Providing Safe House for safe-haven assets

Posted by Vincent Tie on 14 Jul 2019

Silver Bullion founder Gregor Gregersen, with his wife Michelle Tay and daughter Daenerys, in front of silver bars at The Safe House, a precious metals vault in Chai Chee. He advocates long-term investing in undervalued assets that have good upside based on strong trends.

This article was originally published in The Straits Times on 14 July 2019 but accessible only with subscription.

Leveraging his financial and software development experience and with $130,000 of savings, Mr Gregor Gregersen set up Silver Bullion in 2009. The firm allows clients seeking to diversify wealth into liquid assets to buy and store precious metals.

It operates its own precious metals vault, called The Safe House, in Chai Chee. It is a tax-free zone recognised by the Singapore Customs. Last year, electric vehicle battery metals - nickel and cobalt - were introduced as a new asset class for customers keen to invest in the growing global electric vehicle trend.

Mr Gregersen said: "With the bullion and battery metals that they store with us, our clients have the option to use their assets as collateral to borrow funds on our secured peer-to-peer platform that matches lenders and borrowers. The platform has matched more than $80 million in loans."

Silver Bullion also provides bullion authentication services at its testing lab within The Safe House, ensuring that all gold and silver stored are genuine.

At the start, Mr Gregersen, 43, operated his firm from his bedroom and was meeting buyers to transact at MRT stations. The inventory he was selling was kept under his bed. Only after $800,000 in sales did he get an office and hire staff.

He worked as a senior data architect at Commerzbank from 2008 to 2011. Before that, he was senior consultant for business intelligence at Alegri, in Germany.

In 2001, Mr Gregersen obtained a master's degree in information and decision systems from San Diego State University. He also has a doublt degree in economics and finance from the same university in 1998.

Born in Germany, Mr Gregersen is a Singaporean and is married to Singaporean Michelle Tay, 32, who is the founder of premium watch customisation firm Blacker. They have a four-year-old daughter, Daenerys.

Q: What motivated you to set up Silver Bullion?
A: I witnessed first-hand the aftermath of the Lehman Borthers bankruptcy and how it nearly collapsed the global financial system in 2008, while working in the trading room of a major German bank.

At that time, I saw many rushing out to buy physical gold and silver as they were hard assets and immune to default risk. By the time I decided to buy some for myself, it was too late and the local bullion dealers were out of stock. After scouting 12 different dealers in Frankfurt, I managed to buy only a small silver bar from the gift shop of the European Central Bank.

This experience made me realise how fragile our financial system really is. The system is too interdependent and over-leveraged, making it very fragile. It is like a house of cards whereby the removal of a "single too big to fail" component collapses everything.

Furthermore, most paper assets are essentially I.O.Us that can be defaulted upon in a financial crisis. Most people think of money in the bank as being theirs, in reality they are just unsecured creditors. It got me thinking about the need to have part of my wealth in physical assets like gold and silver.

Given that Singapore is such a safe country and there were no bullion dealers then, I promptly started Silver Bullion.

Q: When did you break even?
A: We have always been profitable and have never taken on debt because we had almost no expenses. Given my experience in developing software for banks, I developed and set up the company's website and IT systems.

Since then, we have had more than $600 million in sales. We store more than $300 million worth of precious metals at The Safe House.

Silver Bullion has grown and we have two additional subsidiaries, a technology spin-off and a joint venture company with Aspial Corporation. Our turnover is about $100 million. We have nearly 30 staff and many of them are shareholders.

Q: What's in your portfolio?
A: My equity in Silver Bullion constitutes the largest part of my portfolio. Silver Bullion has about $10 million in net assets and we traded some shares at a $40 million valuation last year. I own 55 per cent of the company. My initial investment in Silver Bullion has increased about 200 times since 2009.

A significant amount of my wealth is in physical silver. I also own Class I battery-grade nickel as I see very strong growth for electric vehicles. Both silver and nickel are deeply undervalued and are good defensive positions in a financial crisis. So I get great upside but limited downside.

For riskier assets, I own bitcoin for the long term and shares of select junior miners. I am waiting to short the US market when investor confidence erodes and over-leveraged margin accounts unwind.

I also own my home, an HDB maisonette in Ang Mo Kio.

Q: What are your immediate investment plans?
A: I am looking to buy more silver and nickel as they are out of favour and extraordinarily undervalued. Compared with equity markets, the chances of prices falling further are much lower. Always buy when assets are unloved and undervalued.

Q: How did you get interested in investing?
A: My interest in investing was more of a means to an end. I figured early on that investing wisely gives me freedom to choose how I want to live my life and pursue the things I am really passionate about, such as building better, more transparent wealth protection systems.

Q: Describe your investing strategy.
A: Invest in what you know and believe in. Don't buy something because your neighbours are buying it. You need to resist the fear of missing out when assets have already appreciated considerably and are likely not a good buy anymore. I've made plenty of mistakes and I am still reminded of this lesson.

I don't like short-term trading as it uses up too much of my time and feels more like gambling. I prefer long-term investing in undervalued assets that have good upside based on strong trends. This strategy needs patience, but it works well and lets me sleep well at night.

Q: What else is in your financial plan?
A: Health insurance. I might look into setting up a trust at some point.

Q: How are you planning for retirement?
A: My wife and I have enough to retire on. However, I would get very bored if I retire, so it is not something I plan to do any time soon.

Q: Home is now...
A: An HDB maisonette in Ang Mo Kio.

Q: I drive...
A: A champagne gold Toyota Estima. I hope to buy a Tesla when it becomes available in Singapore.