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BullionStar Review: Singapore takes major step to become gold trading hub

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Below is an article published with permission from BullionStar, a Singapore online bullion company where you can buy gold and silver at competitive prices. To be a successful wealth builder, investors must always stay ahead of the the curve and keep abreast on the latest development in investment trends. For the past few years, the government has been trying to establish Singapore as a precious metal trading hub. Clearly, there is an investment demand to justify such policy shift. Investors should therefore consider accumulating gold bullion on a long term basis before it starts to get expensive again.
It was announced last week at the locally held London Bullion Market Association (LBMA) forum that the Singapore Exchange will introduce a wholesale kilobar gold contract from as early as September 2014. The introduction of the contract for 25kg of 99.99 per cent purity gold underscores Singapore’s ambition to become a major player in physical bullion trading at a time when global gold demand moves to the east.
It was also reported that Asia’s strong demand for gold was the key driver for the introduction of this contract. According to the World Gold Council, Asia accounted for 63 percent of total consumption of gold jewellery, bars and coins last year. It is this trend of gold moving from the West to the East that many analysts believe that Asia should have greater influence in the price discovery of physical gold.“This is a timely development given the increased requirements for reference prices to be transparent,” Trade and Industry Minister Lim Hng Kiang said in a speech at the LBMA forum. Echoing Mr Lim’s statement, SGX President Muthukrishnan Ramaswami said that this latest development “will enable the trading and clearing of the Singapore kilobar gold contract and establish a fully transparent price discovery mechanism for gold in this region”. This may signal the beginning of the end of the gold pricing dominance in western exchanges lacking physical gold.

This move by the Singapore government continue to attest to gold’s rising prominence in Asia. Singapore had exempted investment grade precious metals from the Goods and Services Tax (GST) in October 2012. This had attracted bullion vaults to be set up in the country. Swiss refiner, Metalor, has also opened its gold refinery in Singapore.

The rising demand for gold only points to the desire of more people wanting to hold their wealth in a hard asset that has good liquidity. It is part of the growing rediscovery that gold is money and it should be held  in every wealth portfolio.

Magically yours,

SG Wealth Builder

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Updated: January 10, 2015 — 2:52 pm

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