Singapore wants to be Asia’s gold trading hub

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fine gold, an Asian hub for banking and finance, is ramping up its bid to become a center for gold trading that may one day rival London. This week, the Southeast Asian city-state unveiled plans to launch a physically deliverable gold contract in September to meet strong demand from Asia – home to the world’s biggest gold consumers.

“I think this is the next step for Singapore, which has made a number of moves to turn itself into a gold hub,” said Victor Thianpiriya, a commodities analyst at Australian bank ANZ.

“Singapore is already a hub for financial services and wealth, so it makes sense that it wants to make itself a benchmark for gold trading in Asia.”

The Singapore Exchange said on Wednesday that the contract will be the world’s first wholesale 25 kilobar gold contract and will be made up of a series of six daily contracts.

In 2010, Singapore set up a high-security storage facility called the Singapore Freeport that subleases storage space to management companies.

Two years ago, the government scrapped a sales tax for investment-grade gold and in the past year banks such as Deutsche Bank have set up gold vaults on the tiny island.

“This [gold contract] is a plan two years in the making. The reason is that we have seen a trend of gold moving from West to East and there is actually no market place for market players to buy gold at a wholesale level,” Albert Cheng, managing director, Far East at the World Gold Council, said. The launch of the gold contract on the Singapore Exchange is supported by the World Gold Council, Singapore Bullion Market Association and four banks that include JP Morgan and Asia-focused bank Standard Chartered.

The other trend Singapore is trying to take advantage of is growing wealth in the region, analysts say. Research firm Wealth Insight expects the country to overtake Switzerland as the world’s biggest hub of offshore wealth by 2020.

China and India, two of the region’s heavyweight economies, meanwhile account for more than half of global gold consumption.

“I think with this gold-contract move, Singapore is targeting high-end investors,” said Ng Kok Fai, the head of currency and precious metal advisory at Credit Agricole private bank. “The bar in this contract is double the size of a typical gold bar around 12 kilobars.”

The launch of a gold contract in Singapore will bring centralised trading and clearing of physically cleared gold and could provide a price benchmark for gold trading in Asia.

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Reading Time: 2 minutes

, an Asian hub for banking and finance, is ramping up its bid to become a center for gold trading that may one day rival London. This week, the Southeast Asian city-state unveiled plans to launch a physically deliverable gold contract in September to meet strong demand from Asia – home to the world’s biggest gold consumers.

Reading Time: 2 minutes

fine gold, an Asian hub for banking and finance, is ramping up its bid to become a center for gold trading that may one day rival London. This week, the Southeast Asian city-state unveiled plans to launch a physically deliverable gold contract in September to meet strong demand from Asia – home to the world’s biggest gold consumers.

“I think this is the next step for Singapore, which has made a number of moves to turn itself into a gold hub,” said Victor Thianpiriya, a commodities analyst at Australian bank ANZ.

“Singapore is already a hub for financial services and wealth, so it makes sense that it wants to make itself a benchmark for gold trading in Asia.”

The Singapore Exchange said on Wednesday that the contract will be the world’s first wholesale 25 kilobar gold contract and will be made up of a series of six daily contracts.

In 2010, Singapore set up a high-security storage facility called the Singapore Freeport that subleases storage space to management companies.

Two years ago, the government scrapped a sales tax for investment-grade gold and in the past year banks such as Deutsche Bank have set up gold vaults on the tiny island.

“This [gold contract] is a plan two years in the making. The reason is that we have seen a trend of gold moving from West to East and there is actually no market place for market players to buy gold at a wholesale level,” Albert Cheng, managing director, Far East at the World Gold Council, said. The launch of the gold contract on the Singapore Exchange is supported by the World Gold Council, Singapore Bullion Market Association and four banks that include JP Morgan and Asia-focused bank Standard Chartered.

The other trend Singapore is trying to take advantage of is growing wealth in the region, analysts say. Research firm Wealth Insight expects the country to overtake Switzerland as the world’s biggest hub of offshore wealth by 2020.

China and India, two of the region’s heavyweight economies, meanwhile account for more than half of global gold consumption.

“I think with this gold-contract move, Singapore is targeting high-end investors,” said Ng Kok Fai, the head of currency and precious metal advisory at Credit Agricole private bank. “The bar in this contract is double the size of a typical gold bar around 12 kilobars.”

The launch of a gold contract in Singapore will bring centralised trading and clearing of physically cleared gold and could provide a price benchmark for gold trading in Asia.

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