As economic uncertainty looms, the wealthy are increasingly turning to gold and silver bullion as a strategy to preserve their wealth. In Singapore, demand for specialized storage facilities for these precious metals is surging, reflecting a growing preference for physical assets over paper investments.
Silver Bullion, a leading vaulting provider, has responded to this rising demand by opening a state-of-the-art facility near Changi Airport. The six-story warehouse, known as The Reserve, is designed to store up to 500 tonnes of gold and 10,000 tonnes of silver. Based on current market prices, the full capacity of these vaults could hold a staggering S$67.5 billion worth of precious metals.
Gold and silver prices have been climbing steadily in 2024, fueled by geopolitical tensions and central bank purchases. Spot gold reached an all-time high of US$2,672.77 per ounce on September 26, following the U.S. Federal Reserve’s interest rate cut earlier that month. Meanwhile, silver prices peaked at US$32.43 per ounce on the same day, though they have since seen some fluctuation.
Long-Term Wealth Preservation
According to Gregor Gregersen, founder of Silver Bullion, clients are not primarily investing in gold and silver for short-term gains. Instead, they see physical bullion as “long-term wealth insurance.” He noted that 80% of Silver Bullion’s clients have never sold their metals, and those who did held onto them for an average of four and a half years.
Gregersen emphasized that physical bullion offers a sense of security that paper assets cannot. “People are realizing that when you buy a paper gold position, there’s often very little physical gold backing it. If one of the institutions involved goes bankrupt, you might end up with nothing,” he said.
A Safe Haven in Uncertain Times
Bullionstar, another key player in Singapore’s precious metals market, has also reported a rise in demand for physical bullion. A spokesperson from the company explained that clients are moving away from volatile investments like cryptocurrencies, seeking the stability and safety of gold and silver. “People are investing in the metal they see as good value rather than the one with more upside potential,” the spokesperson said.
This trend is echoed by Thomas Rupf, Chief Investment Officer for Asia at VP Bank’s Singapore branch. Rupf noted that gold is favored by high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs) as a wealth preservation tool, particularly in times of economic uncertainty. “There is still significant demand for physical gold for wealth preservation,” Rupf said.
Global Clientele Seek Stability
The appeal of Singapore as a vaulting hub for precious metals is growing internationally. Gregersen revealed that only about 10% of Silver Bullion’s clients are Singaporean, with most coming from the United States, Europe, and Australia. He attributed this to Singapore’s reputation as a neutral and stable jurisdiction for long-term gold storage.
The opening of The Reserve has also attracted interest from institutional investors, including family offices and hedge funds, who are looking to convert their paper gold holdings into physical bullion. Gregersen mentioned that some funds are considering storing over S$1 billion worth of gold in the facility.
Wealth management companies are also taking note. Alan Mak, co-founder of SME advisory firm Avary Group, highlighted the importance of multi-generational wealth preservation for family office clients. He has seen a marked increase in purchases of gold and silver bullion since 2023.
As macroeconomic uncertainties persist and geopolitical tensions rise, the demand for physical bullion as a safe haven looks set to continue growing. With Singapore’s robust vaulting infrastructure and global reputation for stability, it is becoming a key destination for those looking to safeguard their wealth in uncertain times.
