Is it Better to Buy Gold in Singapore?
Commodities / Gold and Silver 2012 Nov 15, 2012 - 09:28 AM GMTBy: Jan_Skoyles
Switzerland is a traditional investment safe-haven, however in a recent survey we found that when it comes to gold bullion storage there is a new star emerging and our customers want to be a part of it. Below we explain why those looking to invest in gold may want to look at Singapore to store their gold.
In a recent survey The Real Asset Company asked readers and clients ‘When selecting a vault location, which would you choose?’
Voters were given the following options:
- Hong Kong
- Singapore
- Switzerland
- United Kingdom
- United States of America
When we originally posted the survey we unanimously expected Switzerland to be chosen by the majority those surveyed as the location of choice. However this wasn’t the case, Singapore took nearly 39% of the votes, followed by Switzerland with just over 35%. Lagging behind, the US and Hong Kong took around 11% each whilst the UK brought up the rear with 5%.
Americans want gold investments in Singapore
North American voters were those who pushed Singapore into the lead, finding the Asian city state the best location for gold bullion. A notable 37.4% voted to vault their gold bullion in Singapore.
Europeans as a whole prefer to keep their gold in Switzerland for now, but this may not last long, votes for Singapore were a close second taking 31% of the vote. Germany was the second most active European voter in our survey and interestingly 60% of them voted to vault their gold in Singapore.
39% of voters in Asia would prefer to keep their gold in Singapore; this is perhaps the least surprising result. Switzerland lagged behind as the second preferred location with just 16.7% of the votes.
For the other areas of votes, South America, Africa and Australasia the votes for Singapore were equally split between other options. For instance in Australia 50% would store gold in Hong Kong, whilst the other 50% would store in Singapore. In Africa voters equally prefer Singapore and Switzerland, whilst in South America they’re equally torn between Hong Kong, Singapore and Switzerland.
Whilst we can’t say that Singapore is the definitively preferred location to store gold for all of our readers, it is undeniable that there is a clear shift in individuals choosing Singapore for their safe-haven investments.
To lovers of spy films and those less sure of international banking rules, Switzerland might have seemed the more obvious place to protect your wealth and avoid the beady eye of the government. So what’s changed?
Gold investing in Switzerland
As we saw on our poll, Switzerland does remain a popular place to store gold. For centuries, the small European country has been the investment haven of choice for wealthy individuals from all over the world.
However, the fact remains that it has been overtaken by Singapore as the optimum location, mainly thanks to our American readers. Whilst Switzerland remains a popular location of choice for UK customers, it is slowly losing its appeal and all has definitely been lost with the majority of US investors.
The Swiss banking system is no longer seen as it once used to be; it is no longer as well capitalized as it once was and there is now a distinct lack of privacy compared to previous eras.
Switzerland’s decision to peg to the euro has certainly left many investors wondering whether the country’s currency and banking is as safe as it once was.
In 2007, the US Justice Department launched a criminal investigation into UBS and later Credit Suisse, along with other Swiss Banks for providing banking services to wealthy Americans which allowed them to avoid taxes. In 2009 UBS agreed to hand over the names of 4,450 US clients to the IRS.
The EU also began investigations a few years ago into Swiss bank accounts, through stolen data, as part of a tax evasion exercise.
In 1934, the Swiss Banking Act was passed which outlined the code of secrecy that made Switzerland the ultimate wealth haven for so many years. Singapore is now working hard to emulate this, offering banking secrecy provisions which are comparable to those once seen in Switzerland.
Better to buy gold in Singapore?
Banking in Singapore offers the highest confidentiality, with laws protecting individuals’ privacy whilst allowing for banking information to be provided to foreign authorities where crimes are being investigated.
Changes in banking secrecy are likely to continue and get more complicated thanks to the US’ FATCA – the Foreign Account Tax Compliance Act. The Act requires foreign financial institutions to send details to the IRS of US clients who hold more than $50,000 in a foreign bank.
Should the foreign financial institution choose to not disclose details to the IRS, then they will suffer a 30% US withholding tax on its and clients’ income and gains, as of January 2014. Rumour has it that other countries such as China and Switzerland are looking to ‘piggy-back’ onto the back of the Act.
The fact is, for Switzerland and many other countries, the US is the scary bully who you give your lunch money to. Singapore is the nerdy kid who’s too bright for the bully and can outwit him.
Singapore does not tax its citizens and companies on foreign earnings on a worldwide basis; therefore it pays little attention to their companies’ bank accounts in foreign lands. The motivation for the Singaporean authorities to disclose bank accounts in their domain is, therefore, non-existent.
Countries are also not allowed to launch ‘fishing expeditions’ into account holders’ details in Singapore, foreign authorities must have apparent links and good (suspected criminal activity) reasons to want to investigate someone’s account holdings.
As your investment business increasingly becomes the government’s business it is understandable that individuals are looking for alternatives. But the Singaporean government are onto a niche here and are fully embracing their new-found ‘Swissness’, they seem to care very little if the bully in the playground wants their lunch money, because he ‘aint getting it.
Winning the trust of investors
Trust between an investor and their bank is something which has been on thin ice in recent years, to trust your country not to investigate is also a growing issue and one which is becoming more mainstream.
That’s why at The Real Asset Company when we talk about gold investment we see it as key to reduce counter-party risk as much as possible and provide internationally diverse storage options in countries you trust.
Store your gold in Singapore
Singapore has, in recent years, emerged as one of the world’s most favoured hubs for private banking for HNWI. But now the City State is moving to enter another attractive market – custody and secure storage of gold and silver bullion.
Earlier this year, IE Singapore, the area of the Ministry of Trade and Industry which facilitates overseas growth of Singaporean entities and promotes international trade, announced its plans to make Singapore the Asian hub for physical gold trading. They aim to increase the country’s share of the precious metals market at least five-fold over the next ten years. Currently, Singapore operates about 2% of the gold trading market (in terms of tonnage) according to the agency.
At the beginning of October the Singaporean government scrapped its 7% tax on gold and silver with hopes of turning the city into the centre for precious metals trading. It is hoped to rival both London and Zurich. In both cities, VAT does not apply to the trade of gold which is investment-grade whilst it remains ‘bonded’.
Unlike other countries which also offer physical gold storage and trade, the country aims to capitalise on the growing bull-market for sound investments and safe-havens away from fiat money. They have identified an increasing demand and intend to capitalise on it.
Singapore’s Freeport free-trade zone allows non-residents to store the gold bullion without paying tax or signing customs forms. This offering of client confidentiality is an attractive prospect for those wishing to hold their gold out of their country’s jurisdiction, particularly countries whose governments are slowly driving themselves bankrupt and looking to find sources of income elsewhere.
As a result of the poll and Singapore’s growing status as a hub for gold, customers of The Real Asset Company can now store their gold in Singapore with our vault provider Malca Amit. The vault is within the Freeport facility and has seen unprecedented demand in the last couple of years. We are pleased to be the first online gold investment provider to offer Singapore as a vault location.
No matter how much or how little gold you own, customers of The Real Asset Company can store their gold in our Malca Amit Singapore facility. If you own a kilo or more, you can even have your own vault agreement.
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Jan Skoyles contributes to the The Real Asset Co research desk. Jan has recently graduated with a First in International Business and Economics. In her final year she developed a keen interest in Austrian economics, Libertarianism and particularly precious metals.
The Real Asset Co. is a secure and efficient way to invest precious metals. Clients typically use our platform to build a long position and are using gold and silver bullion as a savings mechanism in the face on currency debasement and devaluations. The Real Asset Co. holds a distinctly Austrian world view and was launched to help savers and investors secure and protect their wealth and purchasing power.
© 2012 Copyright Jan Skoyles - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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