Vault for 200 tonnes of silver to open for business

SINGAPORE — A vault that can hold 200 tonnes of silver will open for business in Singapore this week to cater to increasing demand among Asia’s wealthy even as the precious metal leads price declines this year.

The new facility is 30 per cent booked at the opening, said Mr Joshua Rotbart, Precious Metals General Manager at Malca-Amit Global, which owns the vault.

The storage will add to the firm’s five vaults at the Singapore FreePort, which are fully reserved for gold, he added. FreePort is located near Changi Airport.

“Our existing vaults at the FreePort are highly secured and the rate is too expensive to store silver there,” said Mr Rotbart, who declined to say where the new facility is sited. “We need to find a solution and we also see a strong demand.”

The repository can hold US$127 million (S$160 million) of silver at today’s prices. Gold is about 67 times more expensive.

Silver has lost 35 per cent in the year to date on concerns the United States Federal Reserve will scale back on its monetary stimulus. It is the biggest loser on the Standard and Poor’s GSCI Index of 24 raw materials this year, with bigger declines than gold, nickel and corn.

Silver futures, which dropped to US$18.17 an ounce last month, the lowest since August 2010, traded at US$19.8024 yesterday.

In comparison, gold has slumped 21 per cent this year to US$1,327.43 an ounce.

Goldman Sachs forecasts further price declines in precious metals, with a 12-month target of US$19.60 for silver and US$1,175 for gold. The Fed is likely to start tapering its US$85 billion a month of bond purchases in September, said Goldman Chief Economist Jan Hatzius.

But holdings in silver exchange-traded products (ETPs) have held steady as the region’s wealthy continue to grow.

The number of individuals with US$1 million or more in investable assets climbed 9.4 per cent to 3.68 million in the Asia-Pacific region last year, boosted by additions in Singapore and Hong Kong, according to a report by Capgemini and the Royal Bank of Canada.

Silver holdings in ETPs stood at 19,222 tonnes on July 26, growing 1.6 per cent this year, according to data compiled by Bloomberg. Assets in gold-backed ETPs have contracted at a record pace, shrinking 25 per cent to 1,970 tonnes.

Investors in silver are mostly private individuals, while the majority of gold holders are institutions, said Mr Rotbart.

Malca-Amit — which also has facilities in New York, Zurich, Geneva, London and Bangkok — is looking to build another silver vault in Hong Kong, and may add more gold vaults in Singapore as there is no more storage space in the FreePort, he said. BLOOMBERG