Singapore is making a bold move to become a global gold hub, with the Monetary Authority of Singapore (MAS) opening a national currency vault capable of holding 500 tons of bullion. This vault is now available to foreign central banks and sovereign entities, accompanied by a tax break for the wholesale gold trade. The initiative comes as wealthy investors from the US, Europe, and the Middle East are increasingly storing their gold in Singapore, with private holdings growing 16-fold since 2014 to over 800 tons.
The shift towards Singapore as a gold storage destination is driven by concerns over political uncertainty and fiscal deficits in other regions. Gregor Gregersen, founder of The Reserve, a six-story vault near Changi Airport, emphasizes the appeal of storing gold in a wealthy, stable, and well-defended country like Singapore. His facility, which can hold roughly 10% of the world's annual gold supply, has seen client gold storage triple since early 2020, with 90% of it foreign-owned.
The new sovereign vault differs from private facilities like The Reserve and Le Freeport by being run by the central bank itself, offering foreign monetary authorities a trusted custodian in Asia. The vault will also support gold custody accounts for selected Singapore-based bullion banks, allowing the metal to be put to work. Tax relief on gold wholesale services, including vaulting and refining, will be extended from April 2027, and an SGX over-the-counter clearing system is expected by year-end.
Goldman Sachs has highlighted the growing storage dilemma for central banks, noting that while London and New York offer immediate market access and liquidity, they also come with political risks. The shift in gold storage preferences is evident, with foreign central bank gold at the New York Fed falling by 40 tonnes in August, while custody holdings at the Bank of England rose by 46 tonnes. Central bank buying remains strong, with Goldman estimating purchases of 79 tonnes in August and 85 tonnes a month on a three-month basis.