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Gold Storage Companies

Written By Brian Hicks

Posted December 21, 2012

The problem plaguing Asian investors today is an enviable one—where to store their bars of gold?

Given the worldwide market uncertainties and especially the Western problems, gold has steadily moved east, and investors have lapped it up as a safe haven. This means an interesting boom for security companies across Singapore, Hong Kong, and Shanghai, who are now engaged in developing increasingly complex security systems and high-security vaults.

Brink’s Co. (NYSE: BCO) has tripled its storage space for precious metals in Singapore to 200 square meters (2,152.8 square feet), and is presently developing a bonded warehouse in Shanghai.

The Wall Street Journal reports:

“We are growing, and driving that growth is the storage of precious metals and also bank notes,” said Jos van Wegen, the company’s senior manager of global services in Singapore.

Demand for gold keeps rising across Asia. China’s figure for Q3 was 16 percent of the world’s total gold demand, a rise of 47.1 percent from the same period just three years ago. Meanwhile, Hong Kong reached 6.9 tons in Q3 2012, or a rise of over 50 percent from Q3 2009.

Singapore, on the other hand, experienced a decrease this year—36.7 tons of gold in the first ten months compared to 62 tons over 2011—and it is likely that the government’s February decision to eliminate a 7 percent goods and services tax on precious metals affected imports.

Notwithstanding the requirement for physical storage, gold has the advantage of offering a lot of value in a fairly small physical form; a metric ton of gold could be slightly larger than a wine case but would be worth $54.3 million.

Companies like Malca-Amit are focusing on developing lockups and storage facilities; Malca-Amit already has lockups in Hong Kong and Singapore, and it hopes to open another one in Shanghai early in 2013. The Shanghai vault would also allow storage of high-end consumer goods like designer items.

The company’s Singapore vault can hold 600 tons of gold and is almost full, while the Hong Kong vault can store 1,000 tons of gold—nearly enough space to hold China’s entire official reserve, which the World Gold Council estimates is 1,054 tons.

Although several of these companies do have Western operations, others like Singapore’s FreePort prefer to focus almost entirely on the Eastern theater and are looking to expand across Asia’s gold hotspots.