As gold prices hit record highs, Singapore and Hong Kong are aiming to leap forward as global centers for gold transactions. Attention is focused on whether Asia can emerge as a new hub by cracking the existing order in which London, New York, and Switzerland have dominated the gold transaction market for decades.
According to the Financial Times (FT) in the U.K. on the 29th (local time), Singapore recently opened an ultra-secure vault, The Reserve, near the airport targeting ultra–high-net-worth individuals. The facility is designed to store up to 500 tons (t) of gold and 10,000 t of silver, and it leases space so that private banks and family offices can deposit assets. Although only part of its total capacity is currently filled, the industry sees it as a symbolic attempt to leap into an Asian gold transaction hub.
Singapore has already laid the groundwork for storage infrastructure through the mega storage facility Le Freeport, opened in 2010. It is currently used to store not only artworks but also luxury cars, wine, jewelry, and precious metals, and global storage specialists such as Brink's and Loomis are using it.
Albert Cheng, chair of the Singapore Bullion Market Association, said, "It took London 200 years to build gold market infrastructure, but Asia can grow much faster," noting that this attempt will be a turning point to gauge the results of Singapore's global gold hub strategy pursued for more than 10 years.
Hong Kong has also been accelerating the strengthening of gold-related infrastructure in recent months. Chief Executive John Lee declared in a policy address in Sep. that within three years he would expand Hong Kong's gold storage capacity to more than 2,000 t to create a "regional gold stockpiling hub." Current storage capacity is just over 200 t. The Shanghai Gold Exchange opened its first overseas vault in Hong Kong this summer and launched renminbi-denominated gold contracts. Although it lags behind Singapore in storage infrastructure, its geographical proximity to mainland China is cited as an important factor that could make Hong Kong a forward base for international gold transactions.
These moves by the two jurisdictions align with expanding demand as gold prices soar amid geopolitical instability. David Greely, chief economist at Abaxx Exchange, said, "The center of gold transactions is gradually shifting from the West to the East," and analyzed that "there is significant untapped demand for an Asian transaction hub." Some also say that recent confusion over U.S. gold tariffs highlighted the need for an Asian hub. In Aug., the U.S. government announced it would impose tariffs on gold bullion, then reversed the decision within days, heightening market anxiety, which in turn fed demand for a regional hub.
Multinational oil refiners and precious metals companies are also moving quickly. Swiss firm MKS PAMP opened a regional headquarters in Hong Kong and joined the Shanghai Gold Exchange's new contract, while Heraeus and Metallor also entered the Hong Kong market. Some global traders, however, worry about possible Chinese government intervention. Robert Gottlieb, who traded gold at JPMorgan and HSBC, noted, "It could become a market where the rules can be changed if the Chinese government doesn't like the outcome," pointing to trust risks. By contrast, Adrian Ash of the gold transaction platform BullionVault said, "Singapore's political neutrality is a strength," explaining why the company based its storage hub in Singapore instead of Hong Kong.
Experts agree that liquidity and trust are key for both hubs. Gregor Gregersen, founder of Silver Bullion, which operates The Reserve, said, "The most important thing in this industry is securing liquidity," and assessed that "Singapore shows strength in storage infrastructure, while Hong Kong shows strength in transaction networks."