Singapore: A Cost-Effective Safe Haven For Precious Metals

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The Hard Assets Alliance Blog

Singapore: A Cost-Effective Safe Haven For Precious Metals

In just the past few weeks, we narrowly escaped the Mayan Apocalypse, rang in the New Year without a hitch, and averted a fiscal cliff – a threshold that supposedly would have sent the US economy into tailspin.

Although Congress has been patting themselves on their backs for a job well done, anyone who's read the bill knows that the deal is no different from the hollow resolutions made by countless people on New Year's Day. Both aspire to be the foundation of bigger and better things; however, partisan politics will return to Congress sooner than later, and with it the sense of optimism will fade. In the case of the fiscal cliff resolution, Washington delivered a short-term fix – a Band-Aid on a wound that desperately requires intensive care.

Yet Wall Street celebrated the announcement as if something meaningful had been accomplished, even though government spending is still out of control, economic growth remains muted, and money printing has shifted into overdrive. In this environment, there are no safe havens, and there are no risk-free investments. As a result, an increasing number of investors are flocking to gold and silver as a way to hedge against the fiat money experiment gone mad.

As uncertainty continues to lurk in the shadows, investors are not only in search of safe investments but also secure locations where their capital will be protected from the talons of desperate governments. Sensing opportunity, the tiny nation of Singapore announced on October 1, 2012 that it would make gold and silver exempt from its 7% Goods and Services Tax (GST).

By removing barriers on the trade and storage of precious metals, Singapore hopes to become one of world's premier gold markets and the leading gold hub in the Asian region. Currently, Singapore accounts for just 2% of global gold demand. While this may not seem like much, keep in mind that Singapore is geographically about the size of New York City and has a population of just 5.2 million people. With its highly favorable tax status, International Enterprise (IE) – an organization devoted to Singapore's trade development – hopes that the country can capture 10-15% of the global market over the next ten years.

Though Singapore's gold market aspires to become the next London or Zurich, it must first compete with regional gold hubs Dubai and Hong Kong. Although Dubai handles much of India's gold trade and Hong Kong is the favored gold market for economic powerhouse China, the tiny island of Singapore is considerably more stable than either nation. If all goes according to plan, Singapore should emerge as the Zurich of Asia – a place of relative transparency and stability.

Singapore has all the ingredients to become a world-class gold market. It's a business-friendly environment with reasonable taxes, strong public finances, low crime and poverty rates, world-class infrastructure, and an affluent population, while having Asia's strongest currency over the past decade. Add in Singapore's decision to eliminate its precious-metals tax and you have a recipe for a reshaping of the international precious-metals market.

Singapore's decision to eliminate its tax is an encouraging development that will reshape the international precious-metals market. Hard Assets Alliance members can now take advantage of the special opportunity since we recently made storage available in Singapore.

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