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The world’s gold is moving from West to East

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Did you know that, according to Capgemini and the Royal Bank of Canada’s latest World Wealth Report, there are now more millionaires in Asia than North America…?

An estimated 3.37 million individuals in the Asia-Pacific region have a liquid net worth of over US$1 million. That compares to 3.35 million in North America.

The same trend is evident in the gold market.

While the current world hubs for gold trading and storage are London, Zurich, and New York, stores of physical metal are also beginning to migrate east. Gold storage facilities are springing up all over Asia like mushrooms after a summer rain.

Back in 2009, the Hong Kong Airport Authority set up the first secure gold storage facility inside the confines of the Hong Kong Airport.

This September, Malca-Amit, the Tel Aviv-based diamonds and precious metals company is opening a second state of the art facility at the airport, which will have capacity for 1,000 metric tons of gold.

That compares to the 4,582 tons that the US government claims is in Fort Knox, and the record 2,414 million tons that the world’s exchange traded gold funds collectively held – mostly in London– as of July 5th.

Malca-Amit also has a facility in Singapore’s Freeport complex, and the company is planning a third Asian precious metals storage facility in Shanghai in the near future.

Speaking of Singapore, Simon has written before that the government there recently announced a series of incentive measures aimed at grabbing as much as 15% of the world’s physical gold trade within 5 to 10 years.

Among the measures, the Singapore government will exempt investment-grade gold, silver and platinum from the local goods and services taxes (similar to VAT or sales tax), beginning October 1, 2012.

ViaMat, one of the world’s most well-known secure logistics companies, is also doing heavy business in Singapore and Hong Kong. ViaMat, in fact, is the security partner for such groups like GoldMoney.com and HardAssetsAlliance.net which offer turnkey gold storage solutions.

Private individuals can contract directly with ViaMat, though their fees can be quite steep… so this may not make sense unless/until your holdings exceed several hundred ounces.

For private investors with smaller holdings, a place like The Storage in Hong Kong is a great option, especially considering how inexpensive it is to buy gold in Hong Kong.

Simon and I have both written before that premiums on gold coins in Hong Kong can run as little as 0.15% above spot—you can see this for yourself at places like Hang Seng Bank and the Bank of China, both located on Des Voeux Road.

One of the great advantages of Hong Kong as a place to buy, sell and store gold is that there are no taxes or duties on imports or exports of precious metals. There is no local sales tax either.

Moreover, the market for precious metals is deep and active, and no one bats an eyelid if you walk into the bank and drop a wad of cash to exchange for gold bullion.

Contrast this with places like the United States where cash transactions are increasingly being viewed with major suspicion, and the government is trying to recruit everyone from bankers to coin dealers into being unpaid spies.

Until next time,

Tim Staermose
Chief Investment Strategist, Sovereign Man

About the author: Born to a Danish father and British mother, in Dar Es Salaam, Tanzania, Tim Staermose has led an international life since the day he was born. Growing up, he also lived in Egypt, Denmark, and Singapore, before eventually settling in Australia, where he completed his education and took out citizenship. Since then he has also lived and worked in Hong Kong, and Manila, Philippines, in the field of equity research — both for a bulge-bracket Wall Street investment bank, and for an independent investment research firm. Today, when not traveling the globe looking for investment and business opportunities for the Sovereign Man community and catching up with his diverse, multinational group of friends, he divides his time between Hong Kong, and the Philippines.

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Comments on this entry are closed.

  • Jo McIntyre

    I heard the Chinese had bought a 400 oz. gold bar from Fort Knox. They tested it and found it was base metal under a top layer of gold. Any truth to that?
    Also, on the 0.15% premium to BUY gold coins. What is the % charge to sell them back? My dealers here charge in the neighborhood of 10%. Am I being cheated or is this standard?

  • trueasian

    totally wrong for the 0.15% premium… I went 3 weeks ago in both Hang Seng Bank and the Bank of China, it was something like 4%. Guys you should update your price, it’s many months I buy my gold in des Voeux and It was always something like 3/4%. Maybe you have special relation with the cashier?

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