Top 6 Reasons Why You Should Store Gold in Singapore
4 September 2023
The financial system is riddled with unstable banks and indebted governments. Gold stands out as one of the few assets that isn't tied to another entity's liability. While buying physical precious metals is an astute wealth protection decision, choosing the right country to store physical bullion is just as important.
Singapore has emerged as a premier destination for gold storage, offering unparalleled advantages in terms of security, cost-efficiency, and legal protection. We share in this article the top reasons why you should consider bullion storage in Singapore, examine the various precious metals storage facilities available, and explore key features that make the country an attractive choice for investors worldwide.
Why Storing Gold at Home May Not Be the Best Option
Storing gold at home might seem convenient and reduces storage costs, but it exposes gold owners to the following risks:
- Jurisdictional risks: Your country of residence may not be the best jurisdiction for storing bullion if has poor private property ownership laws, weak or corrupt law enforcement, gun prevalence, or an unstable political climate.
- Security risks: Storing gold at home makes it susceptible to theft and places the responsibility of securing your gold bullion on you and your family. Even with a secure safe, armed burglars can resort to holding your family at gunpoint, forcing you to disable any home security systems.
- Lack of insurance: Many gold owners store gold at home without any insurance coverage, making stored bullion susceptible to loss through fire, theft, and natural disasters.
- Liquidity issues: If you decide to sell your gold, having it stored in a reputable gold vault or gold depository can make the process smoother, since the vault operator is likely to have contacts of precious metal dealers who can provide sell-back options easily.
Despite the above risks, storing gold at home can still be a good option if it is part of an overall plan to diversify where your gold holdings are stored. Keeping some gold at home within arm's reach can help in emergencies where you need a portable and internationally recognized form of wealth like gold. However, it is good to also consider diversifying your gold holdings offshore in safe countries like Singapore.
Why Choose Singapore for Gold Storage?
Singapore’s stellar reputation as a safe haven for gold storage is no accident. The country’s unique combination of economic advantages, tax benefits, geopolitical stability, strong enforcement of private property ownership, and military capability for self-defense makes it an optimal choice for investors seeking a secure location to store their precious metals.
Let us look at each of these benefits of storing gold in Singapore in greater detail to understand why this Southeast Asian country is a favored choice among wealth builders globally.
#1 Geopolitical Stability
Singapore is regarded internationally as one of the most politically stable countries in the world. The country topped the annual Chandler Good Government Index in 2023, edging out bigger countries such as Switzerland, Finland, Denmark, Norway, Sweden, the Netherlands, and Germany.
The index evaluates the collaboration of public institutions in crisis preparedness, the strategies governments employ to tackle inflation while preserving quality employment, and the efforts made by governments to foster inclusive communities and robust health systems, among other aspects.
Singapore's high level of political stability sets it apart from many other countries as an ideal location to store precious metals, ensuring a safe and predictable setting for storing precious assets.
#2 One of the Safest Countries in the World
Singapore is often hailed as one of the safest countries in the world, a reputation it has meticulously built and maintained over the years. The country came out top again on Gallup's Law and Order Index 2022, a feat it has repeated since 2015.
The city-state's low crime rate is a testament to its effective law enforcement and strict legal system. The Singapore Police Force is highly efficient and technologically advanced, employing a range of sophisticated tools and methods to prevent and solve crimes.
Additionally, the country's comprehensive surveillance system, with cameras installed in many public places, acts as a significant deterrent to criminal activities. This robust security infrastructure instills a strong sense of safety among residents and visitors alike.
Furthermore, Singapore's political stability and strong governance contribute significantly to its safety. The government's zero-tolerance policy towards corruption and its commitment to upholding the rule of law has created an environment where illegal activities are less likely to thrive. Moreover, Singapore's emphasis on social harmony and community cohesion has fostered a culture of mutual respect and understanding among its diverse population.
This harmonious social fabric not only enhances the overall quality of life but also plays a crucial role in maintaining the country's status as one of the safest places in the world.
#3 Best Country to Do Business
Singapore’s flourishing economy and supportive business climate have earned it numerous international accolades, including repeatedly topping the Economic Intelligence Unit's business environment rankings for 15 consecutive years.
Singapore's open economy allows the free flow of capital from foreign investors and the ease of doing business within the country and in the Southeast Asia region.
For gold investors, Singapore's open economy is attractive since it allows gold to be easily transferred in for storage in a precious metal vault and out of the country, if necessary. Similarly, funds can be transferred to Singapore bullion companies to buy gold in Singapore and transferred out to any international banks if gold is sold.
#4 Tax Advantages
Singapore has the following tax advantages when it comes to investment-grade precious metals and wealth:
- no VAT or sales tax when you buy gold, silver or platinum bullion
- no capital gains tax when you profit from selling gold, silver or platinum bullion
- no wealth tax
- no inheritance tax
Since October 2012, the Singaporean government has exempted Investment Precious Metals (IPM), namely investment grade gold, silver and platinum bullion, from the Singapore sales tax known as the Goods and Services Tax (GST). This astute move by the government aims to make Singapore a precious metal hub in Asia, attracting businesses in the precious metal space to Singapore.
Swiss gold refiner Metalor has built a gold refinery in the west of Singapore since 2013. Many gold storage vaults, bullion dealers, and secure logistics companies have since sprouted up or made Singapore their regional headquarters.
In addition, some precious metal vaults, like The Safe House, offer tax-free storage of physical bullion that does not meet the Investment Precious Metal criteria set out by the Inland Revenue of Singapore (IRAS).
This healthy ecosystem has made the Singapore precious metal market competitive as these precious metal companies vie for market share given Singapore's economic advantages.
#5 Strong Enforcement of Private Property Ownership
Another factor that makes Singapore an attractive destination for gold storage is its strong enforcement of private property ownership. The comprehensive legal framework in the country ensures the security of private property, including stored gold, and provides a reliable legal recourse should there be any disputes or negligence.
The stringent enforcement of private property rights and Singapore’s low crime rate ensure high-level security for gold storage in the country. This robust legal protection adds another layer of assurance for investors looking to store their gold in a secure and reliable jurisdiction.
#6 Military Capability for Self-Defence
Despite its small geographical size, Singapore fields one of the most advanced and well-equipped militaries in Southeast Asia. In fact, it consistently outspends its Southeast Asian neighbors on defence. For 2023, Singapore's defence budget tripled Malaysia's, its closest neighbor, and is 40% more than populous Indonesia.
Singapore’s formidable military capability adds an extra layer of security for stored assets in the country. With an active strength of 71,000 full-time personnel and the capacity to mobilize 352,500 reservists, Singapore is ranked 29th in terms of military strength among 145 countries.
The Singapore Armed Forces (SAF) primarily utilize military equipment sourced from the United States, Israel, and Western Europe. In terms of air power, Singapore's Air Force boasts a larger fleet of combat aircraft compared to bigger nations like Malaysia, Thailand, Switzerland, Belgium, and Canada. Additionally, Singapore is the first Southeast Asian nation to acquire the US-manufactured F-35B Joint Strike Fighter. This aircraft's capability to take off from shorter runways and land vertically is particularly advantageous for a compact country like Singapore.
This military prowess provides a deterrent to potential threats and a robust defense system that ensures the security of stored assets. The strong military presence in Singapore serves as a powerful safeguard, offering investors peace of mind in knowing that their stored assets are protected.
Types of Gold Storage Facilities in Singapore
Singapore’s stable currency, minimal political risk, and low crime rates enhance its desirability as a sanctuary for gold and silver bullion storage, providing investors with peace of mind through political risk diversification and safety assurances.
The country offers investors an array of physical precious metals storage facilities to choose from, each offering distinct advantages and features designed to cater to different investors’ needs and preferences.
Given these 6 factors, it is not difficult to understand why Singapore ranks as one of the best countries to buy and store gold in.
Bank Vaults and Safe Deposit Boxes
Singapore banks used to be the defacto places to store physical gold and silver with their safe deposit box services, but they are increasingly not the best choice for precious metal owners seeking fully insured bullion storage.
Banks' safe deposit boxes are often uninsured as they do not require hirers to declare the box contents. Without any verification of the stored item's value, items in a safe deposit box cannot be insured.
Since the 2008 Great Financial Crisis, trust in banks has also waned, given their interconnectedness in the financial system. While Singaporean banks are considered one of the safest in the world, physical precious metal owners are increasingly looking for alternate options to minimize counterparty risks inherent in the financial system.
Private Safe Deposit Boxes
Besides banks, a few private companies also offer safe deposit box services in Singapore.
One of Singapore's biggest mass-market safe deposit box operators is Certis Cisco, a security company specializing in providing a comprehensive range of security services, including security guarding, enforcement services, technology solutions, and consultancy services. While Certis Cisco safe deposit boxes are offered in different sizes at lower rates than bank safe deposit boxes, they also do not offer insurance for their boxes.
Gold holders seeking insured safe deposit boxes can consider storing gold bullion with The Safe House vault at The Reserve. Owned and operated by Silver Bullion, one of the largest bullion dealers in Singapore, The Safe House allows gold owners to insure their bullion stored in safe deposit boxes. It offers 2 types of safe deposit boxes:
- Gold safe deposit box (Class II)
- Measuring 22.8 x 3 x 2.5 inches
- Stores up to 500 troy ounces of gold
- Comes with default liability protection of USD 200,000, with the option to increase the insurance coverage
- Silver safe deposit box (Class I)
- Measuring 39 x 15 x 11 inches
- Stores up to 6,500 troy ounces of silver
- Comes with default liability protection of USD 50,000, with the option to increase the insurance coverage
Besides storing bullion in safe deposit boxes, gold owners looking to diversify their gold holdings offshore can store gold bullion with a few private vaults in Singapore. Unlike a safe deposit box where the hirer rents the space within the box, private vaults often rent vault storage space based on the amount of gold, silver, or platinum stored.
As most of these private vaults are operated by international secure logistics companies leasing vault storage space to Singapore bullion dealers, gold owners will need to engage the storage services of Singapore bullion dealers to access this private vault storage service.
If you are seeking to minimize your jurisdictional counterparty risks from potential foreign government gold confiscation or gold nationalization events, storing with a vault storage service having a bullion dealer-secure logistics provider relationship may not give you the necessary protection. This is often due to the foreign jurisdictional risk exposure from international secure logistics companies, as many operate in multiple countries worldwide.
In such a relationship, you are also not a direct storage client of the international secure logistics provider since you are storing gold through the bullion dealer, who is the direct client. Therefore, it is likely that the Service Agreement of the secure logistics provider (and potential risks) is not made known to you.
The good news is that Silver Bullion provides one of the best gold storage solutions aimed at wealth protection in Singapore. Silver Bullion's S.T.A.R. Storage allows you to store bullion at its state-of-the-art vault, The Safe House, fully insured with minimal exposure to foreign governments.
What is unique about storing gold with Silver Bullion is the company's vertical integration - it owns the bullion dealership, precious metals vault, and the building housing its vault (The Reserve). This vertical integration of wealth protection ensures that storage clients have exclusive Singapore jurisdiction. Any requests from foreign entities seeking its customers' gold will need to go through Singapore's legal system before they will be entertained.
Silver Bullion's vertical integration even extends to the company having its own IT company to develop its software for online bullion retailing and vault storage, minimizing potential security weaknesses from external software vendors.
The Safe House vault also has one of the best precious metal insurance covering theft, inside jobs, sabotage and terrorism, and loss due to mysterious disappearance. When viewed together, Silver Bullion's S.T.A.R. Storage offers one of the best and complete features for holistic wealth protection.
Singapore’s unique combination of economic advantages, tax benefits, geopolitical stability, strong enforcement of private property ownership, and military capability for self-defense make it an ideal location for storing gold and other precious metals. With various storage facilities available, including private vaults, bank vaults, and secure logistics providers, investors can find the perfect solution tailored to their needs, knowing that their valuable assets are securely stored in one of the safest countries in the world.