Singapore Gold Vaults Draw Wealthy Westerners, Holdings Surging 16-Fold

Gold bars weighing 12.5 kilograms sit at Italian precious metals refiner Italpreziosi on Sept. 29. (Yonhap) Privately held gold in Singapore has surged 16-fold over the past decade as wealthy investors from the United States, Europe and the Middle East relocate their physical gold amid spreading geopolitical conflicts, fiscal concerns and political uncertainty. According to Bloomberg on Oct. 21, Singapore-based precious metals dealer J. Rotbart & Co. estimated that privately held gold in Singapore exceeded 800 metric tons last year, about 16 times the level in 2014. A significant portion of the increase came from Europe. The company expects holdings to continue growing through next year, potentially reaching 1,400 metric tons. Major vault operators in Singapore are already struggling to accommodate the influx of demand. Le Freeport, known as “Asia’s Fort Knox,” said in May that most of its underground vault space, with capacity for at least 1,700 metric tons of gold, was nearly full following a sharp increase in storage demand. The Reserve, another major facility, also reported a substantial rise in overseas demand. The amount of gold held for its clients reached 8.6 metric tons, triple the level in early 2020, with overseas customers accounting for about 90% of the holdings. Wealthy investors are turning to Singapore not simply because of gold’s intrinsic value, but because the stability of the jurisdiction where their assets are stored has become a priority. Singapore is considered suitable for storing wealth over periods of 30 to 40 years or longer, thanks to its stable governance, sound fiscal position and strong national defense capabilities. Concerns over the U.S. fiscal deficit and political uncertainty are particularly encouraging wealthy Westerners to diversify their gold storage locations. J. Rotbart & Co. said online inquiries from Western clients, including those in the United States, Canada and the United Kingdom, tripled over the past year. Precious metals platform Gauld said about 40% of its European clients had transferred some of their gold from Switzerland to Singapore. The shift is partly attributed to changing perceptions of Swiss neutrality following Western countries’ freezing of Russian assets. Singapore’s government and financial industry are seeking to capitalize on the trend. The Singapore Exchange plans to introduce a clearing system for over-the-counter gold transactions by the end of this year, while the Monetary Authority of Singapore provides gold custody services for foreign central banks and other institutions. Tax incentives for funds investing in physical precious metals have also been expanded. Major financial institutions, including Nomura International Asset Management and Oversea-Chinese Banking Corp. (OCBC), are strengthening their physical gold custody and related businesses to meet rising demand from wealthy clients.