The global gold market is at a crossroads: a paradigm shift is inevitable. Singapore an important global bullion trading hub. Physical gold movement in and out of the country reached new highs in 2020. And in the last few years, we have observed an increasing number of big bullion banks, commodity trading houses, foreign fund managers, and financial institutions establishing a presence in Singapore.

The focus and mandate of SBMA in recent years has expanded considerably, and we are now widely acknowledged and recognised as a “super connector” both within and beyond the region. With our growing reputation and profile, we are observing healthy interest among prospective members, especially over the last 18 months, when some may have expected this to slow because of the pandemic. Eleven new members have been added during this period and there is a pipeline of applications in progress.

Beyond serving our members, we are also privileged to be recognised as the voice of the bullion industry by regulators and market development bodies. SBMA was also the industry body that Singapore’s Ministry of Law engaged with on the introduction and subsequent ongoing monitoring and reporting requirements for the “Precious Metals Dealers Prevention of Money Laundering and Terrorism Financing Act”.

All in all, our refocused efforts in the past 6 years speaks of our role in ASEAN, to the collective effort to promote the cooperation of the global gold market in the post-pandemic era. In charting our next course of action for market development, our members have a few wishes that require collective action.

First, the gold market is calling out for a global solution in the form of supply chain integrity, standardised delivery form(s), fungibility, regional reference pricing, clearing, settlement and the need for multiple global vaults other than London for metal can be delivered and securely stored closer to the customers.

The acute situation that we experienced in the first quarter of 2020, which happened at COMEX due to the supply chain crunch because of widespread lockdowns, unavailability of transportation or lack of refining capacity in the right country. Market players found physical gold was neither in the right place or right form to meet demand, despite the abundance of metal in London vaults.

In resolving this situation, Asia played a global role and we saw refineries in Singapore, Hong Kong and Australia providing a large share of production of kilobars to banks and traders for shipment to the United States. This would not have happened in a perfect model.

We believe that a more co-ordinated approach with more collaborative parties is a possible solution. Hence, we support the Gold 24/7 Plan proposed by the World Gold Council and LBMA’s Responsible Sourcing guidelines.

Second, the industry requires a digital gold standard. Digitalisation of the industry is something that is going to happen, and it will help change the way in which we view gold as an asset (and no doubt, other precious metals, or commodities as well). This will help determine how, where, and when it is settled, how it can be used as collateral (greatly improving efficiency e.g., instant title transfer, DVP, etc. Such a standard will benefit both institutional and retail investors.

Third, is attracting newcomers to the profession and to continue educating investors. Getting the right people to the industry is critical as we see the ageing of the current batch of professionals in our industry. However, as good people continue to be attracted to other sectors of the financial markets, fewer juniors are entering our profession. At the same time, gold investment faces competition from many competitive investible products, so a good case for gold and its continued update is critical, and I am pleased that the World Gold Council has been beefing up its efforts towards this initiative.

The future is bright if all global stakeholders are united in achieving our common goals of ensuring transparency, trust, and accessibility, with agreed uniform standards in the global gold market. – Albert Cheng, CEO, SBMA