PRECIOUS METAL APPEAL: Among the options are gold coins, gold wafers, gold bars and gold investment accounts as well as exchange traded funds

WARS have been fought for it; and love has been declared with it. That is the appeal of the luminous precious metal, gold.

The Incas referred to the elusive metal as the "tears of the Sun", while in ancient Egypt, gold was considered the skin or flesh of the gods.

The glittering metal, which is extremely scarce, has been traded for thousands of years.

In Malaysia, there are gold reserves within the Eastern Gold Belt, covering Kelantan, Terengganu and Pahang, as well as in Sabah and Sarawak.

Last month, the short-lived excitement of Kampung Melayu Majidee residents in digging for gold indicated that all that glitters is not gold.

The "gold nuggets" found in the predominantly Malay settlement area in Johor were actually iron pyrite, or "fool's gold".

Although the gold rush in Kampung Melayu Majidee did not turn into a large-scale gold race as in Lubuk Mandi, Rusila (Terengganu) in 1988, bright prospects of gold mining awaiting large foreign gold miners.

Gold, due to its intrinsic value, is used as a hedge against inflation and economic uncertainty. More people are resorting to gold as an investment, especially with the gloomy outlook in the US, Europe and Japan this year and next.

The demand for gold is also fuelled by the depreciation of the greenback, which is fiat money or a currency that is not backed by a physical commodity.

Many central banks now are net buying gold, while China has eased restrictions on gold purchases, which pushes up the country's gold demand.

Locally, everybody recognises the value of gold but not all look at it as a precious commodity or as an alternative investment to stocks, property, fixed deposits, or even unit trusts.

Gold offers more liquidity and unlike property investment, it does not involve a large sum of money or having to go through legal process and filling various forms.

Between 2005 and May 2010, the price of gold has increased from US$416.27 an ounce to US$1,200 an ounce. This represents a 188.3 per cent increase, or an average of 37.66 per cent rise a year.

Meanwhile, the 2001-2010 (May) period saw gold price rose from US$255.95 per ounce to US$1,200 an ounce, representing a growth rate of 369 per cent, or an average of 36.9 per cent a year.

However, if you are interested in buying gold, do some digging before investing. You need to know how much gold to buy, in what form, at what price, and from whom.

Among the options are gold coins, gold wafers, gold bars and gold investment accounts as well as exchange traded funds, gold futures or stocks.

In Malaysia, there are gold bullion coins, the Kijang Emas issued by Bank Negara Malaysia and the Kelantan gold dinar.

Jewellers also sell non-jewelry gold, but make sure that it comes with a certificate.

Islamic banks like AlRajhi Bank and Kuwait Finance House are also offering gold products.

For those who don't want to keep the physical gold, they can open gold investment accounts at Maybank and Public Bank.

Most Malaysians are also unaware that silver is another precious metal that generates high returns.

In bull market of precious metals, silver turns in greater percentage gains than gold as it outperforms gold. What makes silver shinier is the huge and growing industrial demand for silver.

In January this year, gold has ended the month with a gain of more than 10 per cent, while silver was up 21.5 per cent.

In fact, silver's January gain has outperformed the Dow's 2011 performance. It also outperformed last year's gains in the Nasdaq and S&P 500.

Metal is expected to perform well in the Year of Dragon - a good news for gold and silver enthusiasts.