In a recent survey The Real Asset Company asked readers and clients When selecting a vault location, which would you choose?
Voters were given the following options:
- Hong Kong
- Singapore
- Switzerland
- United Kingdom
- United States of America
When we originally posted the survey we unanimously expected Switzerland to be chosen by the majority those surveyed as the location of choice. However this wasn’t the case, Singapore took nearly 39% of the votes, followed by Switzerland with just over 35%. Lagging behind, the US and Hong Kong took around 11% each while the UK brought up the rear with 5%.
What Buyers Want
North American voters were those who pushed Singapore into the lead, finding the Asian city state the best location for gold bullion. A notable 37.4% voted to vault their gold bullion in Singapore.
Europeans as a whole prefer to keep their gold in Switzerland for now, but this may not last long, votes for Singapore were a close second taking 31% of the vote. Germany was the second most active European voter in our survey and interestingly 60% of them voted to vault their gold in Singapore.
39% of voters in Asia would prefer to keep their gold in Singapore; this is perhaps the least surprising result. Switzerland lagged behind as the second preferred location with just 16.7% of the votes.
For the other areas of votes, South America, Africa and Australasia the votes for Singapore were equally split between other options. For instance in Australia 50% would store gold in Hong Kong, while the other 50% would store in Singapore. In Africa voters equally prefer Singapore and Switzerland, while in South America they’re equally torn between Hong Kong, Singapore and Switzerland.
While we can’t say that Singapore is the definitively preferred location to store gold for all of our readers, it is undeniable that there is a clear shift in individuals choosing Singapore for their safe-haven investments.
To lovers of spy films and those less sure of international banking rules, Switzerland might have seemed the more obvious place to protect your wealth and avoid the beady eye of the government. So what’s changed?
Switzerland Still Popular
As we saw on our poll, Switzerland does remain a popular place to store gold. For centuries, the small European country has been the investment haven of choice for wealthy individuals from all over the world.
However, the fact remains that it has been overtaken by Singapore as the optimum location, mainly thanks to our American readers. While Switzerland remains a popular location of choice for UK customers, it is slowly losing its appeal and all has definitely been lost with the majority of US investors.
The Swiss banking system is no longer seen as it once used to be; it is no longer as well capitalized as it once was and there is now a distinct lack of privacy compared to previous eras.
Switzerland’s decision to peg to the euro has certainly left many investors wondering whether the country’s currency and banking is as safe as it once was.
In 2007, the US Justice Department launched a criminal investigation into UBS and later Credit Suisse, along with other Swiss Banks for providing banking services to wealthy Americans which allowed them to avoid taxes. In 2009 UBS agreed to hand over the names of 4,450 US clients to the IRS.
The EU also began investigations a few years ago into Swiss bank accounts, through stolen data, as part of a tax evasion exercise.
In 1934, the Swiss Banking Act was passed which outlined the code of secrecy that made Switzerland the ultimate wealth haven for so many years. Singapore is now working hard to emulate this, offering banking secrecy provisions which are comparable to those once seen in Switzerland.
Singapore's Banking Climate
Banking in Singapore offers the highest confidentiality, with laws protecting individuals’ privacy while allowing for banking information to be provided to foreign authorities where crimes are being investigated.
Changes in banking secrecy are likely to continue and get more complicated thanks to the US’ FATCA -- the Foreign Account Tax Compliance Act. The Act requires foreign financial institutions to send details to the IRS of US clients who hold more than $50,000 in a foreign bank.
Should the foreign financial institution choose to not disclose details to the IRS, then they will suffer a 30% US withholding tax on its and clients’ income and gains, as of January 2014. Rumour has it that other countries such as China and Switzerland are looking to ‘piggy-back’ onto the back of the Act.
The fact is, for Switzerland and many other countries, the US is the scary bully who you give your lunch money to. Singapore is the nerdy kid who’s too bright for the bully and can outwit him.
Singapore does not tax its citizens and companies on foreign earnings on a worldwide basis; therefore it pays little attention to their companies’ bank accounts in foreign lands. The motivation for the Singaporean authorities to disclose bank accounts in their domain is, therefore, non-existent.
Countries are also not allowed to launch ‘fishing expeditions’ into account holders’ details in Singapore, foreign authorities must have apparent links and good (suspected criminal activity) reasons to want to investigate someone’s account holdings.
As your investment business increasingly becomes the government’s business it is understandable that individuals are looking for alternatives. But the Singaporean government are onto a niche here and are fully embracing their new-found ‘Swissness’, they seem to care very little if the bully in the playground wants their lunch money, because he ‘aint getting it.
Storage Hub
Singapore has, in recent years, emerged as one of the world’s most favoured hubs for private banking for HNWI. But now the City State is moving to enter another attractive market -- custody and secure storage of gold and silver bullion.
Earlier this year, IE Singapore, the area of the Ministry of Trade and Industry which facilitates overseas growth of Singaporean entities and promotes international trade, announced its plans to make Singapore the Asian hub for physical gold trading. They aim to increase the country’s share of the precious metals market at least five-fold over the next ten years. Currently, Singapore operates about 2% of the gold trading market (in terms of tonnage) according to the agency.
At the beginning of October the Singaporean government scrapped its 7% tax on gold and silver with hopes of turning the city into the centre for precious metals trading. It is hoped to rival both London and Zurich. In both cities, VAT does not apply to the trade of gold which is investment-grade while it remains ‘bonded’.
Unlike other countries which also offer physical gold storage and trade, the country aims to capitalise on the growing bull-market for sound investments and safe-havens away from fiat money. They have identified an increasing demand and intend to capitalise on it.
Singapore’s Freeport free-trade zone allows non-residents to store the gold bullion without paying tax or signing customs forms. This offering of client confidentiality is an attractive prospect for those wishing to hold their gold out of their country’s jurisdiction, particularly countries whose governments are slowly driving themselves bankrupt and looking to find sources of income elsewhere.
As a result of the poll and Singapore’s growing status as a hub for gold, customers of The Real Asset Company can now store their gold in Singapore with our vault provider Malca Amit. The vault is within the Freeport facility and has seen unprecedented demand in the last couple of years. We are pleased to be the first online gold investment provider to offer Singapore as a vault location.
Please Note: Information published here is provided to aid your thinking and investment decisions, not lead them. You should independently decide the best place for your money, and any investment decision you make is done so at your own risk. Data included here within may already be out of date.