Traditionally, the most common locations for precious metals’ vaulting services around the world have been New York, London, Switzerland, Hong Kong, Shanghai and Singapore. Recently there have been a lot of uncertainties with political turmoil both in the east and west.
For New York and London, with recent US presidential elections and Brexit, most of our customers’ feedback was that they were concerned about the uncertainties of these events and the macroeconomic instability in general. Some of our clients are even worried of (another) gold confiscation Executive Order similar to the one in the USA in 1933. Furthermore, there is a lot of uncertainty regarding the regulations such as FATCA and the upcoming CRS (Common Reporting System) causing many customers to look for alternative wealth protection choices outside of the financial system. A good indicator of these concerns is that, with the exception of Singapore, almost 50% of our new clients in 2016 were from the US and Europe.
As for Shanghai and Hong Kong, we have also seen a shift in the sentiments among some of our clients. China has been accumulating physical gold over the past years has banned all the exports of gold. As Hong Kong is increasingly operating under influence from Beijing, there are concerns that the nationalizations (and even possible confiscations) can occur with an order from the Government. Customers are therefore increasingly looking for alternative jurisdictions for storing their precious metals and for our Asian clients Singapore is a natural choice.
For more reasons of why Singapore is one of the best jurisdictions for bullion storage in the world please read the answer to question 10.
Yes, it is true that Switzerland has been a safe haven for wealth protection for a long time. There are many similarities between Singapore and Switzerland such as the rule of law, very strong and stable economies, a trustworthy financial sector, protection of private property rights, low levels of crime, etc. It is no wonder that Singapore is therefore often referred to as the Switzerland of Asia.
However, with the recent introduction of regulations such as FATCA and the upcoming CRS, some of our clients, in particular those from the US, have been facing significant difficulties in operating in Switzerland and even opening a simple bank account. As for our Asian clients, in addition to the above mentioned safety and security issues, they also choose Singapore for the proximity of its geographic location, good transportation links, first class infrastructure and overall efficient services when they visit.
Firstly, Silver Bullion Pte. Ltd. is a Singapore company and therefore we fall exclusively under the Singapore jurisdiction. As such we are under no obligation to answer to any requests from any international body or institution unless directly ordered by Singaporean authorities.
As for Singapore and its ability to protect its values and its sovereignty, here are the two examples that might better explain Singapore’s willingness to stand up to international pressure.
The first was the Michael Fay graffiti case of 1994, where then President Bill Clinton and a group of US senators tried in vain to prevent Michael Fay from being punished according to Singapore laws. Read about it here.
The second case was more recent; in 2015 and 2016, when Singapore authorities shut down the operations of two major Swiss banks - BSI Bank and Falcon Private Bank, for their involvement in Malaysia’s 1MDB corruption scandal. Read about it here and here.
Singapore’s success story, as claimed by its modern founding father, late Lee Kuan Yew, is based on confidence. Therefore, as it was clearly illustrated in the two examples, Singapore will even stand up to strongest nations and risk losing big businesses in order to keep the confidence in its rule of law, political and financial stability and protection of private property rights. Singapore has no natural resources, no large population and the betrayal of this confidence would therefore mean an economic suicide.
The invoice provided by Silver Bullion for the purchased (and stored) bullion is viewed as a commercial invoice under the Singapore law. Also, once purchased and stored in our vault, the client’s bullion is not an asset of Silver Bullion anymore but a physical property of the client and Silver Bullion’s role becomes that of a storage agent / custodian.
In the (highly unlikely) event of Silver Bullion’s default or bankruptcy, each client’s bullion is therefore not going to be a part of the liquidation assets under the Singapore law. This means that all clients will be able to come to the appointed liquidator with their invoice (containing the unique parcel numbers) and directly claim their bullion, i.e. their property.
Similarly, any case of Infidelity of Employees (i.e. inside jobs) would cause imprisonment under Singapore law. Moreover, the insurance coverage for our vault also includes Infidelity of Employees and even Mysterious Disappearance, so all our clients are truly protected against ‘all risks’.
This is one of the most common misconceptions about Singapore, although at first sight it may seem a reasonable concern.
Singapore has been very careful to neither ally nor distance itself with any major power as they try to avoid policies that could cause conflict down the line. In line with this policy, Singapore has managed to build a number of mutual defence treaties with surrounding countries designed to reinforce stability in the region.
Surprisingly, Singapore also carries an enormous stick relative to its small size. Regionally, this city nation is a military heavyweight, given the two year compulsory military service for Singaporeans that allow the armed forces, police and the civil defence force to deploy over 1.4 million personnel with a large portion deployable at short notice given the yearly week-long readiness drills. The defence budget is around 12.1 Billion SGD (almost 10 billion USD) making Singapore a medium sized spender internationally and the country with the highest military expenditure in the entire ASEAN region; larger than Indonesia or Thailand.
Singapore even has a defence industry which locally manufactures and exports the SAR 21 rifles and various artillery pieces which are used by other militaries and Special Forces. Singapore also has both training and military bases in Taiwan, Thailand, Australia, India and the US (Idaho). In other words, Singapore is very well defended regionally.
In comparison, the nearest neighbour Malaysia has a professional army consisting of approximately 400,000 troops including the active reserve personnel. As for China, Singapore is the largest foreign investor in China and is seen as one of their most important regional partners. In 2015, Singapore was chosen to host the first historical meeting between highest representatives from China and Taiwan. In simple terms, China would have a lot to lose and almost nothing to gain from attacking Singapore.
The distance between Singapore and North Korea is just under 5,000 kilometers (3,100 miles) which is almost 1,000 kilometers more than the distance between London and Baghdad (4,090 km) so any potential spill over effects from possible conflicts would therefore be highly unlikely.
Furthermore, Singapore’s active foreign policy and its good relations with most major superpowers, make the possibility of Singapore’s direct involvement in a military conflict among the stated countries improbable.