The MAS has cautioned against schemes investing in gold, as a Singaporean-based gold-trading company is reportedly being investigated for misconduct.

The Monetary Authority of Singapore has cautioned against investing in physical assets like gold, as a reportedly bankrupt gold investment firm is undergoing investigation by the government. 

The Singaporean deputy prime minister was asked in parliament about the validity of gold investment schemes, namely: "whether the ministry regulates the activities of companies that promote
investment in gold and other precious metals to the public, whether
the ministry is aware of companies that are actively promoting the
investment of precious metals in public areas, and whether the ministry is aware that these companies are aggressively recruiting 'agents' and offering them upfront commissions for projected sales."

The question may have been referring to Genneva, a reportedly bankrupt gold trading company offering gold buy-back schemes, which is currently under investigation by the Commercial Affairs Department. According to media, the Commercial Affairs Department raided the Singapore offices of the firm on 1 October after it declared itself insolvent and refused to return funds to investors.

In response, Tharman Shanmugaratnam, deputy prime minister and head ofMAS, said: "MAS does not regulate schemes that involve investors acquiring direct
ownership of physical assets, such as property, gold, art or wine."

He added: "If there is evidence of fraud or other breaches of the law, CAD will take firm and appropriate action."

He underlined that the gold buy-back schemes enquired about, are not regulated by MAS. But regardless of whether these activities are regulated, schemes that claim to provide high returns with seemingly low risk will crop up from time to time.

"In the current low interest rate environment, people may indeed be more easily tempted to put their money into them. But there is a lot of sense in the old investment adage:  if an investment looks too good to be true, it is probably not true," he warned.

"I therefore urge Singaporeans to exercise great care and vigilance before committing themselves to any investment scheme that claims to give high returns."

He advised that retail investors should deal only with firms regulated by MAS, such as banks, insurance companies, licensed financial advisers and brokers. Regulated firms are subjected to prudential requirements which provide financial safeguards and required to comply with  market conduct rules which guard against mis-selling, he reasoned.

Retail investors should consider how the returns in any investment scheme are generated, Shanmugaratnam added, and should ask lots of questions.

"Unless one is very knowledgeable about the product and understands and is willing to take the risks, it is better not to get involved in any scheme that offers very high returns. High returns are only possible with high investment risk. In some instances, they may also be fraudulent," he cautioned.

Through MoneySENSE, the national financial education programme, MAS has highlighted the risks of unregulated schemes such as gold buy-back schemes, and  the pitfalls of dealing with unregulated entities. More generally, MoneySENSE has repeatedly emphasised the need to exercise extra caution when consumers receive offers that seem too good to be true.