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Global Gold Storage Options

By Ronald Stoeferle, Managing Partner, Incrementum AG

Published on September 8, 2020

Legal, geopolitical and economic stability are key factors to consider, but so is a country’s “gold culture” and its relevant traditions and track record when looking for a place to store gold.

The entire reasoning behind investing and holding physical precious metals, especially when kept outside the banking system in private high-security storage facilities, revolves around trust, security, risk diversification, and hedging against the vulnerabilities and worst-case scenarios of the monetary system. Thus, the choice of storage location must also be largely evaluated through the same lens.

The main factors to be considered when choosing a jurisdiction in which to store gold are the levels of protection of individual financial freedoms and private property rights; as well as political and economic stability. According to these measures, three countries stand out from the rest: Liechtenstein, Switzerland, and Singapore.

Liechtenstein’s Advantages

The Principality of Liechtenstein is a member of the European Union (EU) and part of the European Economic Area and Schengen area. Although it became independent in 1806, it can be argued that the history and the values of Liechtenstein were largely formed after the Second World War. It was then that today’s reigning Prince of Liechtenstein, Prince Hans-Adam II, had to take over a bankrupt country and effectively managed to turn it into a competitive, innovative, and agile financial hub of international renown.

The country’s standing as a reliable business and banking centre and the princely house’s reputation for being ahead of the curve are undeniable. The ruling families of Liechtenstein fully embrace the values of individual and financial freedom and recognise the importance of private property rights. Property rights are even further protected given the fact that Liechtenstein has no emergency legislation. Even in times of political or economic upheaval, an ad-hoc expropriation is thus unenforceable.

The system of government is classified as a constitutional monarchy, with the decision-making power being shared by the monarch and the democratically elected parliament. Liechtenstein is built on a system of governance that shows great restraint and respect towards individual freedom, private property, the right to privacy, and the financial sovereignty of its people.

As a clear exception to the global trend, Liechtenstein has been running budget surpluses for years, signalling not only financial prudence but also providing the country financial leeway in case of a severe economic crisis.

Public debt as a share of GDP, 2018 (%)

Source: IMF, Incrementum AG

The Case for Switzerland

Even before the enforced confederation of 1848, Switzerland was among the most industrialised countries in mainland Europe. Historically, even under intense external pressures, Switzerland retained its sovereignty and remained an armed neutral country, resisting both world wars. It still has one of the most decentralised political structures in the world today. Its constitution outlines the basis of its political system and its government’s limits, according to the principles of subsidiarity and direct democracy.

The practical impact of this key political differentiation, which sets Switzerland apart from other countries, is extensive and often surprising. As a real, direct democracy, Switzerland has time and time again gone against the grain, defying political trends set by its neighbors or the international community.

Switzerland’s economy makes the case for it being an excellent location for physical gold investors. In stark contrast to its EU neighbours and the EU as a whole, the Alpine nation is much more prudent in managing its finances. Its gross federal debt dropped below 100 billion Swiss francs (S$150 billion) in 2018 for the first time since 1997; and the general government debt (confederation, cantons, municipalities, social insurance) amounts to little less than 200 billion francs, with a declining tendency relative to GDP.

Overall, Switzerland’s success is largely based on the fact that it was built on economic rationality and not politics, and thus the Swiss have always been open to innovation. In terms of stability and security, it is clear that Switzerland has withstood the test of time.

Its long-standing neutrality, noninterventionist foreign policy record, and the fact that more than 50% of households in the country are armed, create a safe environment, and provide peace of mind both for citizens and investors. Furthermore, the strict limits placed on its government’s powers and the long track record of the government staying well within those limits make the confiscation of precious metals stored under Swiss law very improbable.

Global GDP per capita, and Singapore GDP per capita, 2019 (USD)

Source: World Bank, Incrementum AG

Asia’s Strongest Contender

This brings us to our final candidate, Singapore, a country that has experienced significant capital inflows over the past few decades. The island lying on the equator in Southeast Asia has no capital gains taxes, no goods and services taxes (GST) on investment-grade precious metals, and a strong record of respect for private property rights. Without question, a genuine and impressive success story, especially since its independence in 1965.

The sunny island has been widely celebrated as an economic miracle. It has a unique geographical advantage, being strategically located at the crossroads of key trade and shipping routes of the world, while also enjoying proximity to China. Conceptually created as a “city-state”, it has become one of the most developed economies in Asia and has emerged as a global business and financial hub. It is also recognised as one of the world’s most competitive and business-friendly economies. Additionally, its tax regime and regulatory framework are simple and investor-friendly. Singapore also offers a stable political environment and a robust economic background, with a rapidly and consistently rising GDP.

A quick look at the infographic below shows that ultra-high-net-worth individuals, i.e. individuals with a net worth of at least $30 million, from around the globe continue to vote with their feet, choosing to call Singapore home.

As the conversation surrounding wealth taxes increases in the West, capital controls are still socially and culturally not acceptable in Singapore. Economic freedom is viewed as an ultimate right in Singapore, with the government acting as a guardian and arbiter of that right for its citizens.

Image courtesy of media company, Visual Capitalist

Weighing the Options

When it comes to prudent and long-term investments in physical precious metals, one size most definitely does not fit all. Each decision and step that forms a comprehensive and solid strategy needs to take into serious consideration the individual needs and aims of the investor. While security and strong property rights play a key role for all investors, specific circumstances and relevant technicalities might make one jurisdiction more attractive than another.

All three jurisdictions make a convincing case for secure gold storage with regard to stability and private property rights, a case that is infinitely strengthened when we compare the risks and uncertainties that most other jurisdictions entail.

As Europe is increasingly going down the road of centralisation and as economic and social tensions are increasingly prevalent throughout the continent, Switzerland and Liechtenstein might be seen as being right in the eye of a coming storm. By contrast, Singapore could be better off and even have a competitive advantage in this regard, not only because of its geographical distance from Europe but also because it may provide additional diversification by being in the Asian, rather than the European, economic and geopolitical sphere.

RONALD STOEFERLE is managing partner of Incrementum AG, responsible for research and portfolio management. In 2007, he published his first In Gold We Trust report. Over the years, the study, which is available in English, Mandarin and German, has become one of the benchmark publications on gold, money, and inflation. He is an advisor for Tudor Gold Corp., a significant explorer in British Columbia’s Golden Triangle, and a member of the advisory board of Affinity Metals.

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Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

SBMA Secretariat-Fabian-Lew

Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

SBMA-margare-secretariat

Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.