Investing in silver in 2014: Amid frenzied demand to buy and store silver, a Singapore retail supplier of coins and bars opened a new 600-metric-ton vault on Monday.
The sizable Silver Bullion Pte. Ltd. storage facility can hold some $390 million worth of silver (at Friday's prices of $20.33 per ounce). Known as The Safe House, the new facility is located west of Changi International Airport. At present, it keeps some 37 tons of silver, mostly for its retail clients, behind a secure 2.5-ton stainless door.
Founded in 2009 to offer a cost-effective and reliable avenue to buy, sell, and store physical grade (.999) silver bullion in Southeast Asia, the company doubled sales to 1.04 million ounces in 2013 from 517,000 ounces a year earlier.
Successful in serving retail clients, Silver Bullion Pte. Ltd. is mulling expanding services to financial global institutions. The company already has a notable international presence. Americans are among the most active of its customers who are investing in silver today.
"While prices dropped last year, we saw physical demand went through the roof," Gregor Gregersen, founder and director of Silver Bullion Pte. Ltd., told Bloomberg. "Our American customers seem to be concerned about rising government debt in their country and see silver as a form of insurance."
Second Sizable Singapore Silver Vault in Less Than a Year
Hong Kong-headquartered Malca-Amit Global Ltd started a 200-ton silver vault in Singapore in July 2013. Opened to cater to the increasing demand for physical metals among Asia's wealthy, the facility was 30% booked at the open.
In little more than six months, the storage was filled to capacity. That has prompted the precious metals and diamond company to consider adding a seventh vault to its holdings amid insatiable demand and Singapore's soaring precious metals stature.
Singapore's government has been promoting the country as a bustling bullion-trading hub. In 2012, the government lifted a 7% sales tax on investment-grade precious metals. The move is aimed at boosting Singapore's global bullion trade seven-fold.
The Asian city is already the fastest-growing wealth center in the world, with more than $550 billion in assets under management, according to research firm WealthInsight.
A New Way of Investing in Silver in 2014
The opening of Silver Bullion Pte.'s new warehouse and Malca-Amit's full facility underscores a notable shift in the way people want to own and invest in silver.
You see, last year's rout in the white metal and silver stocks has left investors wanting to hold tangible silver. Silver prices fell 36% last year.
But demand for physical silver is soaring.
After a record 2013, in which the U.S. Mint sold a best-ever 42.675 million ounces of American Silver Eagles, sales got off to a strong start in 2014. First-day sales of the popular 2014 Eagle silver coins nearly reached weekly capacity when they debuted in mid-January, according to U.S. Mint data.
During the first week of March, Eagle sales rose 1,100,000, marking the second-highest weekly gain since the debut week of the 2014 issues. That pushed year-to-date sales to a whopping 9 million. That was more than the annual totals for the same period in some 15 years, going back to the series start in 1986.
Eagles are one of the most convenient ways to invest in silver bullion. They are easier to sell, store, and transport than large silver bars and are also more liquid. They are popular among both U.S. and foreign investors.
"American Eagle silver coin is the most popular product in our portfolio," Zane Lim, regional manager at Singapore-based precious metals dealer Bullionstar.com, told the Wall Street Journal.
One reason why investing in silver will continue to be popular: irresponsible government spending and volatile geopolitical relations.
Indeed, outstanding marketable U.S. government debt has swollen to a record $12 trillion from $4.5 trillion in 2007, according to data from Bloomberg. And silver is coveted as a safe-haven asset and hedge against political and economic uncertainties because it tends to retain its value during periods of instability.
The Wall Street Journal:
Investors Flock to Silver Coins
Silver Vault for 600 Tons Starting in Singapore on Demand
Singapore Is Seeking to Be the Asian Bullion Hub With Tax Free Gold and Silver