Silver Vault for 200 Tons Starts in Singapore as Wealthy Buy

A silver vault that can hold 200

metric tons opens in Singapore this week to cater for increasing

demand for physical precious metals among Asia’s wealthy even as

the commodity leads declines this year.

The new facility is 30 percent booked at the opening, said
Joshua Rotbart, precious-metals general manager at owner Malca-Amit Global Ltd. The storage will add to the firm’s five vaults

at the Singapore FreePort, which are fully reserved for gold, he

said in an interview. The repository can hold $128 million of

silver at today’s prices. Gold is about 67 times more expensive.

While silver has lost 34 percent in 2013 on concern the

U.S. Federal Reserve will taper stimulus, holdings in exchange-traded products have held steady. The number of high-net-worth

individuals in the Asia-Pacific region expanded 9.4 percent last

year, according to Cap Gemini SA and Royal Bank of Canada.

Deutsche Bank AG, UBS AG and JPMorgan Chase Co. are among

banks operating metals storage in Singapore.

“Our existing vaults at the FreePort are highly secured

and the rate is too expensive to store silver there,” said

Rotbart, who declined to say where the new facility is sited.

“We need to find a solution, and we also see a strong demand.”

Silver is the biggest loser on the Standard Poor’s GSCI

Index of 24 raw materials this year, beating declines in corn,

gold and nickel. Futures, which dropped to $18.17 an ounce in

June, the lowest since August 2010, traded at $19.9045 today.

Gold has slumped 21 percent to $1,330.34 an ounce.

ETP Holdings

Silver holdings in ETPs stood at 19,222 tons on July 26,

1.6 percent higher this year, according to data compiled by

Bloomberg. Assets in gold-backed ETPs have contracted at a

record pace, shrinking 25 percent to 1,970 tons. ETPs allow

investors to trade assets without taking delivery, while

physical holders require storage, such as a vault.

Investors in silver are mostly private individuals, while

the majority of gold holders are institutions, said Rotbart.

Malca-Amit is looking to build another silver vault in Hong

Kong, and may add more gold vaults in Singapore as there is no

more availability in the FreePort, he said. The FreePort is

located near Changi Airport in the east of the city-state.

The number of individuals with $1 million or more in

investible assets climbed to 3.68 million in the Asia-Pacific

region in 2012, boosted by additions in Singapore and Hong Kong,

according to a report from Cap Gemini and Royal Bank of Canada.

China accounted for 43 percent of worldwide economic growth from

2007 to 2012, according to an estimate from Barclays Plc.

Leased Space

UBS, Switzerland’s biggest bank, started storing gold for

clients in a leased facility in Singapore, an executive said

this month. JPMorgan Chase opened a bullion vault at the

Singapore FreePort in 2010. Jeremy Hughes, a Deutsche Bank

spokesman in Singapore, said that the bank had leased space for

its 100-ton gold vault at the FreePort from Malca-Amit.

Goldman Sachs Group Inc. forecasts further declines in

precious metals, with a 12-month target of $19.60 for silver and

$1,175 for gold. The Fed is likely to start tapering its $85

billion a month of asset purchases in September, Jan Hatzius,

the New York-based bank’s chief economist, said in a report.

About 50 percent of silver is used in industry, compared

with 10 percent for gold, data from the Silver Institute and

World Gold Council show. Industrial applications for silver

include photography and electronics.

Malca-Amit’s vaults in Hong Kong and Singapore have a

precious-metals capacity of 1,000 tons each, and the company

also has facilities in New York, Zurich, Geneva, London and

Bangkok. The company leases vault space to banks, and stores

items for its own customers.

The Singapore government has been promoting the country as

a bullion-trading hub, removing a 7 percent sales tax on

investment-grade precious metals in 2012. About 2 percent of

world gold demand flows through Singapore, and the government

aims to increase that to as much as 15 percent.

To contact the reporter on this story:

Chanyaporn Chanjaroen in Singapore at

cchanjaroen@bloomberg.net

To contact the editor responsible for this story:

James Poole at

jpoole4@bloomberg.net

Enlarge image

Silver Vault for 200 Tons Starts in Singapore as Wealthy Buy

Malca-Amit Global Ltd. via Bloomberg

One of Malca-Amit Global Ltd.’s existing vaults is seen in Singapore, in this 2012 handout photograph released to the media on July 29, 2013.

One of Malca-Amit Global Ltd.’s existing vaults is seen in Singapore, in this 2012 handout photograph released to the media on July 29, 2013. Source: Malca-Amit Global Ltd. via Bloomberg

Enlarge image

Silver Vault for 200 Tons Starts in Singapore as Wealthy Buy

Malca-Amit Global Ltd. via Bloomberg

Malca-Amit Global Ltd.’s security vehicles are seen at one of the company’s existing vaults in Singapore, in this 2012 handout photograph released to the media on July 29, 2013.

Malca-Amit Global Ltd.’s security vehicles are seen at one of the company’s existing vaults in Singapore, in this 2012 handout photograph released to the media on July 29, 2013. Source: Malca-Amit Global Ltd. via Bloomberg

Enlarge image

Silver Vault for 200 Tons Starts in Singapore as Wealthy Buy

Munshi Ahmed/Bloomberg

While silver has lost 33 percent in 2013 on concern the U.S. Federal Reserve will taper stimulus, holdings in exchange-traded products have held steady.

While silver has lost 33 percent in 2013 on concern the U.S. Federal Reserve will taper stimulus, holdings in exchange-traded products have held steady. Photographer: Munshi Ahmed/Bloomberg

Silver Vault for 200 Tons Starts in Singapore as Wealthy Buy