An employee shows gold bullion at Degussa shop in Singapore, June 16, 2017. Photo by Reuters
Singapore is exploring options to expand its gold storage capacity to meet central banks’ growing demand as it ramps up efforts to position itself as Asia’s gold trading hub.
Singaporean authorities are assessing several potential sites for new storage facilities, including land near Changi Airport.
In response to media queries, the Monetary Authority of Singapore said it is also considering the use of existing facilities for gold storage, but has yet to confirm any plans to expand vault capacity.
Earlier, the city-state announced a plan to develop gold-related capital market products and establish a trusted clearing and settlement system for over-the-counter transactions. Gold vaults are typically located near major airports to enable efficient air transport and minimise travel time on roads.
Attracting central banks with substantial gold reserves and playing a critical role in providing market liquidity is seen as a cornerstone of Singapore’s strategy.
The participation of major financial institutions acting as market makers is also essential, mirroring the structure of London, the world’s leading gold trading center where billions of dollars worth of transactions take place daily.
According to the World Gold Council, central banks worldwide hold around 39,000 tonnes of gold, equivalent to nearly 18% of all gold ever mined.
Capturing even a small share of these holdings could strengthen Singapore’s position in the regional market, which is currently dominated by Hong Kong–a key gateway for bullion flows into China, the world’s largest gold consumer.
