Deep in the 7.4-acre Singapore FreePort next to Changi International Airport's runways is the bullion vault of Swiss Precious Metals, behind 7-metric-ton steel doors built to survive a plane crash or earthquake.
The rooms are almost full after demand rose fivefold in the year since the Geneva company opened the vault. The firm plans an extension and relocated CEO Jean-Francois Pages to Singapore last month to cope with the surge of investors willing to pay as much as 1 percent of the value of their holdings each year to keep them secure.
"The European debt crisis and its impact on the solvency of European financial players are driving European customers to find refuge in tangible values like physical gold and other precious metals," Pages said. Demand "is totally compatible with the current financial and political global turmoil."
Adding storage space
Barclays Capital is building a new vault, the Brink's Co. and Deutsche Bank AG may add more space, and the Perth Mint may expand for the first time since 2003, a sign they expect demand to keep increasing after the 11-year rally in which prices increased sevenfold. Investors in exchange-traded products backed by gold bought 2,236 tons of bullion since 2003, exceeding all except four countries' official stockpiles.
Gold climbed to a record $1,921.15 an ounce on Sept. 6. Prices more than doubled since the end of 2007 as stock markets slumped, economies contracted, and central banks and governments pumped more than $2 trillion into the global financial system.
The metal rose 27 percent to $1,803.32 this year as the MSCI all-country world index of equities retreated 11 percent, led by financial stocks. Treasuries returned 8.5 percent, a Bank of America Corp. index shows. The U.S. Dollar Index, a gauge of the world's reserve currency against six major trading partners, slumped 10 percent in the past 15 months.
Gold will exceed $2,000 this year, according to the average estimate of 16 respondents in a Bloomberg survey at the London Bullion Market Association's conference in Montreal. The metal will peak at $2,268 next year, the survey showed.
Storage companies are responding. The 112-year-old Perth Mint, which refines more than 8 percent of all supply and is owned by the Western Australian state government, may add a new vault within the next year, according to Treasurer Nigel Moffatt. The mint sells everything from gold coins to 400-ounce bars.
Brink's, the largest bullion carrier in Britain, is considering adding more storage after opening a new London vault this year. Barclays, based in London, is building a vault in the city that will open next year, the bank said in a statement last week.
Deutsche Bank of Frankfurt is considering expanding existing facilities and developing new ones to meet demand, Matthew Keen, a director at the bank, said this month. JPMorgan Chase & Co. started a vault at the Singapore FreePort location last year and opened another in the financial district of New York.
"With gold prices where they are, we encourage people to keep it in safety-deposit boxes at banks or vaults, which gives that sense of security," said Scott Carter, CEO of Goldline International Inc., a Santa Monica precious-metals retailer established a half-century ago.
ETF Trust
Gold bought for investment accounted for 38 percent of total demand in 2010, compared with about 4 percent a decade before, the World Gold Council estimates. Holdings in gold-backed exchange-traded products are equal to more than nine years of U.S. mine production. The SPDR Gold Trust, the biggest bullion exchange-traded product, exceeded the market capitalization of the SPDR S&P 500 ETF Trust in August, beating what had been the industry's largest exchange-traded fund since 1993.
The Brink's vault business is part of the company's value-added global services unit, which accounts for about 35 percent of total revenue, according to Bradley Safalow, CEO of New York's PAA Research. The shares will rise about 62 percent to $40 in the next 12 months, he estimates.
The company operates its storage business on long-term contracts that guarantee revenue, Chairman and CEO Michael Dan said in a conference call with investors in July. Brink's benefits when prices appreciate, he said.
Malca-Amit Global Ltd., owner of two gold vaults at the Singapore FreePort and looking to add another, may see revenue from precious-metals storage in the city state climb by 30 percent next year, said Ariel Kohelet, executive director of Malca-Amit Singapore Pte.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/21/BUOU1L7HLP.DTL#ixzz1YhGgzDbp
The rooms are almost full after demand rose fivefold in the year since the Geneva company opened the vault. The firm plans an extension and relocated CEO Jean-Francois Pages to Singapore last month to cope with the surge of investors willing to pay as much as 1 percent of the value of their holdings each year to keep them secure.
"The European debt crisis and its impact on the solvency of European financial players are driving European customers to find refuge in tangible values like physical gold and other precious metals," Pages said. Demand "is totally compatible with the current financial and political global turmoil."
Adding storage space
Barclays Capital is building a new vault, the Brink's Co. and Deutsche Bank AG may add more space, and the Perth Mint may expand for the first time since 2003, a sign they expect demand to keep increasing after the 11-year rally in which prices increased sevenfold. Investors in exchange-traded products backed by gold bought 2,236 tons of bullion since 2003, exceeding all except four countries' official stockpiles.
Gold climbed to a record $1,921.15 an ounce on Sept. 6. Prices more than doubled since the end of 2007 as stock markets slumped, economies contracted, and central banks and governments pumped more than $2 trillion into the global financial system.
The metal rose 27 percent to $1,803.32 this year as the MSCI all-country world index of equities retreated 11 percent, led by financial stocks. Treasuries returned 8.5 percent, a Bank of America Corp. index shows. The U.S. Dollar Index, a gauge of the world's reserve currency against six major trading partners, slumped 10 percent in the past 15 months.
Gold will exceed $2,000 this year, according to the average estimate of 16 respondents in a Bloomberg survey at the London Bullion Market Association's conference in Montreal. The metal will peak at $2,268 next year, the survey showed.
Storage companies are responding. The 112-year-old Perth Mint, which refines more than 8 percent of all supply and is owned by the Western Australian state government, may add a new vault within the next year, according to Treasurer Nigel Moffatt. The mint sells everything from gold coins to 400-ounce bars.
Brink's, the largest bullion carrier in Britain, is considering adding more storage after opening a new London vault this year. Barclays, based in London, is building a vault in the city that will open next year, the bank said in a statement last week.
Deutsche Bank of Frankfurt is considering expanding existing facilities and developing new ones to meet demand, Matthew Keen, a director at the bank, said this month. JPMorgan Chase & Co. started a vault at the Singapore FreePort location last year and opened another in the financial district of New York.
"With gold prices where they are, we encourage people to keep it in safety-deposit boxes at banks or vaults, which gives that sense of security," said Scott Carter, CEO of Goldline International Inc., a Santa Monica precious-metals retailer established a half-century ago.
ETF Trust
Gold bought for investment accounted for 38 percent of total demand in 2010, compared with about 4 percent a decade before, the World Gold Council estimates. Holdings in gold-backed exchange-traded products are equal to more than nine years of U.S. mine production. The SPDR Gold Trust, the biggest bullion exchange-traded product, exceeded the market capitalization of the SPDR S&P 500 ETF Trust in August, beating what had been the industry's largest exchange-traded fund since 1993.
The Brink's vault business is part of the company's value-added global services unit, which accounts for about 35 percent of total revenue, according to Bradley Safalow, CEO of New York's PAA Research. The shares will rise about 62 percent to $40 in the next 12 months, he estimates.
The company operates its storage business on long-term contracts that guarantee revenue, Chairman and CEO Michael Dan said in a conference call with investors in July. Brink's benefits when prices appreciate, he said.
Malca-Amit Global Ltd., owner of two gold vaults at the Singapore FreePort and looking to add another, may see revenue from precious-metals storage in the city state climb by 30 percent next year, said Ariel Kohelet, executive director of Malca-Amit Singapore Pte.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/09/21/BUOU1L7HLP.DTL#ixzz1YhGgzDbp
