You’ve got the gold, but I’ve got the guns
L. Glenn Lawrence
Sovereign X

You’ve got the gold, but I’ve got the guns

Key Points

  • Owning gold comes with risks, whether physical or financial gold.
  • Unfortunately, “you’ve got the gold, but I’ve got the guns” is a widespread attitude today, particularly in the U.S.
  • Sovereign X believes Singapore is an excellent jurisdiction to consider for banking, residency, corporate formation, and storage of art and precious metals, as it is secure, respects private property rights, and is supportive of free markets.

L. Glenn Lawrence, writing from Singapore

While in Singapore on other business, I decided to check out possibilities for gold storage. The main benefit of owning physical gold, as opposed to financial gold (e.g., ETFs, unallocated storage, futures contracts), is that you don’t have credit risk. You don’t have to worry about your counterparty living up to their future promises.

But owning physical gold is not without risk either. 

The main downside to owning physical gold is the risk of theft.  Unfortunately, “you’ve got the gold, but I’ve got the guns” is a widespread attitude, particularly in the United States.  Theft can come from both private and public sources—a common thief or government confiscation (see Franklin D. Roosevelt’s extraordinary Executive Order 6102, April 5, 1933).

Let’s leave aside the thorny issue of transporting gold outside the U.S. (it can be done, but make sure you learn about and follow every disclosure requirement as it’s more than just the $10,000 monetary instrument reporting requirement).

One solution is to store your physical gold in a secure location outside of the territory of your citizenship.  Security, in this case, is represented by both a secure physical facility and a jurisdiction that respects private property rights and is supportive of free markets.

Singapore fits the bill on both of these counts. 

The Le Freeport, formerly known as Singapore Freeport, is referred to as Asia’s “Fort Knox,” a private, ultra-modern maximum-security facility that opened more than a decade ago. It was modeled after freeports in Switzerland and was designed by Swiss architects.  In addition to gold storage vaults operated by Swiss Precious Metals and Malca-Almit, it is aims at the fine arts and collectibles markets. Major clients include Christie’s and JPMorgan Chase.

It has 323,000 square feet of strong rooms, an area of about six U.S. football fields, and it is inside both the Changi International Airport and a tax-free zone within Singapore. It bills itself as “an art fortress in the heart of Asia,” and was designed with an “eco-friendly” and artistic “ethos.”

However, it was almost at capacity even before it officially opened, and new capacity fills very quickly. 

In addition to the storage alternatives listed above, a viable, albeit less sexy option, is the Certis storage facility not far from the Singapore airport.  Their bonded warehouse is in an extension of the Singapore Free Trade Zone, which means that customs duties are suspended for goods being moved in or out of their facility, and for goods transferred to another bonded warehouse with similar free-trade zone treatment. Duties are only imposed if goods are sold locally.

I contacted Certis to arrange for a tour.  They are very security conscious and not open to casual visitors.  Before authorizing a visit, in addition to wanting to know my name and address, the name of my company, and my passport number, they wanted to know the period of storage required and the quantity of storage required in weight and type of denomination (size of bars).

Certis operates a very professional and secure facility. Their Secure Vault is designed for the storage of precious metals, precious stones, and cash.  It is managed by a team of custodians who must wear specially designed jumpsuits within the vault area.  The jumpsuits prevent them from hiding anything in their body or clothes.  They undergo a body check when exiting from the vault and at the end of each shift. 

Certis maintains armed guards positioned outside the vault 24 hours, seven days a week, and surveillance cameras and other intrusion detection systems cover the areas outside and within the vault.

They use an inventory management system to keep track of everything stored in the vault.  Besides secure transportation (they handle currency transport for the Monetary Authority of Singapore, Singapore’s central bank), they offer a fine arts depository and safe deposit boxes.  Their fine arts depository is climate controlled and has an inert gas fire suppression system.  A private viewing room is also available. 

Certis offers safe deposit boxes in two locations in Singapore.  They also offer an integrated international courier service that can handle bullion, precious stones, and fine art.

Singapore is an excellent jurisdiction to consider for banking, residency, corporate formation, and storage.  Those seeking a viable alternative for private safe deposit boxes and secure gold storage should put Singapore, storage alternatives at the Le  Freeport and Certis high on their list.


Glenn Lawrence is co-founder and managing partner of Sovereign X.

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