On a Tuesday in November, Singapore's central bank opened a vault for foreign central banks and sovereign institutions, able to hold 500 metric tons of gold. It is one more step in a long, patient effort by a small trading nation to earn a place among the old keepers of the world's bullion. Yet the gold itself has been drifting east for years, and whether Singapore becomes a destination in that movement or only a convenient waypoint remains an open question.
Singapore Bets on Vaulting and Tax Breaks to Win a Bigger Share of the Global Gold Market
On a Tuesday in November, Singapore's central bank opened a vault for foreign central banks and sovereign institutions, able to hold 500 metric tons of gold. It is one more step in a long, patient effort by a small trading nation to earn a place among the old keepers of the world's bullion. Yet the gold itself has been drifting east for years, and whether Singapore becomes a destination in that movement or only a convenient waypoint remains an open question.
On Tuesday, the Monetary Authority of Singapore opened a gold vaulting service for foreign central banks and sovereign entities, with an initial capacity of 500 metric tons. It is the most concrete move yet in a campaign to make the city-state a serious name in the global bullion trade.
The vault is joined by planned tax exemptions for wholesale gold services such as vaulting, refining, testing and broking, and by a physical gold clearing system announced in June, expected to begin operating in the first quarter of 2027. Together, these measures hope to draw bullion flows and place Singapore alongside London and Switzerland, just as more gold trading moves toward Asia.
The climb is steep. London vaults held about 9,850 metric tons at the end of October, while Singapore starts at 500. Hong Kong is expanding its own storage and clearing infrastructure, and it has China at its doorstep.
Skeptics are not quiet. Juerg Kiener of Swiss Asia Capital called Singapore very late to the party, arguing that a physical hub needs volume from trade-backed structures, and that Hong Kong is China's window to the world. He suggested Singapore might settle for storage serving financial institutions, a niche that already exists in its high-security freeport near Changi Airport.
Analysts see a shifting map. Gold once passed mainly through London and Switzerland, but Asian refineries and regional demand have increasingly moved bullion directly within Asia. Kavalis suggested Hong Kong may win central banks tied closely to China, while Singapore could draw those already active in its banking markets. Fan argued the two centers complement each other more than they compete.
Deputy Prime Minister Gan Kim Yong echoed that view, rejecting the idea of a fixed pie and noting that the vault gives central banks another option for diversifying where they keep reserves.
Whether trust in Singapore's financial system can become real bullion flows is still unanswered. As Fan put it, volumes need liquidity and liquidity needs volumes. The clearing system in early 2027 will be the next test of whether the infrastructure can draw the traffic.
On Tuesday, the Monetary Authority of Singapore opened a gold vaulting service for foreign central banks and sovereign entities, with an initial capacity of 500 metric tons. It is the newest and most concrete step in a campaign to make the city-state a serious name in the global bullion trade.
The vault is not the only piece. Singapore also plans tax exemptions for certain wholesale gold-related services, among them vaulting, refining, recasting, testing and broking. In June, it announced a physical gold clearing system to settle bullion transactions locally, with operations expected to begin in the first quarter of 2027. Together, the measures aim to attract more bullion flows and place Singapore alongside established centers such as London and Switzerland, at a time when more gold trading activity is moving toward Asia.
The scale of the incumbents shows how steep the climb is. London vaults held about 9,850 metric tons of gold at the end of October, counting both commercial and central bank storage. Singapore's opening capacity is 500 metric tons. Hong Kong, meanwhile, is also expanding its gold storage and clearing infrastructure, and it sits next to China, the world's largest gold market.
Juerg Kiener, chief investment officer at Swiss Asia Capital, was blunt in his assessment. Singapore, he told CNBC, is very late to the party, because building a physical hub requires volume in trade-backed structures. In his view, China is the largest gold market and Hong Kong is its window to the rest of the world, so Singapore is not well placed to compete with Hong Kong in gold-backed trade. He suggested a narrower role: physical gold storage for financial institutions. Even there, commercial vaulting is already available in Singapore, including at its high-security freeport near Changi Airport.
The push comes after a decade in which the movement of gold has already changed. Historically, much of the world's bullion passed through London and Switzerland, where large bars were traded or refined before shipment to Asian markets. As Asian refineries have expanded and regional demand has grown, gold has increasingly moved directly between Asian markets, reducing reliance on European trading centers, according to Kavalis, an analyst cited in the report. More sophisticated hubs in Asia could speed that shift.
Kavalis also saw a division of likely customers. Hong Kong may have the edge with central banks and institutions whose financial activity is closely tied to China, while Singapore could appeal to those already active in its banking and financial markets. Fan, another analyst, sees room for both to grow, saying the two centers complement one another more than they compete.
Deputy Prime Minister Gan Kim Yong made the same point on Tuesday, rejecting the idea that the two hubs are fighting over a fixed pie. It is not a zero-sum game, he said, adding that the vaulting service gives central banks another option for diversifying where they hold their reserves.
Whether Singapore's reputation as a trusted financial center can turn into real bullion flows is still unanswered. Fan described the problem as chicken and egg: attracting volumes requires liquidity, and building liquidity requires volumes. The clearing system due in early 2027 will be the next test of whether the infrastructure draws the traffic.
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Economy & Finance