Singapore Has Golden Ambitions

Singapore has emerged as one of the world's hubs for private banking for the wealthy, and now it is making a play to become the Fort Knox of Asia.

Starting Monday, the Southeast Asian city-state is scrapping a 7% tax on gold and silver in an effort to turn the city into a precious-metals trading hub to rival London and Zurich, where value-added taxes don't apply to the investment-grade gold trade.

Investors have flocked to gold and silver in recent years as the world economy sputtered. The most nervous among them shunned the futures and funds often used to invest in gold and instead bought bars, ingots and coins to stash their wealth.

Singapore, touting its image as a safe, stable and few-questions-asked haven for investors, is hoping to store an increasing amount of that gold and silver.

"There has been a dramatic increase in customers wanting to move out of paper, that is over-the-counter gold, and into physical," said Cedric Chanu, director, Asia precious-metals trading at Deutsche Bank. "We're seeing customers wanting to move their gold from Europe into Singapore."

Following the tax exemption, Singapore is aiming for a 10%-15% share of global gold demand within five to 10 years, up from around 2% now, government agency IE Singapore said at the time the exemption was announced early this year.

Gregor Gregersen, director of Singapore-based physical gold and silver supplier Silver Bullion Pte. Ltd., pointed to Singapore's low crime rate and political stability as key factors in Singapore's transformation into a precious-metal trading hub. "People feel safe storing their bullion here," he said. 

Read more: Wall Street Journal, 2012 1 October