Ringgit vs Gold (price in USD) over the last 20-30 years, you will realise its CAGR is not bad or even better than FD.

Although I am not a big fan of gold, I do believe, it will shine during a "calamatic" environment.  As you  know, all the QEs, NIRP and HM (helicopter money), has caused a huge divergent between the REAL ECONOMY and the FINANCIAL MARKETS.  Today, the world debt is about 2.5 - 3.0x of world GDP.  It is fine if most of the debt is "productive", but unfortunately you and I know, more than half are "unproductive". 

Hence, with the slower world growth (due to oversupply), and also reduction in purchasing power in most G7 or all the EMs, the realignment will happen sooner or later.  

For those who find it cumbersome to buy physical gold, just buy Bornoil, they own about 380kg of gold in their inventories, worth about RM93,000,000.  Bornoil also own SugarBun's F&B and Pezzo.

OVERVIEW ON BORNOIL (listed on Bursa)

Market cap:  RM411 million (rights issue in Nov 2015 of RM249m)

Businesses:      Gold Mining in Pahang (allocated RM120m)

                          Food and Beverage (mainly in East Malaysia - Sugar Bun and Pezzo - double digit growth)

                          Venturing into Limestone Mining

                          New businesses (allocated RM60m but not identified)

Owner:  Hap Seng Insurance Berhad

This stock is for investor like me who like to have a little exposure to GOLD and USD.  Normally, if anyone is to buy gold, I will ask him to put into the vaults and forget about it untill your children grow up to become adult. So, instead, you can keep this in CDS.

(Disclaimer: This is not a buy, hold or sell recommendations.  It is just a view on GOLD).

WHAT ABOUT OIL?

The stock named Bornoil is pretty misleading.  Same view, may drop to USD20 per barrels (in one or two years time).  Can consider shorting oil.  WIll Malaysia kaput if oil goes to USD20 per barrel?  Not exactly, but the currency will definitely suffer a lot.  However, this is not a prediction that it will stay at USD20 for a long period.  Perhaps only for a couple of weeks before it rebounded.  i know, I know, lots of people will say this is crazy.  I would not like to discuss the detail of this, but I do hope you read the research by Gary Shilling.

SO ARE YOU RUNNING OUT OF IDEAS ON WHERE AND WHAT TO INVEST?

Well, we have two ideas here.  

More investment ideas - i have listed it in sosfinanceplanning.blogspot.com.

Malaysia Debt by Sector

Private sector debt = RM1.58T

Government sector debt = RM0.62T

Total Debt (P + Gov) = RM2.2T

GDP of 2015 = RM1.16T

Total Debt to GDP = 1.9x