“The center of gravity of the gold market has shifted east, with Singapore, fortuitously placed as the potential fulcrum of this new balance,” Fan Shaokai, the World Gold Council head of Asia-Pacific and global head of central banks, said at the recent Asia Pacific Precious Metals Conference held in Singapore.
This observation underscores Singapore’s transformation into a critical player in the global gold market. Over the past two decades, the city-state has leveraged its strategic location, robust infrastructure, and business-friendly policies to become a leading financial center and destination for gold trading, investment, and storage.
This transformation is no doubt a validation of the right steps Singapore took to be at the forefront of the bullion industry today.
Key Factors Driving the Singapore Gold Hub
Strategic Location and Connectivity
Located at the crossroads of major trading air and sea routes, Singapore is a natural gateway between the East and West. Its well-developed airport, seaport, and world-class logistics infrastructure make it ideal for the storage and movement of gold and other precious metals.
Singapore is near about 25% of the world’s gold mining supply centers, including China, Indonesia, Australia, Papua New Guinea, and Laos. The presence of Metalor, a major LBMA-accredited Swiss refinery established in the country in 2013, bolsters the usefulness of this proximity for the gold trade.
Tax Advantages
The establishment of Singapore’s Metalor gold refinery was undoubtedly a result of the Approved Refinery and Consolidator Scheme (ARCS), which exempts precious metals refiners and consolidators from the Goods and Services Tax (GST) on imported materials for refinement into investment-grade precious metals.
Singapore had an active Southeast Asia gold distribution center in the 1960s and had an over-the-counter (OTC) gold market trading 25-kilogram 99.99% purity gold contracts. However, with the imposition of the GST in 1994, gold consumption fell significantly, causing the Singapore gold market to languish into the 2000s.
Therefore, the government’s 2012 decision to exempt investment-grade precious metals from the GST was a pivotal effort to reboot Singapore’s gold market and transform it into a leading gold hub. This policy quickly aligned Singapore competitively with major gold hubs like Hong Kong and Switzerland.
Already a major world financial center and tax haven with no capital gains tax, Singapore’s sales tax exemption on bullion signaled its desire to increase domestic gold trading and gold storage within its jurisdiction.
The sales tax exemption of gold, silver, and platinum bullion improved cost-efficiency for investors, incentivizing bullion buying. This attracted the establishment of bullion dealers, like Silver Bullion, and secure logistics companies in the city-state. The increased buying of investment-grade precious metals resulted in a higher demand for bullion storage services, incentivizing the private sector to construct precious metal vaults to meet storage demand.
Undoubtedly, Singapore’s 2012 Investment Precious Metals (IPM) tax exemption encouraged the swift development of its domestic gold supply chain in the following years, further solidifying its candidacy as a regional gold hub.
World-Class Vaulting Infrastructure
In the mid-2000s, the Singapore government actively supported building the Singapore Freeport (now Le Freeport) storage facility for fine art as part of its plans to develop the country into a leading art hub.
The Singapore Freeport opened in 2010 and extended its services to include gold storage within its vaults.
In 2014, Silver Bullion established The Safe House vault to meet client demands for bullion storage in Singapore. Since 2024, The Safe House has moved into its new premises at The Reserve, expanding its vaulting capacity to store 500 tons of gold and 10,000 tons of silver.
The completion of The Safe House vault within The Reserve has captured international attention. News outlets report that the Hong Kong Chief Executive views The Reserve’s construction as “fierce competition” to Hong Kong’s position as an international gold trading center.
These world-class gold storage facilities in Singapore offer secure and insured storage to high-net-worth individuals, institutional investors, and bullion banks, attracting the transfer of precious metals into the country and increasing gold trading activity.
Well-Governed Jurisdiction
Singapore’s rise as Asia’s leading gold hub is also predicated on its reputation as a well-governed jurisdiction characterized by political stability, strong law enforcement, and a business-friendly environment.
The city-state ranked first in the 2024 Economist Intelligence Unit (EIU) business environment rankings for the 16th consecutive year, making it the most attractive country for doing business. According to the EIU, Singapore’s political stability was one of the factors that contributed to the country's place as a premier business destination.
Singapore also topped the fourth edition of the Chandler Good Government Index (CGGI), a world ranking on government effectiveness, for the second consecutive year. The country ranked first in three of the seven pillars under assessment: leadership and foresight (involving ethical and adaptable leaders with long-term vision), strong institutions (such as ministries and public departments), and attractive marketplace (includes job creation, innovation, and opportunities).
Singapore is known as one of the safest countries in the world. Its societal safety is a result of strong law enforcement. The city-state ranked fourth among countries in East Asia and the Pacific in the World Justice Project Rule of Law Index 2024. It received highest scores in factors like the absence of corruption, order and security, and regulatory enforcement.
Singapore also adheres to international regulations, such as anti-money laundering (AML) and combating the financing of terrorism (CFT) protocols, strengthening investor confidence.
By combining stability, regulatory transparency, and societal safety, Singapore's consistent strong governance sets it apart from other gold hubs. This approach attracts global investors and fosters trust in its long-term viability as a leading destination for bullion trade, storage, and investment.
Political Neutrality
The rise of China as a global superpower has introduced both opportunities and challenges for international investors. While Hong Kong historically served as a leading bullion hub, its growing integration with mainland China has raised concerns among certain investors.
Since the enactment of the Hong Kong National Security Law in 2020, many investors fear a diminishing distinction between Hong Kong and mainland China. This has led to concerns about the legal and financial independence of the territory.
Increased alignment with China's regulatory and political framework may deter international investors seeking a more neutral jurisdiction for their gold holdings.
Tensions between China and Western countries, particularly the U.S., also add a layer of risk for investors concerned about the implications of sanctions or policy shifts on their assets.
Singapore, in contrast, offers a politically neutral and highly secure alternative, making it an increasingly preferred destination for gold storage and trading.
The city-state maintains a careful balance in its international relations. Its approach to diplomacy is guided by pragmatism, actively engaging with both the U.S. and China, prioritizing mutual economic benefits while avoiding entanglement in their geopolitical conflicts.
Both superpowers are Singapore’s top trading partners. With China, Singapore is its largest source of foreign investments since 2013, reflecting deep economic interdependence. On the other hand, the U.S. and Singapore have over 70 years of mutual cooperation. The city-state also has a three-decade old pact with the U.S., allowing the latter access to Singapore’s naval and air base facilities.
Singapore often acts as a neutral ground for high-stakes negotiations, such as hosting the 2018 summit between U.S. President Donald Trump and North Korean leader Kim Jong Un.
A “Truly Viable” Global Gold Hub
Today, Singapore has a well-developed gold supply chain comprising of gold refining, wholesalers, precious metals distributors, secure logistics, and world-class vaulting facilities.
Singapore’s next step in becoming a leading gold hub would be encouraging foreign central banks to store their gold reserves there. The World Gold Council’s Fan Shaokai shares this sentiment, believing that Singapore is poised to become a “truly viable alternative” to London and New York as a hub for central bank gold vaulting.
Vaulting the central banks’ gold reserves would boost market liquidity and bring benefits such as greater market stability, improved price transparency and efficiency. Additionally, Singapore could become an additional clearing location for gold, allowing it to provide clearing, settlement and custody services for the region, further solidifying its role as Asia’s leading gold hub.
Singapore is well-positioned as a secure and reliable destination for gold storage, trading, and investment. As the world increasingly seeks stability and security, Singapore’s gold hub is becoming the natural choice for those looking to safeguard and grow their wealth through gold.