Gold's strange 'bear market': Deutsche Bank opens gold vault in Singapore


Deutsche Bank Opens Singapore Gold Vault

By Clementine Wallop
The Wall Street Journal
Sunday, June 9, 2013

SINGAPORE -- Deutsche Bank is opening a vault in Singapore that can hold $9 billion of gold, as it hopes to tap rising demand for the precious metal in Asia amid a push by the city-state to burnish its image as a bullion-trading hub.

Singapore last year scrapped a goods-and-services tax on gold in a bid to help boost its share of global gold demand to 10-15% within a decade from around 2% in 2012 as it seeks to compete with more established bullion-trading centers.

"Gold has traditionally been stored in London, Zurich, and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve," Mark Smallwood, Deutsche Asset & Wealth Management's head of wealth planning in the Asia-Pacific region, told The Wall Street Journal on Friday.

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Political and economic risk in Europe is keeping investors cautious, and demand for physical gold as a haven is strong, putting Singapore in a position to benefit from its reputation as a stable and safe place to store high-value assets.

"What we're seeing is customers looking at gold and being cognizant of the fact that when things go wrong, where you're storing the gold is extremely important," Mr. Smallwood said. "Risk factors for gold are increasing dramatically, and people want to store where they perceive it to be safe, which often will involve geographically diversifying that storage."

Deutsche Bank started accepting bullion into the new Singapore vault three or four weeks ago and is seeing strong demand from its customers for storage in the facility, he said.

The vault can hold up to 200 metric tons of gold, which is around the same volume as the central bank reserves of Belgium or the Philippines.

The vault is in the Singapore Freeport, a high-security facility, and is subleased from Malca-Amit, a company that specializes in storing and transporting diamonds and precious metals. Deutsche Bank also has vaults in London, Hong Kong, and Zurich.

Deutsche Bank is one of the world's biggest gold-dealing banks and is among those that set gold prices every day in London. The so-called fixings are used to determine spot prices worldwide, including in jewelry, and for sales from mining companies to refineries.

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