07 Jun Entering the Singapore Precious Metals Market – An Insider’s Perspective
We’re very happy to share that our article – “Entering the Singapore Precious Metals Market – An Insider’s Perspective” has been included in the latest edition of Crucible – the Singapore Bullion Market Association’s publication. Read below or download the full magazine here.
Entering the Singapore Precious Metals Market – An Insider’s Perspective
I first arrived in Hong Kong seven years ago and was hired by global luxury logistics company, Malca-Amit. In 2011, the construction of the Singapore Freeport was completed, and major bullion houses and banks were opening dedicated vaults within the facility. During this period, Singapore was cementing its position as an international wealth management centre at a time when global demand for investments in physical precious metals was growing. An exciting opportunity introduced itself and I was offered a move to Singapore to oversee the new developments.
The Draw of Singapore
Singapore was in the right position to offer high-net-worth clients, private banks and institutions the opportunity to manage and have custody of not only their financial assets, but also physical holdings of tangible assets, mostly precious metals.
As the physical infrastructure expanded, so did the demand by international clients for reliable solutions for sourcing investment-grade bullion. In October 2012, the Singapore government decided to waive Goods and Services Tax (GST) on investment precious metals, boosting the market even further. During this growth period, many new dealers and retailers established themselves, promoting Singapore as the location for sourcing and storing investment bullion.
Malca-Amit saw an opportunity to provide this service in-house and set up a one-stop solution for our clients. The business idea was simple: offer high-net-worth clients an easy and secure way to invest in precious metals by providing them a complete solution, handling transportation, storage and trading through one point of contact. Bullion are fully allocated and stored, while clients could still enjoy unlimited access to their assets. We decided to tailor the solution according to the needs of individual clients, by accepting only high-value transactions, and by leaving the retail segment to other specialised firms. Clients could purchase new bullion, authenticate their current holdings, or value and liquidate heirlooms coins and bars.
Singapore was the perfect spot to launch the service. Success was fast and impressive as many clients saw the advantage of going to a reliable partner for an all-in-one solution. Clients saw, and still see, easy access as the primary advantage of having direct ownership of physical metals. For many HNWI the particular lure of this type of investment is the security it provides in times of crisis.
I launched J. Rotbart & Co. in April 2016 to offer the same service with a greater degree of innovative and flexibility. Clients of J. Rotbart & Co. still find Singapore to be the preferred place to store their bullion.
Opportunities for J. Rotbart & Co.
Given our particular industry, and the global scope of our services, we value the opportunities Singapore affords our business. As geopolitical tensions rise, and economic growth is still sluggish, more clients are realising that wealth preservation through investing in physical precious metals is the prudent thing to do. Moreover, the banking system is losing its attractiveness as the right counter party for investment in precious metals because, on the one hand, regulatory requirements incentivise banks to cease offering these services, while on the other, investors are losing trust in the banks, especially since the financial crisis of 2008.
Singapore’s more international character is unparalleled in Asia. English is an official language and the rule of law is strong. Furthermore, financial and logistical infrastructures are well developed. There is a good presence of private banks, wealth management companies and trust companies, and storage capacity for precious metals at volume is in place. Vaults are operated by the four big global logistics companies, as well as by the local companies. The industry enjoys the strong support of Singapore’s government, mostly through International Enterprise (IE) Singapore. As Switzerland’s glamour as a global centre for storage of precious metals is waning, Singapore stands to attract even more investors.
The Challenges That Lie Ahead
While the future for the precious metals market in Singapore looks bright, there are some challenges ahead that we must be ready to tackle.
Precious metals’ lure as a vessel for hiding or laundering money is obvious. It is our resoponsible to be alert and dutiful when conducting due diligence on our clients; it is prudent that we ask tough questions if necessary and be aware of our clients’ intentions. Self-discipline while conducting our business is prudent and ethical.
Another challenge is banking. Precious metals companies find it difficult to bank. Our experience has been good in Singapore, where banks are very open to this industry. However, it is important that all relevant parties in Singapore make sure this does not change. The situation in Hong Kong today is a prime example of how the reluctance of banks to work with the industry is driving players away from the market.