The S.T.A.R Storage, established in 2011 and fully operated by us, segregates bullion into equally sized and uniquely identified, tamper evident, parcel bags (parcels). Individually identified parcels, whose contents are authenticated through DUX, are individually owned by customers, fully insured and stored at our subsidiary, The Safe House (TSH), under exclusive Singapore jurisdiction.
Parcels are either:
Parcels can be easily:
Currently we are 102.79 % allocated having:
Gold and Silver bullion, stored outside the financial system in a safe jurisdiction, can be a wealth insurance and crisis hedge that will protect you in the worst of situations.
Although bullion does not generate interest, preciousness lies in the fact that it is a scarce commodity that cannot be created out of thin air, thereby increasing in real value over time. As the major world currencies such as the US dollar, Yen, Euro and even the Chinese Yuan devalue their currencies through extremely low interest rates and massive currency creation, the real purchasing power of fiat currencies is eroded despite interest payments.
The US dollar, for example, has lost over 98% of its purchasing value since 1913, whereas gold has increased (in dollar terms) by a factor of 60 over the same time period. Throughout history, excessively debased currencies will eventually become worthless and unsustainable debts will eventually be defaulted upon; but physical gold and silver, despite short-term price fluctuations, will endure as a reliable store of value as they have over the last 4,000 years.
As we are entering times of financial turbulence and as more people realize the extent of our global financial fragility, it is only prudent to protect some of your wealth through the physical storage of gold or silver outside the banking system. If no significant crisis occurs you will be hardly worse off, but if a currency or banking crisis does occur, your physical bullion will be a financial lifesaver.
There is a near truism in the industry which states that, “If you can’t touch it you don’t own it”.
This statement is true in most cases because storage solutions which rely on generic quantity or weight counts are, by definition, based on an IOU system, making the client, in a legal sense, an unsecured creditor rather than an owner.
In the industry you will often find that bullion storage are categorized as “Unbacked”, “Unallocated”, “Allocated”, and in some cases “Reserved” as follows:
Keep in mind that these terms, other than "reserved" which requires documentary proof, are often used quite loosely and as this is mostly a self-regulating industry so full allocation often comes down to how transparent the storage system is.
S.T.A.R. Storage has been “Reserved” from the begining and, although more expensive and restrictive, it is well worth the trouble as it is a prerequisite for clients to be a legal title owners.
From a legal point of view, investors are normally unsecured creditors because their money is recorded as a liability with their immediate counterparty which typically will become an unsecured creditor themselves as they transfer funds to other counterparties along the counterparty chain.
As the name suggest unsecured creditors are completely dependent on the solvency of their counterparties which is not a good situation if you seek to minimize risk to protect yourself from systemic risks. The typical exceptions of this rule are real estate – where you receive legal title to your property - and buying and taking home a physical good, such as bullion, yourself – in which case legal ownership was transferred via an invoice.
So if you purchase bullion for storage and do not get an invoice – the vast majority of cases - you can be pretty certain that your status is that of an unsecured creditor because you own a claim, not a physical asset. On the other hand if you receive a valid invoice you would be an owner of the bullion as evidenced by the invoice. To issue an invoice for goods the issuer must be in possession of the goods and the goods must be uniquely identifiable if they remain under custody of the seller.
So a storage invoice stating “monster box of 500 Maple leafs” for example is essentially an IOU because it does not specify what specific box you own nor does it guarantee that bullion exists at the time of the transaction. So ultimately it is a promise. On the other hand a sealed parcel ID SB20005XXX owned by Silver Bullion Pte Ltd containing a monster box would be valid property because it is specific existing asset giving the client ownership of the parcel and relegating Silver Bullion Pte Ltd to act as a storage agent for the client owner.
An advantage to being a legal title owner is that it makes it very difficult and illegal to encumber – see encumbered bullion – your bullion. Another advantage is that your claim to the parcel survives the dissolution of your dealer. In other words, if your dealer goes bankrupt you would still be the owner of the parcel and a bankruptcy court would not be able to claim it for creditors whereas, as an unsecured creditor, you would probably have lost any claims you had. Furthermore, in Singapore, falsifying an invoice is a criminal rather than civil matter making the humble invoice a very powerful document indeed.
However from a dealer perspective issuing storage invoices for physical parcels does not allow for shortcuts and is much more complicated and expensive compared to issuing promises and virtual quantities because:
We have developed the “Reserved” characteristic of S.T.A.R. to support invoicing and customer ownership from the beginning. Ownership is a bedrock characteristic of our storage program and a key to our success as customers are becoming more sophisticated and understand the value of having legal title to one’s bullion.
It might seem illegal but it has been quite common by providers not to store physical bullion while charging storage charges. Often the provider rationalle is that the bullion will be hedged financially and if the customer needs the bullion then it will be bought in the market when requested. There have been a number of class action lawsuits against major banks about this in the past. Tellingly the usual defense was "It is an industry practice".
a. Invoices and POs: S.T.A.R. Customers own their bullion in specific, sealed and uniquely identified tamper proof bullion bags referred to as "parcels". Parcel Ownership is transferred and returned via Invoices and Purchase Orders listing the specific parcel codes that were bought and sold. In Singapore falsifying an invoice is a criminal rather than civil offense so the humble invoice is a strong statement.
b. Photos of you parcels: You have access to the "Parcel Photo" report which contains a page describing each parcel you currently own and a clear photo that clearly shows the parcel's seal number, content and weight.
c. Vault Inventory Report by parcel. We publish the vault operator(s) inventory check confirming the physical presence of each parcel by serial code by vault. This is updated at least twice per week.
d. Third party specialized material auditors from the Inspectorate, a London Bullion Market Association (LBMA) approved inspection company on a quarterly basis. The latest Inspectorate report can also be downloaded online by S.T.A.R. Customers.
See the Documents & Cancellation Sections in the User Agreement for more details.
It is only natural that a reserved system needs a way to insure that a parcel is not sold to multiple customers concurrently as it would essentially downgrade the system to an unallocated storage system.
The Parcel Ownership List contains all S.T.A.R parcels and lists the respective owner of each parcel. Ownership is represented by your anonymous eight digit S.T.A.R. Owner ID so that your privacy is protected.
The complete parcel list is made available for download to all S.T.A.R. Storage customers so that each owner can crosscheck their parcel holdings. This means that any double allocation would be obvious to all S.T.A.R. Storage customers. Beside our internal checks and customer review, this list is further checked by our accountants and annually by Singapore financial auditors.
Dealers will normally reply that the bullion comes from trusted sources. For the most part this answer has merit but often a dealer will also buy back bullion from sources other than mints or foundries. Having the ability to conclusively determine bullion genuinity is a must for us. Trusting is good, being able to test is better.
Silver Bullion Pte Ltd developed a comprehensive bullion testing program back in November 2012 called DUX. DUX is an acronym that stands for Density Ultrasound and X-ray Fluorescence testing. Each test measures and compares a different physical characteristic (mass and volume, ultrasound celerity, and surface metal composition) in such a way that counterfeit bullion might pass an individual test but not the DUX trio of tests. Find out more how DUX works.
All Transfer-in bullion and buybacks, not coming directly from mints, foundries or primary distributors are tested in this manner and DUX test reports are associated with the Transferred bullion on a Parcel by Parcel Basis.
There is a common practice in the industry to lease out stored bullion to generate additional income.
The basic premise is that Entity A, having a large amount of bullion which was acquired using client funds is now on the company balance sheet – as clients are unsecured creditors. Entity A then takes a large chunk of the bullion and leases it to Entity B for a fee. Entity B leases the bullion, pays the fee to A and promises to return the bullion at a certain date. Entity B then proceeds to sell the bullion to other entities and assumes that they can return the bullion at some point in the future.
In such a scenario the bullion is, unbeknown to the customer, leased out and then sold to another party. Often the bullion does not even need to be physically moved as the lease normally involves only claims to the bullion and it can generate a nice side income for entity A. In such a scenario the bullion against which the client has a claim has been “encumbered’. Entity A can even claim that the bullion is still allocated as the bullion often is physically still in the vault. This practice allows Entity A to charge less, or even give free storage to clients by using the leasing income as a source of revenue.
Although it sounds illegal this practice is widespread and is legal in large part because the clients do not really own the bullion, - see Unsecured Creditor vs. Owner for details - as they merely have a claim for bullion against Entity A which in turn sees the client claims as mere liabilities on their balance sheet.
As an interesting side note, you might have heard that Germany was quoted a seven year delivery timeline to get back 300 tonnes of gold which was stored for free for the Germans courtesy of the New York Federal Reserve. Although there is no firm evidence this looks like a typical case of bullion leasing with the lease being over in 7 years – see an article on the subject that we published in February 2013.
We do not lease bullion out on principle. Furthermore our “Reserved” storage characteristic and the legal ownership status of our customers make bullion leasing by design very difficult or straight up impossible as the bullion, due to ownership transfer, is not on our balance sheet.
Bullion storage is based on a chain of trust and a set of legal contracts that extend from the customer, through intermediaries, all the way to the vault where bullion is stored. Each link implies additional legal, jurisdictional and financial exposure, so the fewer the number of links the better. Because it is an industry practice by dealers not to fully disclose to customers where or with whom bullion is stored or which repatriation and Force Majeure clauses are in effect, the customer would know only about the first link of his storage counterparty chain and have little real understanding how vulnerable their bullion is in a systemic crisis.
Counterparty chains matter because your bullion is only as safe as the weakest link in your chain. Should an Intermediary, in a systemic crisis scenario, go bankrupt you might find out too late that your bullion claim only goes as far as the bankrupt intermediary – which might be a company you never heard about – and that, as an unsecured creditor, your claim to recover assets of the bankrupt intermediary is very low in the order of repayment (seniority) and second to secured creditors (e.g. banks which always secure themselves) of the bankrupt intermediary.
As The Safe House is a subsidiary of Silver Bullion by storing through S.T.A.R. Storage, you effectively reduce your counterparty chain to a single link. The absence of intermediaries means that you have legal, financial and jurisdictional certainties. To modify the saying, “The buck starts and stops with us”.
As of March 2014 Silver Bullion has a positive balance sheet of over 5 million SGD (4 million USD) and an official recorded capitalization of 2.5 million SGD in the company’s BizFile report (see explanation in a later paragraph). Compared to our operating expenses these are very high financial reserves, allowing the company to operate for almost 10 years without revenue if needed which is much higher than typical businesses.
The Safe House SG, which required extensive initial capital investments, was financed 90% from internal funds by Silver Bullion while 10% came directly from Gregor Gregersen, Silver Bullion’s founder. Neither Silver Bullion nor The Safe House have any debt and Silver Bullion owns 120,000 ounces of silver and 800 ounces of physical gold outright allowing for substantial in-stock inventory and thereby enabling customer ownership more efficiently.
You can easily find out unbiased and detailed information about a Singaporean company, such as registered company debtors, whether it is audited, in tax compliance, ownership details and official capitalization by downloading a Bizfile report from the Accounting and Corporate Regulatory Authority (ACRA) of Singapore.
Each report costs 5 SGD (4 USD, payable via credit card) and takes about 5 minutes to obtain. It is worthwhile to review such a file as it essentially lifts a curtain off the company, revealing hard facts and allowing you to independently verify claims that companies might make. If you are going to become a client of a storage program in Singapore it is worth spending 5 minutes and 5 dollars to review this report and counterparties on the counterparty chain.
To obtain company reports go to ACRA BizFile.
Insurance comes in many guises. For a vault operator insurance is a major cost so lowering an insurance through exclusions can make a big difference to the bottom line. Depending on the type of coverage and an insurance companies inspector assessment some type of coverage might simply not be granted, such as infidelity, which could be seen too risky for the insurer.
As Silver Bullion Pte Ltd has moved into the vaulting business through The Safe House SG we have acquired our own insurance policy instead of relying on direct insurance from an outsourced Vault Provider.
Obtaining an extremely strong all-risk vault insurance at good rate was probably the most important milestone for Silver Bullion and The Safe House as our insurance essentially removes all physical storage risk and has a better coverage than most established vaults.
The the insurance protects your bullion not only from Theft and Fire but also includes:
Such insurance strong insurance, issued by XL Group - a Lloyd’s underwriter - was made possible because the underwriters who inspected the storage facility, processes and people behind it, decided to effectively trust The Safe House SG unconditionally for 100 million USD.
As of late March 2014 this insurance amount is twice our currently stored bullion and will be raised further as needed.
S.T.A.R. Storage customers can download the signed Insurance Certificate and policy number from the storage interface.
A Force Majeure clause relieves a party from an obligation under the contract if a certain event occurs so if you are seeking to protect yourself from systemic risks then you would want to make sure this clause does not undermine the very reason to store bullion in a separate jurisdiction.
A major reason The Safe House was created was that there is little bullion storage capacity in Singapore that is not run by a subsidiary of an overseas company, thereby implying direct or indirect exposure to European or US governmental regulations which will likely be bearing the brunt of upcoming systemic crisis. Such exposure creates legal ambiguity as to what would happen if a Western nationalization were to re-occur and is made evident in the Force Majeure clause of storage contracts, which typically indemnify the storage provider from “any governmental action, by any government”.
We believe that if you go through the trouble of storing bullion in Singapore then you should not have to sign such an “any by any” clause as it negates the very reason to store bullion in Singapore in the first place. Furthermore, unless you are dealing with a storage provider directly, you would not know what Force Majeure clauses your dealers accepted in their respective contracts with the next middlemen or storage facility. Such storage counterparty chains cause further legal vagueness and uncertainty.
Through The Safe House SG Pte Ltd, being a subsidiary of Silver Bullion Pte Ltd, we have full contractual transparency along the entire storage chain with no material Western regulatory exposure for stored bullion. Although a Western nationalization event or shipping restrictions would affect our ability to obtain new bullion and might stop us from accepting US dollars as payment, your existing bullion would not be affected by a Western nationalization occurrence.
Although Singapore has no natural resources, it managed, over the last 50 years, to become one of the richest countries in the world through an excellent educational system, very efficient governance, hard work and pragmatism, extremely low corruption and simple but clear laws that foster competition and guarantee private property. Although there are no capital gains taxes and low income taxes, the government had budget surpluses 23 times over the last 25 years and closed 2013 with a 3.9 billion SGD (3.1 billion USD) surplus. English is the primary language along with Chinese (Mandarin), Malay and Tamil (Indian) dialect and the country boasts extremely low crime rates. In other words, Singapore is rich, safe and stable which we deem to be the criteria for choosing the best jurisdiction for bullion storage.
Beside being a leading financial center, Singapore has one of the busiest airports in the world, the busiest cargo port in the world and huge refineries on an offshore island called Jurong Island. Although Singapore is covered by malls and entertainment options, plenty of scarce land is reserved to natural parks and trees. Real estate prices are sky high as Singapore has become a favorite destination for able workers and entrepreneurs. A host of other, constantly evolving, industries and businesses call Singapore home and it is a top location for global companies to set up its Asian headquarters.
The Singapore Government is, in many respects, run like a business as governmental ministries, for example, have their budget reduced every year, rather than increased, and have to bid for additional funds which keep pressures on governmental officials to raise efficiency and services. Politicians are very well paid to attract smart individuals and minimize the temptation of favoritism or flat-out corruption. Most policies, a legacy of Lee Kuan Yew, are truly designed for the long-term benefit of the country rather than political maneuvering to win votes during election. Singaporeans are afraid to be outcompeted and will try just a bit harder which explains why the country has done so well.
Much of this success has come about because Singapore is one of the most trusted jurisdictions in the world and is well known as a country where laws are upheld in spite of external pressures. Lee Kuan Yew, the very long serving prime minister who is rightly seen as the architect of modern Singapore summarized Singapore’s success down to a single word: confidence.
This situation is excellent for bullion storage because, if Singapore (for example) were to nationalize gold due to US pressure (for example) the consequences would be an immense loss of confidence and would have a devastating effect on the Singapore economy. So although nothing is ever absolutely certain, Singapore has no incentive (as they are very wealthy already) and it has a lot to lose by supporting a hypothetical US gold nationalization.
An interesting case illustrating Singapore’s willingness to stand up to foreign pressure was the Michael Fay graffiti case, where then President Bill Clinton and a group of US senators tried in vain to prevent Michael Fay from being caned. Read about it here.
These factors make Singapore a great jurisdiction for Gold and Silver storage. To better understand how and why Singapore works we highly recommend reading “From Third World to First” written by Lee Kuan Yew himself.
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 defense treaties with surrounding countries designed to reinforce stability in the region.
Surprisingly, Singapore also carries an enormous stick give 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 950,000 personnel with a large portion deployable at short notice given the yearly week-long readiness drills. The defense 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.
Singapore even has a defense industry which locally manufactures and exports the SAR 21 rifles and various artillery pieces which are used by other militaries and Special Forces. Among others Singapore has both training and military bases in Taiwan, Thailand, Australia, India and the US (Idaho). In other words, Singapore is very well defended regionally.
You can read more about it here.
The four defining characteristics of S.T.A.R. Storage:
Singapore Jurisdiction - Across the Entire Storage Chain - By establishing our 630 ton capacity vault in Singapore, removing middlemen and eliminating ties to Western jurisdictions, we ensured that Singapore jurisdictional protections are not undermined by foreign regulatory ties in the event of foreign gold nationalizations. See Executive Order 6102
Ownership without Financial Markets Counterparty Risk - Under S.T.A.R. Storage you are the legal owner of the bullion as evidenced by a Singapore commercial invoice. Falsifying invoices in Singapore is a criminal offense, giving these documents a strong legal status. Ownership is a much stronger position compared to the unsecured creditor status that most financial (paper) precious metal positions entail.
Insurance Beyond Industry Norms – Storage resellers and marketing materials often use the term "All Risk" to describe insurance. This can be misleading because "All Risk" means "a type of insurance coverage that can exclude only risks that have been specifically outlined in the contract". Therefore you need to get a list of exclusion to evaluate an "All Risk" policy. Regardless whether a policy is "Specified Risk" or "All Risk Excluding Specified Exclusions" the following are the key vaulting coverages to compare:
A Solid Counterparty - With no debt, extensive employee share ownership and enough reserves to operate for over 10 years without sales, we are here for the very long term and an extraordinarily solid counterparty during a crisis.
No Import Duty or Sales Tax on IPM Bullion in Singapore - S.T.A.R. Storage is exempted from duties and the Singapore Goods and Services Tax (GST) because we store only IPM Tax Exempt Bullion which can be freely taken delivery of, imported or exported. Only bullion defined as IPM can be transferred into S.T.A.R. Storage though our Transfer-In Program.
No Capital Gains Tax in Singapore - Singapore has no capital gains tax for private individuals. Thus, under Singapore law, no local taxes are due on profits derived from selling your bullion. The above refers to Singapore jurisdiction only; if you are foreign resident or citizen you might be required to voluntarily report and pay capital gains taxes to the tax authority that has jurisdiction over you.
No International Reporting Requirements by Silver Bullion - S.T.A.R. Storage involves physical products (bullion) storage which is not classified as a financial product by Singapore. There is no legal obligation on Silver Bullion to report to any foreign government, including any foreign tax authority, regulator and/or any foreign public authority to provide information on any customers and/or any transactions performed under the User Agreement. See 17. Amendments, Privacy and Breach
Authenticated - S.T.A.R. Storage parcels are stored on an Authenticated basis whereby bullion not received directly from a mint, refiner or major supplier are DUX Tested and test results are linked to the parcel.
Always Fully Allocated - The total amount of bullion in storage always matches or exceeds as the total amount of bullion owned by S.T.A.R. customers. This is because the "Reserved Storage" system makes unallocated positions impossible and because Silver Bullion, which fully owns over five metric tonnes of silver and substantial amounts of gold and platinum, is also storing bullion at The Safe House. See the Storage of Bullion clause in the S.T.A.R. Storage Agreement for more details.
Clear Ownership - Bullion held in S.T.A.R. Storage by customers will not be subject to any kind of lending, collateral or derivative transaction , unless requested by the customer for his/her own benefit, and will remain your property in the safekeeping of the Vault Operator until sold or withdrawn according to your instructions received via Silver Bullion.
Transparent Inventory & Ordering - S.T.A.R. Storage lists how much bullion is available in-stock for immediate purchase at the vault or whether a purchase needs to be pre-ordered from suppliers. As a permanently fully allocated storage program S.T.A.R. differentiates between these orders since you can only receive legal title for bullion that is physically present in the vault.
Uniquely Identified Bullion Parcels with Photo ensure your parcel exists. S.T.A.R. Customers own their bullion in specific, sealed and uniquely identified tamper proof bullion bags referred to as "parcels". As a S.T.A.R. Storage owner you have access to the "Parcel Photo" report which contains pages describing each parcel you currently own and a photo that clearly shows the parcel's seal number, content and weight.
Third Party Inspections ensure Bullion is Present. We publish the original vault operator inventory check confirming the physical presence of each parcel by serial number. This is done at least twice a week and the checks confirm that all the bullion is indeed in the vault. Furthermore, the inventory parcels are checked 4 times per year by specialized material auditors from "Bureau Veritas / Inspectorate", a London Bullion Market Association (LBMA) approved inspection company or by our Financial Auditors (PricewaterhouseCoopers Singapore) . All documents as well as the insurance certificate can be be downloaded online by S.T.A.R. Storage Customers.
Audit on Demand Option. It is possible to organize an audit of your bullion through "Bureau Veritas" or another auditor of your choice which will issue you a findings report. Please note that such audits are relatively costly at around 2,000 USD and, given that quarterly audit reports are included in our storage service, these might only make sense under special circumstances.
The Parcel Ownership Report Prevents Double Assignment of Parcels The Parcel Ownership List contains all S.T.A.R. parcels and lists the anonymous eight digit S.T.A.R. Owner ID owner next to each parcel. This complete list is made available for download to all S.T.A.R. Storage customers so that each owner can crosscheck their parcel holdings. This means that any double allocation would be obvious to all S.T.A.R. Storage customers while preserving owner anonymity.
Sign up as a Silver Bullion User and then apply for a S.T.A.R. Storage account. Once your S.T.A.R. Storage account is verified, you will see a checkmark next to your username and will be able to buy, sell, transfer-in or take delivery of your parcels online.
All charges are in Singapore Dollars—the figures below are rounded to the nearest cent; however, the actual charge is calculated up to four decimal places. It is possible to pay the US dollars equivalent amount which is set at the time of order. For Parcel Buy / Sell rates please review the Cumulative Discount Tier Price Chart for each bullion item. Storage customers always enjoy the client buyback rate.
Fixed (absolute Singapore dollar amount, not percentage) storage rates of:
Storage charges start on the date bullion ownership is transferred in your name and the invoice is closed (Invoice Date). You will not be charged while your order is being processed or if it is a pre-order. Upon sale or delivery of parcels any unused or overdue storage months will be refunded or deducted on a daily pro-rated basis as part of the Purchase Order or Delivery Note.
It is possible to transfer your existing bullion into S.T.A.R. Storage which includes repackaging into parcels, validation through DUX testing and the ability to sell the bullion to us online.
Transfer-in is charged on a per-ounce basis and discounted based on your discount tier. See the Transfer-In page for details.
Optional pick-up in Singapore at 25.00 SGD (17.86 USD). Additional 299.00 SGD (213.57 USD) if armed delivery to a Singapore address is required.
Bulk delivery charges outside of Singapore vary depending on destination and volume.
The Safe House SG Pte Ltd (TSH), subsidary of Silver Bullion Pte Ltd, provides a Do It Yourself (DIY) storage solution using custom designed Safe Deposit Boxes and processes designed to maximize security and privacy. A box can be packed remotely upon provisioning. Once sealed, the customer is required to be physically present at The Safe House to access the box.