If you had invested in gold a decade ago, the value of your investment would now have increased by a substantial 82 percent.
If you had chosen to put that cash in the bank instead, then you would have actually lost money. People in the Philippines, Vietnam, and Indonesia suffer from negative real returns due to spiking inflation and taxes. Folks in Malaysia and Japan fare slightly better – their banks will give them an annual return of approximately 0.5 percent.
Malaysian entrepreneur Robin Lee started HelloGold to help households prepare for retirement and make it easier to secure loans.
He noticed how high net worth individuals used gold to hedge risks.
The fintech startup democratizes access to gold purchases. People can buy nuggets from as little as US$0.22 (1 Malaysian ringgit) through the app. That’s significantly cheaper than banks or gold merchants that demand people buy in increments of an entire gram, or more.
Gold is now at US$39.81 per gram.
Robin says the idea for the app came to him during his previous stint as the CFO at the World Gold Council, a consortium of some of the world’s leading gold mining firms. Part of his role was to oversee the disbursement of a US$30 billion fund. He noticed how corporates and high net worth individuals used gold to enhance returns, hedge risks, and as a form of collateral.
“I believed that HelloGold, in turn, could use these same principles to help mass market consumers,” he says.
All that glitter
HelloGold functions as a hybrid virtual marketplace where consumers can buy and sell gold to one another. It’s also possible to have the physical gold shipped to your address – but the minimum is at least one gram. In this scenario, certain costs will apply – to cover delivery, insurance, and associated premiums.
Robin explains the startup earns money every time a transaction is made on the platform – there’s a two percent commission. Additionally, it also charges a two percent annual maintenance fee.
Ordinary people are far more comfortable with gold than a virtual currency.
It’s possible for consumers to use their existing gold reserves as collateral for loans solicited from HelloGold partners. In that case, Robin’s team will receive a commission from the partner financial institution as well.
All the gold deposits are stored in a vault in Singapore, where they’re insured for loss and theft.
“During the Asian financial crisis of 1997, I saw firsthand how bad things can happen to good people at no fault of their own. The man on the street saw their currencies hit by extreme devaluation […] Someone earning US$1,500 a month woke up one morning earning US$700 instead, with a devastating effect on how he could provide for his family,” explains Robin.
“The inequitable impact of these events […] left a lasting impression on my mind.”
The startup, based in Kuala Lumpur, is still relatively new – it launched in November, so talk about growth is premature. It has a team of 18 people spread across Southeast Asia and Europe and is funded via a US$1 million seed round raised from friends, family, and angel investors.
The math whiz insists it’s a much smarter decision for consumers to buy gold through his team rather than existing merchants and banks.
“The smallest gold coin that a merchant offers is 1 gram – and has an associated premium of up to 40 percent above the prevailing gold price. Hence, the price would have to increase by more than 40 percent before the buyer would break even on his investment. That’s a poor investment decision,” he explains.
Short term plans are to roll out the product into Indonesia, Philippines, Thailand, and China, but Robin says the long-term vision is to be present in emerging markets across Asia and the Middle East.
He believes gold is a safer bet to promote financial inclusion compared to cryptocurrencies like Bitcoin. The underlying principle is the same – finite supply offers a natural hedge to risk and uncertainty – but ordinary people are far more comfortable transacting in gold than a virtual currency.
“With HelloGold, we want everyone to have better access to saving products, affordable financing, and remittances,” smiles Robin.
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