Singapore Bullion Market Association

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Gold: a Safe Haven for Private Wealth Investors in Singapore

By Nicolas Mathier, CEO, Global Precious Metals Pte Ltd

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What’s the Deal With Gold?

Did you know that astronauts’ helmets are coated in gold? Gold’s unique property of being highly reflective shields the astronauts from solar radiation, enhancing its mesmerising charisma since historical times. Gold’s allure is deeply rooted in history, culture, and practicality, spanning civilisations like the Egyptians, Greeks, and Romans. Serving as currency, symbol of power, and religious artefact, gold embodies wealth, luxury, and authority globally. Its use in jewellery and regalia epitomises its enduring significance across cultures and generations. With non-corrosive properties and lasting value, gold symbolises immortality and deity, distinct from paper currencies. As a beacon of financial security, especially during economic uncertainty, it attracts investors and central banks alike to increase their gold reserves.

Gold: a Safe Haven in the Eyes of Many

Amid waning confidence in traditional financial institutions, gold is a refuge, protecting against systemic risks, a role it has already exhibited in past events. As a tangible asset, it is recognised to be immune to the risks associated with paper currencies and public markets, making it a reliable store of wealth. Historical events such as economic downturns, banking failures and heightened inflation, have fuelled a shift towards gold, bolstered by its intrinsic value and frictionless liquidity.

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Financial volatility and geopolitical tensions can lead to unpredictable market swings, prompting investors to seek counter-cyclical assets. Gold’s stability, low and perhaps even negative correlation with other asset classes make it an appealing option for diversification, acting as a safeguard against erratic public market behaviours as evidenced over the long term.

Gold Etfs Vs Physical Gold

Gold ETFs offer investors exposure to gold without physical ownership, providing liquidity and easy trading. Physical gold, though secure and an inflation hedge, requires storage and insurance. Despite the notion of ETFs being cost-effective, with an expense ratio (management and administrative costs) of 0.4% and transaction commissions, do the cumulative costs really express more affordability compared to buying physical gold?

Shifting Market Dynamics From Europe to Asia

The global gold trading landscape is experiencing a notable shift from European to Asian markets, driven by economic, cultural, and geopolitical factors. Asia’s economic rise, particularly led by China and India, is fuelling increased demand for gold, valued for its cultural significance and perceived stability.

Central banks in Asia, notably China and India, are actively increasing their gold reserves to diversify away from traditional currencies, contributing to the eastward movement of gold.

Geopolitical tensions globally are driving investors and central banks to seek safe-haven assets, with Asia emerging as a stable and resilient region for storing and trading gold. This transition signifies more than an economic move; it reflects a strategic response to global uncertainties, underscoring Asia’s evolving role in shaping the dynamics of the gold market.

Singapore’s Allure for Private Wealth Investors

As this shift unfolds, Singapore is poised to emerge as the next gold trading hub in Asia, with its strategic location, robust financial infrastructure, and proactive initiatives in the precious metals industry.

Its strategic location at the crossroads of major shipping routes and its reputation as a top global hub facilitates seamless trade. The city-state boasts a robust financial infrastructure and state-of-the-art storage facilities (Freeport), creating an ideal environment for gold investment activities.

Singapore’s growth as a gold trading hub is propelled by attractive tax benefits on investment-grade precious metals, offering cost-effectiveness with no additional wealth taxes, including capital gains and inheritance tax.

Known for its stable political environment and one of the pioneers of the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act (PSPM Act), this ensures that individuals can trust that their assets in Singapore will be safe from any sudden leadership and policy changes, while Singapore remains resolute in its dedication to safeguard valuable assets from any potential threats or malicious intentions.

Legacy planning with gold involves incorporating the precious metal into estate plans to preserve family wealth, diversify assets, and transfer value across generations. Integrating gold into wills, trusts, or direct ownership facilitates seamless distribution, reducing disputes and securing financial stability for heirs. As a tangible symbol of heritage, gold ensures a lasting legacy beyond monetary worth, safeguarding family wealth, mitigating risks, and leaving a profound impact on future generations.

So, are you ready to hoard gold too?

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NICOLAS MATHIER, the visionary behind Global Precious Metals (GPM) since 2012, embodies the pinnacle of Swiss banking tradition. With a wealth of experience in private banking and wealth management, his journey began at Lombard Odier & Cie in Geneva, Switzerland. Delving into the intricacies of precious metals at Swiss Precious Metals in 2010, he solidified his expertise. Under Nicolas’ leadership, GPM has flourished, extending its reach to various corners of the globe.