Wars and political instability are prompting wealthy families around the world to move where they store their gold, and Singapore has emerged as the destination of choice for high-net-worth individuals in the U.S., Europe and the Middle East.
Privately held gold in Singapore has risen about 16-fold since 2014, according to estimates by Singapore precious metals dealer J. Rotbart & Co. cited by Bloomberg on the 21st.
Holdings topped 800 metric tons last year, with much of the increase flowing in from Europe. The company expects demand for gold storage to keep rising this year and next.
The influx is filling up Singapore's largest vaults. Le Freeport, a precious metals storage facility known as the Fort Knox of Asia, can hold at least 1,700 tons of gold. In May, it said most of its underground vaults were full after a surge in storage demand.
The Reserve, another large vault operator, is also drawing overseas wealth. Holdings by clients in its gold storage program have tripled from early 2020. As of September this year, the facility held 8.6 tons of gold, roughly 90% of it owned by foreign clients.
"Traditional wealthy families that have stored physical gold in other countries are moving some of it to Singapore. Families that did not previously hold physical gold are also buying through private banks or precious metals dealers and storing it in Singapore," said Manish Tibrewal, co-founder of Singapore multi-family office Farro Capital.
Behind the shift is political and economic uncertainty across the globe. Gold prices have faced downward pressure recently, but interest in the metal as a safe-haven asset remains strong amid inflation concerns, uncertainty over long-term interest rates and central bank purchases.
With wars, geopolitical conflict and worries about government finances added to the mix, where to store gold has become as important a consideration as whether to own it.
"People looking to store gold for 30 to 40 years are generally wealthy and prefer a country with no imminent pension crisis that can defend itself. Singapore is exactly that kind of country," said Gregor Gregersen, founder of The Reserve.
Inquiries from Western investors have risen noticeably as concerns mount over the U.S. fiscal deficit and political uncertainty. Online inquiries from Western clients have tripled over the past year, according to J. Rotbart & Co. The largest number came from the U.S., followed by Canada, Britain and Australia.
Some are turning from Switzerland, long the leading destination for gold storage. About 40% of European clients have either moved part of their Swiss-held gold to Singapore or chosen Singapore for storage when buying new gold, according to precious metals platform Gold.
The Singapore government is building on demand from overseas investors to strengthen its position as Asia's gold trading hub. Singapore Exchange plans to introduce a clearing system for over-the-counter gold trades by the end of this year. The Monetary Authority of Singapore also provides gold storage services for foreign central banks and sovereign wealth institutions.
Tax benefits for qualifying funds and family offices investing in investment-grade physical precious metals have also been expanded.
Private financial firms are moving into the business as well. Nomura International Wealth Management has launched physical gold custody services in Singapore after a rise in requests from overseas clients, including in the Middle East.
Oversea-Chinese Banking Corp. (OCBC) also expanded its physical gold business this year, after gold holdings by clients of its private banking arm, Bank of Singapore, rose more than 40% from the end of last year.