WHY STORE PRECIOUS METALS IN SINGAPORE

Storing precious metals with Silver Bullion exclusively in Singapore ensures that your precious metals are stored in a safe country, reducing your counterparty jurisdictional risks and potential foreign governments' gold nationalization directives.

Singapore is Ideal for Long-term Gold and Silver Storage

Singapore is often referred to as the Switzerland of Asia, boasting the world’s freest economy, strong property rights and IP protection, very low corruption, a fully funded pension system, large sovereign wealth funds and no net governmental debts.

Geopolitically neutral, globally trusted, and well-defended Singapore, through exceptional statesmanship, has also become one of the world’s top destinations for foreign direct investments. Due to the vast amounts of incoming capital and talent, Singapore has become a key manufacturing and research center globally.

Politically stable, law-based, and with a culture focused on dialogue and mediation, Singapore is an ideal jurisdiction for safeguarding intergenerational wealth.

Store Gold and Silver in a Wealthy and Stable Country

Singapore is a multicultural English-speaking city-state in Southeast Asia. Despite having no natural resources, Singapore transitioned from a third-world country 50 years ago to become, through good government, the country with the third highest per capita income in the world. We highly recommend reading From Third World to First: The Singapore Story by former Prime Minister and founder of modern-day Singapore, Lee Kuan Yew, to understand how this was done.

The city-state experiences very little crime or corruption, and despite low taxes, it has consistently recorded budget surpluses. It is the only Asian country to be rated AAA by major credit rating agencies. The Economist ranks Singaporeans as having the best quality of life in Asia and today’s Singapore is socially very stable, as well as a cultural bridge between Asia and the West with English being the primary of four official languages. The country has a welcoming stance towards foreign investments. Singapore’s economy is pro-business with free flow of capital.

Singapore's monetary reserves are managed by three reserve management entities/sovereign wealth funds: Monetary Authority of Singapore, GIC Private Limited and Temasek Holdings, with the latter two being among the world's top 10 largest sovereign wealth funds. For details see: ‘What comprises the reserves and who manages them?’.

The Singapore Government is exceptional in that it does not borrow to fund its budget. It operates on a balanced budget and retired Singapore's last foreign debt in 1995. The government, however, issues debt to provide a local risk-free reference rate, support a domestic bond market and provide a guaranteed interest return to the country's self-funding CPF pension scheme. Funds are borrowed for the above purposes and, in turn, invested in higher-yielding liquid investment assets, not spent.

Take note that international media tends to report Singapore pension funds, which are lent to Singapore sovereign wealth funds to manage, as government debt. This creates the paradoxical situation that, as Singapore grows its pension fund wealth, the country is wrongly portrayed as being more indebted. Refer to "How UN, CIA, IMF. and World Bank statistics have misrepresented Singapore debt", "Is it fiscally sustainable for Singapore to have such a high level of debt?" and "Understanding Singapore Government’s borrowing and its purposes" to understand how this misunderstanding has arisen and is being perpetuated.

Well Defended and Neutral

With a defense budget thrice that of its neighbor, an air force comparable to that of Germany, one of the world’s most modern militaries and capable of deploying 420,000 personnel at short notice, Singapore is very well defended.

The Singapore Armed Forces (SAF) have bases in a dozen countries, including Australia, Thailand, New Zealand, India, Taiwan and the USA, as a way to spread military assets, particularly for the Air Force, equipment, and training facilities. Singapore uses a holistic Swiss-style "Total Defense" doctrine, which encompasses military, civil, economic, social, and psychological defense and even boasts a thriving defense industry.

Singapore's foreign policy is aimed at neutrality and maintaining friendly relations with all countries. It is a member of several regional defense agreements and has excellent relations with global powers such as USA, China, India and Russia. Furthermore, Singapore is the smallest country in Southeast Asia, yet it has one of the world’s most important ports, refineries, logistics hubs and financial centers, making its independence strategically important to major trade powers who see Singapore's stability as crucial for global trade.

Singapore Tax Benefits

In Singapore, there are no capital gains taxes nor sales taxes, or duties on Investment Precious Metals (IPM) like gold, silver, or platinum bullion. Investment-grade bullion is free to move and is not subject to import/export limitations or capital controls.

Furthermore, physical assets are not financial instruments under Singapore law and, therefore, are not subject to the kind of international reporting requirement typical of financial instruments.

These Singapore tax benefits on investment precious metals have since attracted silver and gold investors to consider the country as a premier destination for storing gold offshore.

Why Singapore is Unlikely to Nationalize or Confiscate Gold

The architect of Singapore's growth, the late Prime Minister Lee Kuan Yew, stated that if he had to choose one word to explain why Singapore succeeded, it would be ‘confidence’. That is, gaining and maintaining foreign investors' confidence in the country's ability for the long term.

Singapore has no natural resources, so its fortunes were built through good governance, low taxes, and a strong legal system that protects private property. These conditions attracted thousands of multinational corporations that located their regional headquarters, trading, production, and R&D facilities in Singapore to take advantage of the optimal business conditions, prevalent English language use, and the highly educated labor force.

Thus, Singapore's prosperity is built and depends on maintaining these conditions and standing as a champion of free markets, meritocracy, people’s rights to progress, and private property. If Singapore were to betray these principles, it would be akin to an economic suicide, and the Government is well aware of this. Singapore will, therefore, protect these principles to a much higher degree than other jurisdictions and is very unlikely to mandate Singapore courts to enforce blanket foreign nationalizations of private property held in Singapore. Read our article: "How Geopolitics Could Make Singapore the Most Important Gold Market for more thoughts on this subject."

These excellent qualities of Singapore benefit you when you store your precious metals holdings offshore as part of your international diversification strategy for your wealth. However, Singapore is but one-half of the offshore gold storage equation. With whom you are storing precious metals is crucial as well.

Vertical Integration: The Key to Protecting Your Precious Metal Assets

Silver Bullion is a wealth protection specialist for clients looking to store precious metal assets offshore. Since our founding in 2009, our approach to protecting our clients' precious metals holdings has been centered around reducing counterparty risks to their wealth.

We designed our company and services to be vertically integrated - that is, we own our bullion dealership (Silver Bullion) and our vaulting facilities (The Safe House Vault and The Reserve Facility - Singapore's highest capacity precious metal vault).

This unique vertical integration approach requires heavy investment on our part, but it removes all middlemen and ensures that Singapore’s jurisdictional protections are not undermined by foreign regulatory ties in the event of foreign gold nationalization and gold confiscation events.

In an increasingly uncertain world, your country’s laws might change, the financial or banking system might collapse, currencies might hyperinflate, assets of value might be nationalized, and simmering conflicts might escalate. Holding intrinsically valuable physical assets, like silver and gold bullion, in a resilient jurisdiction far away from your home country is a prudent safeguard against such calamities.

During a crisis, your precious metals holdings are only as safe as the weakest link in the counterparty and jurisdictional chain. For this reason:

• we do not outsource our vault storage to third parties, as this amplifies both counterparty and jurisdictional risks, and
• we do not store precious metals in multiple jurisdictions – as this amplifies jurisdictional risks.

By being your single strong link, subject to only Singapore laws, your counterparty risk is only limited to us, without other third-party dependencies.

Our vertical integration, in turn, has allowed us to thoroughly address remaining risks via transparent client asset ownership, comprehensive insurance, and metal genunity guarantees.

Global Vault Contracts Provide Little Protection Against Gold Nationalizations

There is only a small number of vault operators, catering to the silver and gold storage industry, worldwide. Countless bullion dealers and banks outsource physical gold and silver storage to these vault operators. This created a two-tier system. Bullion dealers outsource to vault operators because it is much easier and requires far less capital. Vault operators, in turn, do not buy or sell bullion because it would be a conflict of interest with their bullion dealer clients. The operators, in turn, usually rent facilities, which precludes the kind of vault investments we made into The Reserve.

Most bullion dealers offer precious metal storage with one of these globally operating storage operators, giving you the option of storing gold and silver in different countries.  However, from a systemic risk perspective, having operations in many countries also implies that global vault operators are exposed to the laws and regulations in those countries and, ultimately, the United States. This reality is reflected in the Force Majeure clauses of vault contracts between bullion dealers and vault operators, which typically state:

“[Vault Operator] SHALL NOT BE LIABLE under any circumstances whatsoever for:
Confiscation, seizure, appropriation, expropriation, requisition for title of use or wilful destruction of the Goods, or portion thereof, by/or under the order of any Government (whether civil, military or de facto) and/or public authority”

The clause illustrates the concept of "counterparty jurisdictional risk". In practice, this means that any gold stored with U.S.-exposed vault operators is subject to U.S. laws, regardless if the bullion is stored physically within or outside the United.

To address these potential jurisdictional risks, in an industry, which relies almost exclusively on rentals and outsourcing agreements, we have set a new path, through our full vertical integration, to provide more jurisdictional certainty in times of crisis.

U.S. Executive Order exposure is particularly concerning

On April 5th, 1933, US President Franklin Roosevelt issued Executive Order 6102 requiring all privately owned gold to be delivered to the government within 25 days, with a penalty of up to 10 years in prison for non-compliance for anyone caught in possession of a gold coin or bar. Refer to our article: "Protect your Wealth from Escheatings, Nationalizations and Confiscations" for our thoughts on this matter.

Executive orders are made at the discretion of the U.S. President in a near dictatorial manner without review or approval from U.S. Congress. Although Executive Order 6102 could be interpreted to be in violation of Article 1 Section 10 of the U.S. Constitution, which states, "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts." Nonetheless, it became law overnight in the United States.

Should such an order be issued today due to an economic or financial crisis, it is a near certainty that bullion stored all over the world would flow back to the United States Government. Executive Order 6102, for example, mandated that gold be nationalized in exchange for just USD 20.67 per ounce in 1933, and when the order was eventually repealed, there was no way to claim back the government-seized gold.

Our Nationalization Event Protection Clause

Our S.T.A.R. Storage program was designed from the outset not to have any material exposure to the United States or Europe and to fall only under Singapore’s jurisdiction. In practice, this means that we do not need to recognize the authority of foreign courts and we do not have significant assets outside of Singapore that can be used as leverage to exert pressure on us.

Furthermore, as customers own bullion parcels as property, it would be illegal under Singapore law for us to surrender our customer's property (like their stored precious metals) to a third party without local court approval, even if the third party is an enforcer of a foreign gold nationalization order. Our vault subsidiary, The Safe House, and vaulting facility, The Reserve, operate only in Singapore, ensuring this jurisdictional clarity is not compromised.

In addition, customers can opt to activate our Nationalization Event Protection clause for their S.T.A.R. Storage accounts. Should a gold confiscation or nationalization event occur in your country and you have this feature enabled (you may set this preference on your account profile),  we will freeze your holdings and will no longer accept remote instructions from you, preventing any sale or withdrawals from your account that could be performed under duress. This prevents bullion from being repatriated from your account in a gold nationalization event against your wishes. Your holdings can be unfrozen upon you visiting us in person in Singapore.

Read more on:

• S.T.A.R. Storage - Truly secure your wealth
• Be an asset owner, not a creditor
• Parcels types and audits
• DUX testing and the Genuinity Guarantee
• Insurance beyond industry standards
• Exclusive Singapore jurisdiction