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.
SG Wealth Builder