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BullionStar attends LBMA Conference in Singapore, October 2016


This year, the well-known annual conference of the London Bullion Market Association (LBMA) was held in Singapore between Sunday 16 October and Tuesday 18 October at the impressive Shangri-La Hotel. The conference attracts delegates and speakers from across the world of bullion, with representatives from precious metals refiners, mints, bullion banks, brokers, trading and technology providers, bullion dealers and bullion wholesalers. This year over 700 delegates attended.

The main speaker sessions, presentation and panel sessions of industry representatives ran over two days, between Monday 17 October and Tuesday 18 October. Topics covered in the speaker sessions were numerous and varied and included the bullion market in China, developments in the Indian gold market, responsible gold guidance, LBMA updates and developments, a dedicated session on platinum group metals, and a session on the financing of refineries.

As interesting as the speaker sessions and presentations are, many of the conference attendees use at least some of their time at the LBMA conference to engage in meetings with each other on the sidelines. This explains the constant stream of small breakout meetings that took place in the hotel lobby's seating areas, as well as in dedicated meeting rooms around the hotel. BullionStar also used the occasion to meet with existing suppliers from the refining, minting and wholesaling world, as well as to discuss potential business opportunities with new suppliers.

There were also approximately 20 exhibitor stands at the conference, including stands hosted by CME Group, Brinks, the World Gold Council, IE Singapore (Singapore's trade development authority), Istanbul Gold Refinery (IGR), Metals Focus consultancy, Cinnober, and Nadir Refinery.

Shangri-La Hotel, Singapore

Hong Kong - Shenzhen Gold Connect

On the Sunday prior to the conference, the Chinese Gold and Silver Exchange (CGSE) and the Singapore Bullion Market Association (SBMA) co-hosted a pre-conference presentation titled “Building a physical gold corridor in Asia: Shanghai – Hong Kong / Qianhai – Singapore”, at the hotel, which featured a series of discussions about the CGSE’s new gold trading and vaulting project located in the Shenzhen free trade zone at Qianhai, just across the border from Hong Kong.

Haywood Cheung, Permanent President of CGSE, gave an introductory overview of the Qianhai project, showcasing it as part of China’s “One Belt, One Road” plan, after which Dong Feng, Ping An Commodities Trading in Shenzhen presented a detailed explanation of how the linkages between the CGSE’s trading platform in Hong Kong and Qianhai’s clearing and settlement will for the first time enable the trading of both onshore and offshore Renminbi and the trading of onshore and offshore gold. The Qianhai project integrates trading, clearing, settlement and vaulting, with a 1500 tonne capacity vault, and a trading hall. ICBC will provide settlement of both onshore (Shenzhen) and offshore (Macau) Renminbi as well as providing use of its Shenzhen gold vault (onshore gold settlement) until the CGSE Qianhai vault is completed.

This onshore and offshore trading and settlement of Yuan and physical gold will facilitate arbitrage trading, and is another step in China’s liberalisation of its currency and its gold market as it links the Chinese currency to physical settlement of gold inside and outside of China. This initiative is one to watch and will demonstrate the Chinese government’s gradual easing of cross-border restrictions on currency and gold flow. Next phase gold trading in Qianhai by CGSE member companies will commence on 7 December.

With the CGSE having already established a gold trading link with the Shanghai Gold Exchange (SGE) though its Shanghai-Hong Kong Connect, and with the Shenzhen (Qianhai) - Hong Kong Connect now coming on stream, the CGSE is also planning a Singapore - Hong Kong Connect, and a Dubai - Hong Kong Connect, which, if they materialise, will extend physical gold corridor (trading and vaulting connections) across the Asian region and beyond.

Albert Cheng, CEO of the SBMA, wrapped up the afternoon with an overview presentation of SBMA’s aspirations to evolve Singapore into a bullion market hub for the entire ASEAN region, including countries such as Indonesia, Vietnam and Myanmar. However, details of how this plan will be implemented were not addressed. Cheng also showcased the SGX gold contract which is backed by the SBMA, but which has yet to take off despite being launched over 2 years ago.

Singapore Skyline - Central Business District
Singapore Skyline - Central Business District

LMEprecious gold Futures

The first event we attended on Monday was an early morning presentation by the London Metal Exchange (LME) about LMEprecious, its new suite of spot, daily, and monthly gold and silver futures contracts to be launched in the first half of 2017, that will trade on LME’s trading platform, with market-making offered by 5 investment banks such as Goldman Sachs and ICBC Standard Bank. These futures are for delivery of unallocated metal in the London market and the contracts will still clear through the London bullion market's LPMCL unallocated bullion clearing system. In time, the LME plans to launch platinum and palladium futures contracts on LMEprecious, as well as options contracts on all 4 metals. The LMEprecious platform will also link into LBMA’s planned trade reporting system.

ICE gold Futures

On Monday morning, ICE Benchmark Administration (IBA), a direct competitor to LME in the precious metals trading and clearing space, used the LBMA conference to make a very well-timed announcement that it too will be launching a new gold futures contract for delivery of unallocated gold in London (loco London). The ICE contract will trade on the ICE US futures platform and will begin trading in February 2017, in advance of the LME contracts. This contract is being designed to be compatible for settlement within the LBMA Gold Price auction which IBA administers in London, and it will, according to IBA, allow the introduction of central clearing into the auctions, and thus facilitate wider auction participation. Currently,the direct auction is exclusively open  to a handful of large banks that have large bi-lateral credit lines with each other. At this stage it’s unclear how the connections between the futures contract and the LBMA Gold Price auction will work, but BullionStar plans to examine this development in future coverage.

Unallocated Gold, Gold Lending and Central Banks

Given that the LBMA Conference is attended by dozens and dozens of precious metals refineries and mints, it was notable that the subject of "unallocated gold" cropped up in the discussion of LMEprecious and ICE futures contracts, but that there was no discussion in the actual LBMA conference programme schedule of 'unallocated gold' as the term is used by the LBMA. An unallocated gold position in an account in the London gold market is merely a contractual claim for gold against the bank that the account is held with. As such, it is a synthetic gold position.

It was also odd in our view that there was no seminar or discussion about the London gold lending market within the conference programme. As gold lending is an important and influential area of the London gold market, it affects marginal gold supply, and it has an impact on gold price formation.  Notably, the topic of central bank activities in the gold market was completely missing from the conference schedule this year,  a notable omission compared to previous years.

Gold price benchmark for Singapore revisited

In another announcement on Monday morning at the conference, the Singapore minister for trade and industry announced that the SBMA in conjunction with the LBMA and ICE Benchmark Administration (IBA), they'll begin a feasibility study on launching a “pre-AM gold price” auction, which would serve as a benchmark for the Asian region and which would be held at 2pm Singapore time, in advance of the European trading day. This Singapore benchmark was already discussed and announced over 3 years ago, but has put on hold in 2014 due to European regulatory investigations at that time into manipulation of the London Gold Fix.

LBMA Trade Reporting

The conference speaker programme opened on Monday morning with introductory remarks from Lim Hng Kiang, Singapore Minister for Trade and Industry, outgoing LBMA chairman Grant Angwin, incoming newly appointed Chairman Paul Fisher who recently arrived from the Bank of England, Tim Pearce, the chairman of the London Platinum and Palladium Market (LPPM), and LBMA CEO Ruth Crowell.

The LBMA CEO’s introductory speech touch on the planned launch of trade reporting services for the London Gold Market. This trade reporting contract has been awarded to financial technology providers Cinnober – BOAT Services – Autilla, after those partners won the LBMA’s recent RfP tender which had been launched in October 2015. Ruth Crowell referred to trade reporting as ‘Phase 1’ of a new suite of technology services. Trade reporting  will be launched in Q1 2017, and will, according to the LBMA “demonstrate of the size and liquidity of the market for clients, investors and regulators”. Phase 2 of this project refers to services such as central clearing in the London bullion market.

Further background to the chosen trade reporting solution was provided by Jamie Khurshid, the CEO of BOAT Services. Surprisingly, even though this RfP took the LBMA over 1 year to complete, it will still now require a 'design phase' where BOAT/Cinnober needs to meet with LBMA member firms to discuss the scope of reporting, followed by a period of customisation and configuration of the implementation. Details on what exactly will be reported (the scope) remain sketchy, and since full London gold and silver trade reporting by all participants (including central banks) is not mandatory in a regulatory sense, it remains to be seen to what extent transparency will be improved.  Because if you don't have full mandatory reporting, you don't have transparency. In another related presentation, Sakhila Mirza, LBMA General Counsel stated that trade reporting will apply to loco London spot trades, forwards and options, but that "LBMA and its members retain control over the scope of reporting", which highlights the self-regulatory nature of the reporting, and again may suggest that the trade reporting may not be as granular or have as much informational value as some may think, especially given that central banks will be exempt from trade reporting.

The Shanghai Gold Exchange and Chinese Gold Market

Monday's schedule also included an  informative series of presentations titled "The Bullion Market in China" from an impressive list of experts. Jiao Jinpu, chairman of the Shanghai Gold Exchange (SGE), provided an overview of the latest developments from the SGE, which has a network of 61 vaults across 35 cities in China, and where physical trading volume reached 34,100 tonnes of gold in 2015. Jinpu revealed that the International Board of the SGE (known as SGEI) has, since launch in September 2014, traded 7,838 tonnes of gold, while the daily Shanghai Gold Price auction, only launched in April 2016, has already traded 384 tonnes, worth RMB 105.5 billion, giving it an average daily trading volume of 3.4 tonnes. Jinpu also vindicated BullionStar's estimates of 2015 SGE gold withdrawals, because, in the words of Jinpu, he sits on the SGE tap, and knows exactly how much gold has been withdrawn from the Exchange vaults.

In his speech, Jinpu announced that in the near future, the SGE and other exchanges will begin using the SGE Gold Price benchmark to develop gold price derivative products.

SGE Chairman Jiao Jinpu
SGE Chairman Jiao Jinpu

In another notable confirmation, Yang Qing, from the Bank of China, one of China's largest commercial banks involved in the global gold market, responding to a question posed by BullionStar, said that he thinks that in future, the Chinese currency, the Renminbi, should have an element of gold backing.

In what was probably one of the most interesting and revealing presentations from BullionStar's perspective, and which vindicates the extensive research and analysis that BullionStar's precious metals analyst Koos Jansen has done on the Chinese gold market, Matthew Turner from Macquarie Commodities Research in London gave a presentation about how to accurately capture and estimate the total trade flows of gold into China given that China does not publish this data itself.

One of Turner's approaches is to use the trade data of all other countries which do report gold exports to China. This approach reveals that China imported 1626 tonnes of gold in 2015 from a number of countries, primarily Hong Kong, Switzerland, the UK and Australia. Another more elegant Turner approach is to take China's total import figure which it does publish, as well as the summated figures of  all of China's other import categories of data, which China also does publish, and then derive the gold import quantities as the delta.

This approach yields a net gold import figure of 1693 tonnes in 2015. Both of these figures are very close to BullionStar's previously published Chinese gold import data estimates, as calculated by Koos Jansen. Adding 2015 Chinese gold mining production to imports gives total new supply coming into the Chinese market in 2015 in excess of 2000 tonnes, which is over 1000 tonnes higher than consumer gold demand as estimated by consultancies such as GFMS and the World Gold Council.

LBMA and SGE familiar with BullionStar's research

On the Monday evening we attended a dinner hosted by Australia and New Zealand Bank (ANZ) at Singapore’s famous Raffles Hotel. Just after arriving we had the privilege of chatting for a few minutes to Jiao Jinpu, chairman of the Shanghai Gold Exchange (SGE) via his colleague and interpreter Jess Yang, and we highlighted to him BullionStar’s extensive research from Koos Jansen on the China gold market and the SGE, which we were impressed that he was already familiar with. Dinner conservation was interesting and varied as we were seated at a table with representatives of the London Metal Exchange, ICE Benchmark Administration (IBA), the CME Group, GFMS, Metalor Singapore, and the Royal Canadian Mint.

During the conference, we also learned that the LBMA is familiar with BullionStar's research into the London gold market, another confirmation that the analysis that we publish is read widely within the bullion industry.

As the conference wrapped up on the Tuesday afternoon, delegates were asked to forecast what the US Dollar gold price will be this time next year. Audience members submitted their forecasts via a special handheld device in the auditorium, which resulted in an average forecast of US$ 1347.

BullionStar Seminar during LBMA Week

To coincide with the fact that the LBMA conference was located in Singapore this year, BullionStar hosted a number of events at its shop and showroom premises on New Bridge Road, Singapore. On the Saturday prior to the conference,  15 October, BullionStar held a 'meet and greet' morning, where customers and anyone in town for the conference could pop in and chat with BullionStar staff. On Wednesday 19 October, BullionStar held a precious metals seminar in its showroom premises at which BullionStar CEO Torgny Persson and Precious Metals Analyst Ronan Manly presented to an audience on the topics of Bullion Banking, and Transparency vs Secrecy in the gold market, respectively. The presentations and transcripts of the speeches will be published on the BullionStar website in the near future.

Infographic: The Indian Gold Market

The Indian gold market is one of the world’s largest and most extensive gold markets, with an estimated 23,000 tonnes of private gold held within India’s borders. In India, gold is revered and held as a traditional form of savings and wealth preservation, particularly in the form of gold jewellery. With minimal gold mining production, Indian gold demand is predominantly met by gold imports, both official and unofficial (smuggling).

Unlike China, where the Chinese government actively encourages its citizens to invest in physical gold, in India the government wages a constant War on Physical Gold. Despite this war, Indian citizens largely ignore their government and continue to purchase physical gold in large quantities.

This infographic guides you through the following characteristics of the Indian Gold Market:

  • Gold held in India versus other major gold holding countries
  • Gold Price Quotation standards in India
  • Sources of Gold Imports into India, both fine gold and doré gold bar imports
  • Gold Smuggling into India
  • The Drivers of Indian Gold Demand
  • Gold Trading Volumes on India’s commodity exchanges, the MCX and NCDEX
  • The Indian Government’s constant War on Gold

Further information about the Indian Gold Market can also be found in BullionStar's Gold University gold market profiles.

Indian Gold Market Infographic

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Additional Gold & Silver & Platinum Coins GST-free in Singapore

Starting 1 September 2016, the exemption of gold, silver and platinum coins from Goods and Services Tax (GST) in Singapore has been extended. The following coins, all available for ordering at, are now available for purchase without any GST.

The updated IRAS Guide on Exemption of Investment Precious Metals (IPM) can be found here.

United Kingdom Gold Queen's Beast 2016 - 1 oz 

The 1 oz Queens' Beast gold coin is the first of ten coins in a newly released series by the British Royal Mint featuring the heraldic beasts that stood guard at The Queen's coronation. Each 1 oz Queen's Beast is minted in .9999 fine gold and is legal tender at £100. With the coin priced as a bullion coin, it is expected to find its' way into both the hands of investors and collectors.

United Kingdom Gold Lunar Monkey 2016 - 1 oz

This is the third coin released by the United Kingdom Royal Mint as part of its' Lunar Series program. The series began in 2014 with the release of the UK Gold Lunar Horse and has attracted investors and collectors alike who are impressed with the design of the coin, as well as the high quality of the finish. The front of the coin features a rhesus monkey swinging through the trees, along with the inscription "Year of the Monkey" . The UK Gold Lunar Monkey has a maximum mintage of just 8,888 coins.

Canadian Gold Growling Cougar 2015 - 1 oz

This coin is part of the "Call of the Wild" Series released by the Royal Canadian Mint in 2014. The series highlights animals living in the wild that have been hunted to near extinction. The Gold Growling Cougar 2015 is the second coin in the series. The coin is unique in that the purity of the gold used to mint the coin is 99.999% pure, making it one of the purest gold coins in the world. The coin is legal tender at CAD$200 which is an unusually high denomination.

Canadian Gold Roaring Grizzly Bear 2016 - 1 oz 

This coin is the third coin released in the "Call of the Wild" Series. Just like the 2015 edition, the Gold Roaring Grizzly Bear is minted in 99.999% pure gold and is legal tender at CAD$200.

United Kingdom Silver Queen's Beast 2016 - 2 oz 

The 2 oz Queen's Beast silver coin is the first of ten coins in a newly released series by the British Royal Mint featuring the heraldic beasts that stood guard at The Queen's coronation. Each 2 oz Queen's Beast silver coin is minted in .9999 fine silver and is legal tender at £5. 2 oz silver bullion coins are relatively rare. With the attractive design of this coin, it can be purchased for a combination of its investment and collectors' properties.

Armenian Silver Noah's Ark 2016 - 1 oz

The Armenian Silver Noah's Ark is one of the most price-worthy bullion coins on the market. The premium is very attractive and is on par or lower than other popular bullion coins like the Silver Maple and Silver Kangaroo. The coin has been minted since 2011. The Armenian Noah's Ark features a dove in flight with an olive branch and Noah's Ark floating on the flood waters. The coin is minted by the German mint, Geiger Edelmetalle. Each coin is minted in 1 oz of .999 fine silver and is legal tender at 500 Dram. Also available in 1/2 oz and 1/4 oz.

Australian Silver Kangaroo 2016 - 1 oz

The Silver Kangaroo is a new bullion release from the Perth Mint and follows in the footsteps of the popular Gold Kangaroo. The Silver Kangaroo features the iconic Australian Red Kangaroo, surrounded by outward radial lines. This enhances the image of the Kangaroo, rendering a 3D-like effect to the kangaroo. With the Silver Kangaroo now exempted from GST, the pricing of the coin is very competitive even compared to the popular Canadian Silver Maples. Each coin is minted in 1 oz of .9999 fine silver and is legal tender at AUD$1.

United Kingdom Silver Lunar Series 2016 - Year of the Monkey - 1 oz

This is the third coin released by the UK Royal Mint as part of its' Lunar Series program. The series was launched in 2014 with the release of the Lunar Horse and has attracted investors and collectors alike who are impressed with the design of the coin, as well as the high quality of the finish. The front of the coin features a rhesus monkey swinging through the trees, along with the inscription "Year of the Monkey". The UK Silver Lunar Monkey has a maximum mintage of just 138,888 coins. Each coin is minted in 1 oz of .999 fine silver and is legal tender at GBP£2.

Canadian Wildlife Peregrine Falcon 2014 - 1 oz

The Peregrine Falcon was the first coin released in the 4-coin "Birds of Prey" Series minted by the Royal Canadian Mint. The series depicts predators in action hunting for its' prey. The reverse of the coin depicts a Peregrine Falcon which can be seen on the coin ready to swoop down to catch its' prey. The mintage for each coin in the "Birds of Prey" series is limited to a maximum of just 1,000,000 coins. Each coin is minted in 1 oz of .9999 fine silver and is legal tender at CAD$5.

Canadian Wildlife Series - Great Horned Owl 2015 - 1 oz 

The Great Horned Owl was the fourth and final coin released in the 4-coin "Birds of Prey" Series minted by the Royal Canadian Mint. The reverse of the coin depicts a menacing Great Horned Howl, wings spread as it descends upon its prey, along with the weight and purity of the coin. Each coin is minted in 1 oz of .9999 fine silver and is legal tender at CAD$5.

Canadian Wildlife Series 2013 - Wood Bison - 1 oz

The Wood Bison was the sixth and final coin released in the Canadian Wildlife Series, a series of coins minted by the Royal Canadian Mint. The series depicted animals in their natural habitat and has proven to be very popular with collectors. The reverse of the coin depicts the Wood Bison, which can be seen galloping through the snow. The mintage for each coin in the Wildlife series is limited to a maximum of just 1,000,000 coins. Each coin is minted in 1 oz of .9999 fine silver and is legal tender at CAD$5.

Austrian Platinum Philharmonic 2016 - 1 oz

2016 is the inaugural year for the Platinum Philharmonic which follows the Gold Philharmonic, first released in 1989, and the Silver Philharmonic released in 2008.  The Platinum Philharmonic features the same loved design as the Gold Philharmonic and Silver Philharmonic. The obverse of the coin depicts the pipe organ in the Vienna Musikverein's Golden Hall. The reverse of the coin shows some of the instruments of the Vienna Philharmonic. Each coin is minted in 1 oz of .9995 fine platinum and is legal tender at €100.

Full official list of Gold Coins qualifying for GST exemption

(i) America Buffalo
(ii) Australia Kangaroo Nugget
(iii) Australia Lunar
(iv) Austria Philharmonic
(v) Canada Maple Leaf
(vi) China Panda
(vii) Malaysia Kijang Emas
(viii) Mexico Libertad
(ix) Singapore Lion
(x) United Kingdom Britannia
(xi) Canada Call of the Wild 3-coin series
(xii) United Kingdom Lunar
(xiii) United Kingdom The Queen's Beasts 10-coin series

Full Official list of Silver Coins qualifying for GST exemption

(i) America Eagle
(ii) Australia Kookaburra
(iii) Australia Koala
(iv) Australia Lunar
(v) Austria Philharmonic
(vi) Canada Maple Leaf
(vii) China Panda
(viii) Mexico Libertad
(ix) United Kingdom Britannia
(x) Australia Saltwater Crocodile
(xi) Canada Wildlife 6-coin series
(xii) Canada Birds of Prey 4-coin series
(xiii) United Kingdom Lunar
(xiv) Armenia Noah’s Ark
(xv) Australia Kangaroo
(xvi) United Kingdom The Queen's Beasts 10-coin series

Full official list of Platinum Coins qualifying for GST exemption

(i) America Eagle
(ii) Australia Koala
(iii) Australia Platypus
(iv) Canada Maple Leaf
(v) Austria Philharmonic

The World’s largest Precious Metals Refineries

There are many precious metals refineries throughout the world, some local to their domestic markets, and some international, even global in scale. Many, but by no means all, of these refineries are on the Good Delivery Lists of gold and/or silver. These lists are maintained by the London Bullion Market Association (LBMA) and they identify accredited refineries of large (wholesale) gold and silver bars that continue to meet rigorous proficient standards of refining and assaying, and that are, at the same time, financial viable and stable companies. Currently, there are 71 refiners on the LBMA’s gold Good Delivery List and 81 refiners on its silver Good Delivery List, or which just over 50 of these refineries are accredited to both the LBMA’s gold and silver lists.

But within the top echelons of the world’s precious metals refineries, a number of names stand out due to their sheer scale and pedigree, as well as their global brand recognition in the production of a wide range of investment grade gold and silver bullion bars. These names include PAMP, Argor-Heraeus, Metalor Technologies, Heraeus, Valcambi, Tanaka Kikinzoku Kogyo, and Rand Refinery.

5000 Tonnes of Gold

Together these seven refinery groups have a combined gold refining capacity approaching a mammoth 5000 tonnes per year. And that’s not even taking into account their refining capacity for other precious metals such as silver and platinum. Valcambi has a gold refining capacity of 1600 tonnes per annum, Metalor 800 tonnes, Heraeus 400 to 500 tonnes, PAMP over 450 tonnes, Argor-Heraeus over 400 tonnes, Tanaka 500 tonnes, and Rand Refinery 600 tonnes.

Notably four of these refineries are based in the gold refining powerhouse of Switzerland, of which three, PAMP, Valcambi and Argor-Heraeus, are clustered literally within a few kilometres from each other in the golden triangle of Swiss refineries centred within the very south of the Swiss canton of Ticino near the Swiss-Italian border. Metalor Technologies is the exception, as its Swiss headquarters facility is based in Neuchâtel, in the north-west of Switzerland. Of the non-Swiss refineries, Heraeus, Tanaka and Rand Refinery, these are headquartered in Germany, Japan and South Africa, respectively.

Gold Refineries, Heraeus, PAMP, Valcambi, Metalor, Argor-Heraeus, Tanaka, Rand Refinery

International in Scale and Ownership

Although three of the four giant Swiss refineries have historically each been owned by a Swiss bank, and although groups such as Heraeus and Tanaka are still privately owned and controlled by founding shareholders, its important to note that none of these giant refineries are purely local concerns, so their headquarters locations are to some extent a secondary concern. From operating facilities, to metal supplier networks, to customer bases, all of these refineries are now absolutely global in nature.

For example, Metalor operates four precious metals refineries globally, in Switzerland, Hong Kong, Singapore and Massachusetts (US). Heraeus runs gold refining and gold bar production facilities in Hanau (Germany), Hong Kong, and Newark (US). In addition to its Swiss refinery, PAMP, part of the Geneva-based MKS PAMP group, runs a joint venture refinery in New Delhi, in conjunction with MMTC, a large state-owned Indian trading company.

In many cases, the ownership of these refineries is international and cross-border in nature, and increasingly so over the last few years. Agor-Heraeus is owned by the Austrian Mint and two German entities Commerzbank and Hereaus. In 2015, Valcambi was acquired by Indian jewellery producer Rajesh Exports, with one of the selling shareholders being US-based gold mining giant Newmont. Indeed, just last month, Tanaka announced the acquisition of Metalor Technologies, a development which has initiated an upcoming major Japanese - Swiss precious metals refinery combination. Metalor was already international in ownership, as its controlling shareholders are French and Belgian private equity companies. While Rand Refinery of South Africa is  exclusively owned by five of the largest South African gold mining companies, some of these owners, such as Anglogold Ashanti and Goldfields, are vast international concerns. Rand Refinery has also increasingly had to cast its new wider for sourcing gold to process in its refinery as South African gold mining output has declined. Rand Refinery now refines over 75% of the gold mined on the African continent (excluding South Africa), and is also increasingly tapping into gold mining output from the US and Asia.

The World's Refinery Referees

Another indicator of the esteem within which these select refineries are held is their membership of the exclusively small panels of good delivery list referees which have been appointed to run the LBMA’s good delivery lists, and similar good delivery lists maintained by the London Platinum and Palladium Market (LPPM) for platinum and palladium bars.

The LBMA’s good delivery referee panel is a five refinery member panel made up of Argor-Heraeus, Metalor Technologies, PAMP, Rand Refinery and Tanaka Kikinzoku Kogyo. The LPPM’s referee panel also comprises five refiner members, namely Metalor Technologies, PAMP, Valcambi, Tanaka Kikinzoku Kogyo and platinum specialist Johnson Matthey. So not only are these refineries listed on these LBMA and LPPM good delivery lists, they actually help run the entire set of good delivery standards and processes. With the upcoming acquisition of Metalor by Tanaka, these LBMA and LPPM referee lists may need some adjustment, since Tanaka and Metalor are members of both referee panels.

Overwhelmingly, the gold and silver bars of these refiners are all also accepted as good delivery for the COMEX gold 100 oz and gold kilo futures contracts, the gold contracts of the Tokyo Commodity Exchange (TOCOM), the Dubai Good Delivery gold list maintained by the Dubai Multi Commodities Centre (DMCC), and the good delivery standards of the Shanghai Gold Exchange.

Investment bullion bars

Although all of these precious metals refineries, to various extents, supply semi-fabricated precious metals, alloys and industrial precious metals suppliers to a diverse set of industrial and jewellery sector clients, it is perhaps the investment grade bullion products of these giant refiners that they are best known to a global audience.

PAMP fabricates a vast range of cast and minted gold and silver bars which are extremely popular across Asia and the Middle East, in fact, the premier brand in those regions. Valcambi manufactures a wide range of gold, silver and platinum / palladium investment bars, as well as precious metal coins and medals, and has become well-known as the international supplier of Combibars. Heraeus, Metalor and Argor-Heraeus produce a wide selection of gold and silver bars ranging from large wholesale (good delivery) bars through to smaller cast and minted gold and silver bars. Tanaka’s gold bars dominate the Japanese market and notably, Tanaka is also the sole distributor in Japan of gold and silver bullion Maple Leafs coins from the Royal Canadian Mint and gold and platinum Philharmonic coins from the Austrian Mint. Tanaka's acquisition of Metalor will be interesting in terms of how the combined group markets and distributes its investment bullion products going forward.

It's also not widely appreciated that Rand Refinery has refined over 50,000 tonnes of gold since it first opened in 1921, which is a staggering nearly one-third of all the gold ever mined. Rand Refinery large gold bars are held widely by central banks across the world. Rand Refinery’s flagship gold bullion Krugerrand coin is also held very widely, with over 60 million Krugerrands minted since 1967.

This article has not touched on the Perth Mint, Royal Canadian Mint or Royal Mint, which its important to remember, each operates its own precious metals refinery facilities in addition to being a sovereign national mint.

In summary, the seven refineries featured above are truly giants of the industry, and their longevity and customer trust attest to the authenticity and quality of their investment bullion products.

To learn more about the world's top precious metals refineries featured in this article, please see the full refinery profiles which have now been published on BullionStar's Gold University pages:






Tanaka Kikinzoku Kogyo:

Rand Refinery:

In addition, the refining activities of the Royal Mint, Royal Canadian Mint and Perth Mint can be consulted in their respective profiles, also on BullionStar's Gold University pages:

Royal Mint:

Perth Mint:

Royal Canadian Mint:


Infographic: The Chinese Gold Market

This Chinese Gold Market infographic guides you through the largest physical gold trading market in the world, China.

An impressive 16,000 tonnes of gold are held within China's borders.

Did you know that the Chinese wholesale demand for physical gold was an astounding 2,596 metric tonnes in 2015? This was supplied by China mining more gold than any other country in the world as well as importing more gold than any other country.

The chief architect of the Chinese gold market, the Chinese State, is continuously moving forward China's position as the dominant market player for physical gold globally.

The Shanghai Gold Exchange (SGE) is the largest market in the world for physical gold trading. It has 10 million institutional customers, 8.3 million individual customers and 55 certified gold vaults connected to it.

In this infographic you will learn more about the following features of the Chinese Gold Market:

  • Total Chinese Gold Reserves
  • Important Chinese Gold Developments
  • Trading Volumes on the Shanghai Gold Exchange (SGE)
  • Trading Volumes and Trading Lots for the Shanghai Futures Exchange (SHFE)
  • Official Chinese Gold Reserves
  • The Role of the Chinese Banks on the Chinese Gold Market
  • Chinese Gold Mining
  • Chinese Gold Supply
  • Chinese Gold Importation

You can learn more about the Chinese Gold Market at the BullionStar Gold University and in Koos Jansen's blog at BullionStar.

Infographic on the Chinese Gold Market which is the largest gold market in the world

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Golden Stockpiles – The Key to Gold as a Store of Value and Safe Haven

Much is written in the precious metals world about gold’s characteristics, as well as how the behaviour of the gold price allows gold to play the role of a unique financial asset that retains purchasing power over time, acts as a safe haven asset, diversifies risk, and provides hedging benefits.

However, much of the material written in this area skips over an explanation of how the simple, yet powerful, relationships and interactions of the gold price actually work. The appreciation of these simple characteristics and relationships facilitates a far more intuitive understanding of why holding gold - in the form of physical gold - can be so beneficial.


One of the commonly overlooked yet critical attributes of gold that allows it to play the role of a monetary asset par excellence is that physical gold has a vast above ground supply, thereby making the global gold market highly liquid.
Gold is mined to be accumulated and nearly all of the gold ever mined is still in existence in various forms, such as in the form of above ground central bank gold holdings, private investment gold hoards, gold jewellery, or within industrial, medical and scientific applications. With gold recycling services now highly advanced and widespread, this also allows gold holdings to be easily transformed between uses by refineries in a cost-effective manner.

Since nearly all the gold ever mined is still in existence, the world’s accumulated stock of gold is multiple times the annual addition to the stock, i.e. the flow of gold. For ease of illustration, assume that 186,000 tonnes of gold have been mined throughout history and that annual mine production is 3,100 tonnes of gold. This gives a total gold stock-to-flow ratio of 60 times. Depending on the gold price, global holders of gold (in all its forms) are able, and sometimes willing, to step up and participate in gold transactions.

Global gold supply is therefore affected, not just by annual gold mining output, but by the existence of this vast above-ground stock of gold. And it is this stock of gold, over the long-term, that has an influence on the gold price, and that can explain gold’s role as a store of value and as a safe haven asset, as well as explaining gold’s price correlations with other asset prices.


Store of Value and Long-Term Inflation Hedge

Over long periods of time, gold has been proven to retain its real purchasing power. Therefore, gold acts as a long-term inflation hedge and as the ultimate store of value. This may appear to be a complex magical process but the theory is quite simple.

A fiat currency whose supply expands recklessly (which is really all fiat currencies throughout history and at present) will become debased. This leads to price inflation, i.e. an increase in the price levels of goods and services expressed in that fiat currency. As goods and services prices rise, the price of gold also adjusts upwards to compensate for these price rises.

The gold price rises, because on a global basis, there always exists an exchange ratio between physical gold and all fiat currencies, and the vast worldwide above-ground stock of physical gold can always be valued in terms of fiat currencies. But unlike fiat currencies, physical gold cannot be debased. Therefore, the gold price, and the valuation of gold, simply captures and reflects the purchasing power of all fiat currencies, and acts as an inflation hedge and a stable store of value. In practice, in a free market, the gold price is actually a signal of future inflationary expectations, and so gold is known as an inflation barometer.

Is his 1977 book of the same title, a UC Berkeley professor, Roy Jastram coined this phenomenon “The Golden Constant”. Jastram analyzed price level data from 1560 to 1976 for England/UK and from 1800 to 1976 for the United States. He then measured gold’s purchasing power over these periods and found it to be constant over time. Jastram’s study was updated in 2008 by Jill Leyland and also extended to the French and German economies. Leyland’s analysis arrived at similar findings, and was especially illustrative of gold’s critical role during the hyper-inflationary period in early 1920s Germany during which paper currencies rapidly became worthless. The ‘Golden Constant’ was interpreted by both studies as being due to gold’s large but slowly growing supply, resistance to debasement, as well as the gold price's unique behaviour in times of currency depreciation and market and political stress.

The gold as a currency hedge phenomenon can also explained by the above relationships. As fiat currencies become debased or suffer confidence shocks, they depreciate in value relative to gold, because gold has a large, slowly growing and finite above ground stock and cannot be debased. This brings us to the next point.


Gold as a Safe Haven and Hedge against Extreme Risk

Physical gold is a proven and accepted safe-haven. But why is this so? The answer is because gold acts as an inflation hedge and a currency hedge and so preserves wealth. In periods of market or economic stress, gold’s price rises because there is a flight to gold since, due to historical experience, the counterparty and default risk potential of most other assets gold comes to the fore, while gold has a highly liquid market, and gold is universally perceived as having no counterparty risk and no default risk. Therefore, gold takes on the role of financial insurance against monetary crises, geopolitical risks, and systemic financial system risks. Because of its high liquidity and lack of counterparty risk, gold also becomes the high-quality collateral during periods of extreme risk.

Gold’s Price Correlation vs Other Asset Prices

Fans of modern portfolio theory will be familiar with the fact that the gold price is not highly correlated with the prices of most other financial assets. Therefore, adding gold into an investment portfolio can lower portfolio risk. Again, the question is why? The answer is quite simple.

The low, and sometimes negative, correlation between the gold price and other asset prices is due to the gold price not being as dependent on economic and business cycles as most other financial asset or commodity prices. Therefore, the gold price doesn’t react to economic cycles in the same way as most other asset prices. This differing price reaction is… you guessed it… due to the large above-ground stocks of gold which can, due to gold’s liquidity and transformability, be mobilized (by price inducement) to enter the market place irrespective of the economic cycle.

Mobilizing physical Gold

As a practical example, this ability of existing above ground stockpiles of gold to be mobilized into the market is well illustrated by the large number of 400 oz gold bars that flowed out of central bank vaults and ETFs in London during 2013-2015, were transformed by Swiss gold refineries into smaller bars, and then flowed east to Asia. The west to east movement reversed in 2016, with large amounts of gold being imported into Switzerland from locations such as Dubai, Thailand, Turkey and Hong Kong for processing back into large gold bars and then sent back to the London market. Another example is gold recycling, which has an ongoing inverse relationship with the gold price. As the price rises, supplies of gold from recycling sources rise, since the price motivates potential sellers to enter the market. It's therefore worth remembering that gold mining supply is not the full story. Some of these huge above ground stocks of physical gold can and do enter the market in various ways and at various times. In this article, we have not even touched on the controversial subject of central bank gold leasing, a potentially large and hidden supply overhang, but a subject left for future analysis.

“How Safe is your Gold?” – Transcript of Speech by BullionStar CEO

The following is the transcript of a presentation made by BullionStar's CEO Torgny Persson on 14 July 2016 to an audience at the FreedomFest conference in Las Vegas, USA:

Liberty is Prevailing

Freedom, ladies and gentleman.

Freedom is the right to think, speak and act the way that we want.

I think I speak for a lot of us here today in saying that we no longer believe in the imposed concept of a government taking care of us from cradle to grave.

I love the principles on which this country was founded.

Freedom of Speech,
Freedom of Thought,
Freedom of Movement,
and Property Rights

But a lot has changed since. Authoritarian tyrants have kidnapped free society. But make no mistake, people across the globe are waking up. The tyrants are losing.

We can see clearly that the tide has turned. Political correctness is crumbling.

We had Brexit in the UK a couple of weeks ago. The end of the world according to mainstream media. We have the rise of Donald Trump here in the US. Love him or hate him but he’s breaking political correctness. He’s saying the unsayable.

It is starting to dawn on the tyrants that it’s all over.

More speech is always better than less speech.

So people are rising up, finally, people are rising up.

Liberty is prevailing! Liberty will always prevail. Freedom is a powerful concept. Freedom to think, say, read and do what you want.

We don’t need to be instructed how to live our lives. We have been oppressed by the government and lied to by the media long enough. Freedom is a force that can’t be stopped.

We don’t need anyone’s authority to govern our own lives. Freedom, think about it, is simply the concept of living your life the way you desire.


My name is Torgny. I’m an economist by training. I’m the founder of 3 different precious metals dealers worldwide. Being Swedish by origin, I first started the Swedish bullion dealer in 2008. Liberty because if you own precious metals, you can gain independence and liberty from the oppressive financial system as you’re not locked in to the fraudulent banking system.

I have a Master’s Degree in Economics. If you ever get the chance to study economics, don’t do it. Economics is upside down. Instead of modelling what is actually happening in the real world, economics is a product of professors peer reviewing each other, holding each other’s hands, coming up with obscure models that they try to push onto the world.

I subsequently started Liberty Silver in Estonia in 2011, and most importantly BullionStar in Singapore in 2012. Today I’m looking to cover three different topics.

First, I will cover what is happening on the gold market by looking at the most important gold trends of 2016. What’s happening in the gold market and what can we expect ahead?

Then I will talk about Singapore because Singapore is the very best place in the world for wealth preservation and asset protection and it’s the best place in the world to buy and store precious metals.

And I will conclude by talking about how I have set up BullionStar with the purpose of servicing offshore bullion protection. I moved to Singapore with my family 3 years ago to establish BullionStar in Singapore simply because it is the best country in the world from which to offer precious metals services for international diversification, and asset and wealth protection.

Global Economy 2016

To understand the gold market, we have to understand what is happening in the global economy - and the relative ‘health’ of the global economy today.

Stock and bond markets have been performing well over the last years but the underlying economies are struggling. Record low interest rates, sub-zero in many countries, and massive money printing have’t triggered any real economic or trade growth.

We can even see that the viability of innovating, of creating new products, of selling products for a profit has become secondary to the goal of just having a corporate presence on the public investment markets. Today, it’s more important for company managers to list their company on the stock exchange than it is to actually create an innovative product that makes money.

So we have an economic system that incentivizes reckless debt behaviour, which leads to asset bubbles, boom-bust cycles, massive debt, mal-investment and inflation.

But how has this monster of debt and inflation been created? What’s at the core of our current economic system?

Today’s Monetary System

It’s the monetary system that allows government to steal through taxation and inflation. Taxation is of course the same as theft. They just had to invent another world of it. Income tax of 30% sounds a hell of a lot better than income theft of 30%. Everyone agrees that it would be wrong for me to go up to someone in this room with $100 and steal $30.

Just because a group of people get together and call themselves the government, it doesn’t change the immorality in stealing.

The monetary system, of course, also redistributes wealth via inflation. Inflation is also theft but in a discreet way as it happens slowly without the general population being aware of it. What did a gallon of milk cost when you were young? What did an ice cream cost?

Inflation is a redistribution of wealth from late receivers of newly printed money i.e. you and I, normal people, to the early receivers. i.e. the government, the central banks and the commercial banks.

Dollar 99

The US Dollar is important in this context because the US Dollar is the reserve currency of the world. As we can see from this chart, the US Dollar actually did pretty well until the beginning of the 20th century. But what happened in the beginning of the 20th century?

The Federal Reserve was created in 1913 and the world went off the gold standard.

Since then the world’s currencies have lost 99% or more of their value.

We have been indoctrinated into believing that the world’s current monetary system is a natural system, but nothing is further from the truth. We should have moved on from it a long time ago as this monetary system really is the root cause of the financial debt disease that we are seeing today.

How is Money Created Today?

Today more and more people are becoming aware of the Federal Reserve’s counterfeiting of money through Quantitative Easing (QE). However, it’s still a mystery to many how most of our money is created today.

Most of today’s money is created not by central banks, but by normal commercial banks. It’s just created out of thin air when the commercial bank extends a loan. There’s nothing backing this money creation, there’s nothing tangible to it.

Let’s illustrate how it works with an example. We have Robert who is in the market for a 1 million dollar house. Robert’s career choice is as a fast food restaurant worker, part-time, on minimum wage. But Robert knows he has to look credit worthy when meeting his bankster so he dusts off his tie for the occasion.

The bankster takes a quick look at Robert and judges him as credible. No problem. You’ll get the mortgage. Now, where did the USD 1 million that the bank lent Robert come from?


It was created out of thin air when the bank extended the loan to Robert. It was just created as a book-keeping entry in the bank’s accounting system out of thin air.

This is how approximately 92% of US money supply is created today. It’s created by banks out of thin air when lending. It’s easy to understand, but for some people hard to believe as it’s just too absurd.

92% Electronic Currency

Only 8% of the US Dollar money supply today exists in physical form and even this 8% are just worthless pieces of paper that only have a value as long as people can be brainwashed into believing they have a value.

Some people actually still think that the US Dollar is gold backed. As a thought experiment, let’s calculate what the price of gold would have to be for the US Dollar to be backed by gold.

The Federal Reserve claims to hold, and note that I say claims to hold because there has never been any independent proper audit of the US Treasury vault holdings, 8133 metric tons of gold. At the same time there’s about 17 trillion of US Dollars in circulation. The price of gold is currently about USD 1300 per troy ounce. The US gold reserves as valued in US Dollars would therefore be worth about 340 billion dollars. This means that the price of gold would have to rise 50-fold for all outstanding US Dollars to be backed by gold today. 50-fold. This is how much the value of our currencies have been eroded.

What is Money?

We can thus see that the world’s current money system isn’t serving us the people. But what is money in the true sense?

For something to emerge as money on a free market, it needs to serve three purposes.

  • Medium of Exchange – Money is the intermediary in the exchange of goods and services. If we don’t have money, we’re back to barter systems of medieval times which is very impractical.
  • Unit of Account – Money is supposed to serve as a measuring stick that everyone understands. Money is a frame of reference. And sure, if I tell you that something costs $100 you have a pretty good idea how much that is, but the problem is that it takes $100 today to buy something that cost $1 a hundred years ago.
  • Store of Value – Money is supposed to keep its purchasing power over time, to keep its value.

Let’s now compare paper currency and gold to see which has the best monetary characteristics.

Durability – Money is not supposed to corrode, oxidize or burn. Well, paper money burns easily whereas gold melts under heat but isn’t destroyed.

Portability: Paper money and gold can both be moved. Electronic currency can be moved very easily but can also be deleted by the stroke of a key.

Divisibility – Let’s do an experiment. I have here a 10 dollar note and a 1 gram gold bar. Now what happens if a split this 10 dollar note, what does it become? Does it become two 5 dollar notes? No it doesn’t, it becomes two worthless pieces of paper. Now what if I instead split this 1 gram gold bar into two equally sized pieces, what does it become? It becomes 2 bars of 0.5 grams each which together is still what I had at the beginning i.e. 1 gram! This tells us a lot about the worthlessness of our paper money.

Fungibility – Fungibility means that each and every unit is indistinguishable from the other

Intrinsic Value – Gold has a high value because of its metallic characteristics. It has high density, it’s soft but still strong, and it’s what’s called malleable, meaning that it can be stretched without breaking. A 1 oz gold coin can actually be stretched out 50 miles without breaking. That’s 6 times all the way up and down the Las Vegas strip!

Imbalances from Using Dishonest Money

By using dishonest money as the world is doing today, we get huge global imbalances.

The US is running a massive trade deficit. There’s much more stuff coming into the US than there is leaving. How are the excess imports paid for? The answer is that it’s paid for by newly created money.

It’s interesting to note that it’s only possible to run trade deficits to this enormous extent if you issue the currency that is used as reserve currency. This is thus only possible in the US, as the US Dollar is used as the world’s reserve currency. In any other, non-US country, it wouldn’t have been possible because the currency would depreciate when there’s a continuous trade deficit.

When the currency is depreciating, it becomes more expensive to import goods and it becomes cheaper for others to buy exported goods. Trade is therefore rebalancing.

This is not happening in the US though and the reason for it is that the US Dollar itself is demanded as reserve currency around the world.

There’s a lot of finger-pointing towards the US because of this, blaming the US for living beyond its means. I don’t agree with that though as it is the rest of the world, i.e. non-US countries, that is demanding US Dollar as reserves which they don’t necessarily have to do. So this is what’s called an exorbitant privilege.

China & US Debt

Things are changing rapidly though as structural changes to the system are long overdue. The system we have today is in no way sustainable. The US Dollar is losing structural support from surplus countries, most notably from China.

Foreign countries are no longer increasing their reserves of US Dollars. China is no longer increasing its holdings of US Treasuries. They stopped buying them. So the system of the US Dollar acting as a reserve currency is very fragile and is only holding together based on the premise of more bribes. Private investors, especially in countries where the markets and currencies are failing such as in South America, buy bonds but they only do so on the promise of more and more easy money to come. People have been conditioned for many decades to run to the US Dollar as a safe haven although I predict that to soon change.

Foreign governments and particularly China are not interested in owning anymore US debt though. The question is when will the private support for the US Dollar stop, because then there’s no one to support US debt anymore except the Fed itself. When will it happen? Timing wise I’m not sure. When I started Liberty Silver in 2008, I thought it would happen much sooner that it has. Sooner or later, it’s going to happen though. We will first get a strong deflationary pressure, we are basically in that phase already. Credit will default but this will not be accepted by the governments, who will buy up debt at all costs, eventually leading to a crisis of confidence and then we’re in big trouble because then people will start to spend their savings quickly leading to hyperinflation. And when that happens, debt and credit is not a good store of value.

And who best understands this situation today? China still has a big surplus though so what do they buy instead?

Chinese Gold Rush

They are buying tangible assets. Gold is one such asset but China is also a major foreign direct investor in all sorts of projects from mining in Africa to infrastructure in central Asia.

The Chinese understand that the days of the US Dollar are numbered.

Chinese rush

Whereas Westerners have mostly been shunning gold for the latter part of this decade, the Chinese have been vacuuming the world’s vaults for physical gold. This chart shows that the Chinese, including both the government and private sector, are holding at least 16,000 tonnes of gold.

Chinese AU 16000

The Chinese government even runs adverts on national TV encouraging everyone to buy gold. Just imagine the US government running adverts on national TV encouraging people to buy gold.

Why do the Chinese do this? The simple answer is that they understand that gold is a stable savings asset, but they also understand that the days of the US Dollar as the reserve currency of the world are numbered, and they understand that gold is a much better safeguard against inflation and currency destruction than anything else.

This trend of gold flowing from the West to the East is the same as a flow of power from the West to the East. It has huge geopolitical implications because whoever has the gold in the end has the power. In my opinion, the Chinese are buying as much gold as they possibly can without breaking the neck of the market.

Western vs. Eastern Gold Mentality

I’m in a fortunate position because I’m running 3 bullion dealers across the world, both in the west and in the east. I have two businesses in Europe and one in Singapore in Asia so I’m fortunate to be able to compare eastern and western gold mentality.

What I see is that when the price of gold is going up, westerners buy. In the west, most people are looking to get a return on their investment. That’s how we’ve been conditioned because if we don’t get a return, inflation will eat up the value of the money.

But when the price of gold is dropping, there are a lot of Asians buying. We get queues outside our shop. Easterners are not looking for a return on their investment. What I see is that easterners don’t view gold as an investment vehicle. They view gold as real wealth, they view it as a safeguard against inflation and currency destruction. They view it as savings which provides independence.

In the west, we see the opposite. When the gold price is dropping, Westerners give up. It’s not good for my investments so I need to chase some other investment. So in the West, people instead buy when the price goes up, due to being trend seekers, as we’ve also witnessed this year.

But in my opinion, we can learn a lot from the Eastern mentality because the Eastern mentality is that gold is savings. There’s no counterparty risk for gold. You don’t have to trust any government, central bank or commercial bank when you buy and hold gold. You don’t need to trust anyone because you hold your wealth yourself so you’re in control.

Simply put, in the East, people are value buyers and buy for generational wealth, whereas in the West people mostly buy gold for the lure of currency profits.

How can Westerners piggyback this successful strategy to save/invest in gold outside the reach of intrusive governments?

Singapore’s Story

Let’s take a look at Singapore. I’ve been living in Singapore for about 3 years. I relocated with my family 3 years ago from Sweden, the worst socialist country in the world. And the country with the most political correctness by far anywhere. You think it’s bad in the US, check out Sweden. Socialism is cancer. I’m not going back there.

I moved to Singapore simply because it’s the best country in the world for precious metals, it’s as easy as that. Whether my kids agree, I don’t know but they like to play with silver coins and actually understand the intrinsic value of precious metals much better than most people in their 40’s and 50’s.

Singapore is the new Switzerland for asset protection. It’s the best and safest country in the world for wealth preservation.

Singapore is unique. Let me tell you my story about when I first went to Singapore. My business partner and I first visited Singapore on an exploratory trip researching whether to establish BullionStar in Singapore after we discovered that the Singaporean government was abolishing the sales tax on precious metals in Singapore in 2012. This is interesting because how many countries today are deregulating anything let alone precious metals? In other countries the rulebook just gets bigger and bigger. I know there’s many absurd examples from the US. From Sweden where I originate, the guidance on the sales tax that all companies must know and follow is 3,000 pages long. That’s insane. The rulebook of absurdity is just growing. Singapore may be the only country that is taking the opposite route of actually removing rules.

In Singapore, the government wants to create a trading, transit and storage hub for precious metals so they actually removed the major hindrance to that, the sales tax (GST / VAT as it’s called in some countries), which is rather unique.

So on my first trip to Singapore together with my business partner, we went to one of the suppliers in Singapore to discuss business opportunities. We had a general business discussion and they said, have you talked to the government yet? So I’m from Sweden where if you send a question to a government authority, in best chance you may get a reply after a few months if you’re lucky and they’ll most likely harass you with an inspection or audit while they’re at it.

We’ve been through a lot of that in Sweden even though we’re following all the rules meticulously.

The Singapore supplier told us that we can indeed contact the governmental trade agency in Singapore so I said why not and I sent the government contact person an e-mail 11 pm. I get a reply in three minutes saying that we’re welcome to meet them the next morning at their office.

Baffled, I replied that we will show up so we rock up to their office at 9 am in the morning. There are two guys meeting us. They are in their 20’s - 30’s and we discuss business opportunities with them. They tell us that we are welcome in Singapore, and that they want us here, and they encourage us to get started, and facilitate the introductions to different stakeholders and suppliers.

I met many bureaucrats in my life but that has never happened before, because bureaucrats  are normally just interested in growing their reach, killing anything productive around them. Whereas in this case, they wanted to help us and even came up with their own private business ideas. And this is the Government! Where else would that happen, would it happen in the US? ‘

We were quite amazed and we went for it and established BullionStar in Singapore four years ago.

Singapore Story

So in general terms, the Singaporean government is keen to incentivize productivity and they understand that the private economy is the backbone of the economy.

Singapore was actually literally kicked out of the Malaysian Federation 51 years ago. With nothing going for them and with no natural resources, the journey since has been a tremendous one. In a mere 50 years, which isn’t a very long time when it comes to building a country, they’ve established the premier financial center of the world. They have done this with a very strong rule of law where there’s a lot of freedom within a set framework. You have a lot of freedom as long as you keep within that framework and you especially have good business freedom.

Now, if you bring in guns or drugs, you’ll be put away for a long time if not forever. I’m a libertarian so I don’t really agree ideologically but I can see how this has been serving Singapore very well as a city-state, as there’s no shootings whatsoever and very little drugs.

Singapore is the most business friendly country in the world. Hands down. The Singaporean government runs Singapore like it was a company.

They focus on productivity and innovation and luckily they are a too important as a country to be listed on any grey or black list because of their low tax regime and financial protection. They are also very good diplomats. A few years ago, OECD put pressure on Singapore to start signing Tax Information Exchange Agreements. The Singaporean government said, yes we will start signing these agreements. To date more than five years later, they have signed one such agreement with…Berumda…Strengthening Singaporean-Bermudian ties to ensure that the OECD doesn’t bother them.

Compare this to Sweden is day and night. Sweden is often perceived as some sort of mellow well-working ideal. Bernie Sanders is touting Scandinavia as some sort of socialistic dream. Let me tell you, he’s got no clue what he’s talking about. Sweden’s been going downhill severely in the last decades. Crime is rampant. Due to the migration crisis, Sweden tops all countries for sexual violence. In 2015 alone, 163,000 asylum seekers predominantly from Syria and Afghanistan, arriving into a country with a population of only 9 million. Everything is totally breaking down. You could never run a storefront precious metals dealership in Sweden like we do in Singapore.

Sweden is also practically cashless. Cash is rare as a payment mechanism, and oftentimes no longer accepted. I was very concerned about my family while we still lived in Sweden even though my Swedish bullion dealer business, Liberty Silver, didn’t have a physical shop but just sent parcel deliveries via insured registered mail.

In Singapore, you can see currency exchangers exchanging tens of thousands of dollars without any security glass or any protection whatsoever and it’s completely normal. A couple of months after I moved to Singapore, I walked past Raffles Place, in the Central Business District, and there was a currency exchanger in the process of counting cash in a counter, standing outside his booth with a currency counting machine. Just when I walked past, there was a gust of wind and a pile of bills were taken by the wind and this was on the busiest street of Singapore with lots of people walking by. The exchanger calmly walked around and picked up the 100 dollar notes like nothing had happened. I had to veer to the side not to step on any of them.

What does that tell you about the security in Singapore? It’s incredibly secure. No one would dream of doing anything. It’s a combination of no social exclusion and harsh penalties. There’s no unemployment whatsoever in Singapore. Every shop you walk into has a sign: “we are hiring”. There’s a shortage of labor. Social standards are thus good. At the same time, the punishments for violent crimes are extremely harsh and includes caning.

Michael Fay, a US citizen, was actually sentenced to six strokes of the cane in 1993 after vandalising cars. The US protested loudly that caning was excessive for a teenager who committed a non-violent crime. The US embassy pointed out that the damage to the cars he vandalised wasn’t permanent but the scars from the caning would leave permanent scars on the US citizen. Bill Clinton pressured Singapore to grand Mr. Fay clemency but Singapore stood its ground and carried out the sentence although reduced to four strokes. It’s a rather harsh punishment. Your buttocks are bared and after three stokes, deep cuts are usually opening with blood squirting out. The enforcer must use the full force of his arm.

So this is an example of the rule of law in Singapore and whether you like it or not, it seems to serve as a deterrent.

Defend your bullion from confiscation risks

Bullion in Singapore

Singapore is the very best country in the world for buying and storing precious metals.

There are no taxes on bullion whatsoever in Singapore. The Singaporean government has actually deregulated the precious metals market. There is no sales tax, no capital gains tax, no import or export taxes, no tariffs or restrictions, no inheritance tax, no gift tax, no dividend tax. Before 2012, there used to be GST (sales tax) on physical bullion, but as I mentioned they abolished that tax in 2012 as they want to encourage bullion dealers to establish in the country.

As we all know, Western countries introduce numerous invasive laws targeting privacy and that place the right to buy and store bullion confidentially under attack.

Importantly, there are no reporting requirements, whether domestically or internationally, when someone buys or stores precious metals in Singapore. Your bullion is your private business and we are under no obligation to report your holdings to anyone. If you buy and store bullion with us, we don’t report it to anyone. You can hold bullion completely confidentially in Singapore and that also applies to FATCA. There’s no FATCA reporting for BullionStar because we are not defined as a financial institution. We are keen on helping you defend your right to buy and store bullion confidentially without your local authorities prying into your bullion ownership.

The Singaporean government has chosen precious metals as a growth industry. Singapore is keen on creating a trade, transit and storage hub for precious metals in Singapore.

As regards safety, you can confidently walk into our storefront bullion retail store in central Singapore and buy bullion with cash, then hand carry your bullion out without being hassled due to the zero crime rate. This has the advantage that the insurance cost for bullion in Singapore is low. By the way, the sentence for robbery in Singapore is up to 20 years in prison and a minimum of six strokes of the cane.

In Singapore, property ownership rights are also very strong. Singapore doesn’t allow frivolous litigation. Remember that it’s less than 100 years since the US outlawed gold ownership. Western governments have a long history of stealing. It seems they can’t help themselves when it comes to stealing. Singapore has no history of any confiscations, seizures or anything like that.

So, storing bullion in Singapore is an insurance policy against government intervention, wealth confiscation and frivolous litigation.

What makes BullionStar unique is that we combine online usability with physical accessibility. is our website where you can buy, sell and store physically allocated and segregated bullion.

Buy & Store Bullion in Singapore

It’s very easy to get started with us. Other bullion dealers also say that it’s easy but then they nonetheless slap you with 7 steps and require you to send in documentation. Signing up for an account with us is a one page registration form. It takes less than a minute. Much easier than signing up for a Gmail account or booking a flight online.

There are no documentation requirements. We don’t force you to send us any documentation at all. You input an e-mail address, password, your address and select a PIN number. It takes, if you’re quick on the keyboard, 30 seconds, and placing an order takes another 20 seconds. You select the items to buy, you go to the checkout and submit your order. One page checkout. I think I speak for many of us in how unnecessarily complicated everyone makes their online interfaces. PayPal, booking a flight ticket, government agencies, banks. They try to trick you into different things you don’t want. Add insurance, add car rental etc.

It should be easy to buy and store gold. A lot of customers are genuinely surprised about how easy we make it. We get good feedback on how easy it is to deal and transact with us, and we have over 600 genuine Google reviews with an average of 4.8.

You can handle everything online 24/7. You can buy, sell, store, order physical withdrawal of your metals online and even audit your metals online.

Trust is very important in the bullion industry. If you trust as with your hard-earned savings, you have to be able to trust us. What I tell our customers is, don’t trust us. Do your own due diligence. Don’t take my word for it. Read up on us. Google us and do your own due diligence.

BullionStar Vault Storage

If you choose to buy and store bullion with us, it’s important to know that we have five different auditing methods. We employ the LBMA-approved auditor Bureau Veritas to do third-party audits on all customer holdings bi-annually. We have something called the Live Audit Report where everyone can anonymously check on their own and all other customers’ bullion holdings. Furthermore, we allow and encourage customers to walk-in to our bullion center in Singapore and do their own auditing of their own metal. If you choose to go to Singapore to audit your metals, you don’t even have to notify us beforehand. You can just show up and ask to audit your metals, and we facilitate this on the spot. We will bring out your metals from the vault to the meeting room. You can go through everything and compare your bars and coins against your records and have a look at your own metals. This auditing program it thus very comprehensive.

We also take photos of your bullion and upload these images to your account. As soon as you have settled your payment, we process the metals into vault storage and take pictures of the actual bullion so that you can compare the bar serial numbers with your invoice. If you then come to our bullion center to do a physical audit yourself, you can again check on the serial bar numbers and if you physically withdraw your bars, those are the exact bars you receive.

With us, you own specific products. Your bars are allocated with you holding the direct legal title to the physical metal.

You can of course have your products shipped to you at any time fully insured. Even though Singapore is the safest country in the world, we have full insurance protection with the largest specie underwriter in the world, XL Insurance, for all risks at full replacement value. You can download the insurance document online. What’s good is that as there’s virtually no crime in Singapore, it makes the storage premiums low. We charge 0.39% of the average value per annum for gold and 0.59% for silver which includes full insurance for all risks, and all handling and online access for your segregated and allocated gold, which is very competitive.

Just like you can physically audit your metals, you can also come in to our shop to physically withdraw your metals without any prior notification. You show up, present your ID and tell us that you want the metals now and we simply hand over the metals to you.

Walk-in Bullion Center in Singapore

We can do this as our vault is actually integrated into the same venue as our shop.

Our bullion center consists of a retail bullion shop, showroom and vault in one and the same venue truly making it a one-stop-shop for everything precious metals. Our shop used to be a bank branch and has an old style bank vault built into it. The vault was built several decades ago and I believe the reason why the vault is still there is because of its sheer impenetrability. It’s 30 inches thick, constructed from concrete and full of steel bars in the walls.

This is a unique shop. Nowhere else in the world do you have the flexibility of buying, selling, storing, depositing, valuing, physically auditing and physically withdrawing metals in one and the same storefront place without any prior notification.

You can just walk in, we have 20 showcase displays full of precious metals. So unlike many other dealers, we don’t hide online on the internet and we believe this combination is quite unique.

Singapore is a long way from the US and you don’t need to visit us to buy and store bullion with us. You can handle everything online. But if you ever go to Asia, I highly recommend that you pay us a visit to have a look. Whether you’re a customer or not as it’s a pretty cool concept.

BullionStar cash on account

BullionStar Cash & Bullion Account

Another unique feature that we offer is our BullionStar account. If you’re considering opening an offshore account, we have the ideal solution for that. It’s becoming more and more difficult to open bank accounts abroad. This is true generally but especially true for US customers.

With a BullionStar account, you can hold not only bullion on your account but also cash. You can hold US Dollars, Euros and Singapore Dollars on the account. It works like a bank account but we are not a bank. This is what is called a stored value facility and is under the same regulations as e.g. how PayPal holds client money.

As we don’t operate under the risky fractionally reserved banking system, this is much safer than a bank account.

It makes it very easy to trade physical bullion, and makes it easy to average in or out of positions.

Funds can be held indefinitely on the account and can be used towards purchasing bullion at any time or you can withdraw your funds at any time.

BullionStar Gold & Silver Bars

BullionStar Gold & Silver Bars are the world’s first and only gold & silver bar traded without any spread without the buy and sell price. This means that at any given point in time, the buy price is the same as the sell price.

What’s the hook you might ask. Well, the initial price premium is slightly higher compared to the spot price of the metal than for other bars of comparable price, but instead there is no spread so you don’t have trading cost whatsoever thereafter.

The bars are also very aesthetically attractive and if you haven’t been yet, come by our booth 425 to check them out.

The BullionStar gold bar is produced by the Swiss refiner Argor-Heraeus and there’s an inscription on the back side of the bar stating “Money since 4,000 B.C.” matching our ideological belief that gold is money.

The BullionStar silver bar is produced by the renowned German refiner Heraeus.

These bars have become tremendously popular as they eliminate the often large spreads faced by physical silver investors.

BullionStar Offshore Bullion Solutions in Summary

BullionStar was set up for the purpose of international diversification, and to provide confidential offshore bullion storage while being very accessible and transparent for the customer him/herself.

Even though we have a lot of local Singaporean customers given our local shop, it was, to a large degree, set up to cater to offshore bullion protection specifically.

There are no taxes on bullion in Singapore and there are no reporting requirements whether locally or internationally. We treat your holdings with full confidentiality although we are very transparent to our customers.

BullionStar is unique in that we combine online usability with ease of registration and ease of online trading coupled with the accessibility of a physical bullion shop and vault in central Singapore. It’s a one-minute process to sign up and place your first order with us.

With your BullionStar account, you can hold both bullion and cash funds in US Dollars, Euros and Singapore dollars on the same account, which is very convenient as it takes out the banks as the middle man between you and us.

When you hold metal with us, it’s your metal – fully allocated and segregated. We deal with physical metals only. With us, you specifically choose which items you buy. You place an order on e.g. a 1 oz PAMP gold bar. We upload pictures of the specific gold bar that you own to your account. We input the serial bar numbers on your invoice. We store that specific bar for you specifically and you have the legal title to that gold bar.

You can then follow your holdings online in real-time and when you prefer, you can sell or physically withdraw (or audit) your 1 oz gold bar. When you audit or withdraw your gold bar, you are given the exact same gold bar with the exact same serial number as you were allocated when you bought it.

By introducing the BullionStar Gold & Silver Bars which can be traded without a spread between the buy and sell price, we’ve solved the problem of large premiums that physical bullion investors and savers were facing.

And we have the most competitive storage fees in the industry.

But don’t take my word for it, check us out online and while Singapore is a long way from here, if you’re ever around in Southeast Asia, come and visit us at 45 New Bridge Road in Singapore. Our booth number is 425 where we have some awesome metal on display and also a very cool video game, the QE defender, where the objective is to obstruct the Fed, ECB and Bank of Japan from dropping money into banks.

Thank you!

Wrap-Up of BullionStar’s visit to FreedomFest 2016 in Las Vegas

Saturday July 16 wrapped up BullionStar's attendance at its first FreedomFest conference and convention in Las Vegas, Nevada. During the event from Wednesday July 13 through to the Saturday afternoon, the BullionStar team interacted with a wide-range of interesting event attendees, discussing topics ranging from the role of precious metals in investors portfolios, to the safety and security of having offshore storage of investment gold and silver at BullionStar's vault facility in Singapore.

Prospective US customers were interested in the fact that there are no sales or other taxes on bullion in Singapore, no reporting requirements on bullion, and that Singapore is a safe and stable political jurisdiction which upholds property ownership rights and where the Singaporean government actively supports the gold sector. On the topic of specific vaulting infrastructure, potential customers learned that BullionStar's "My Vault" facility provides secure, insured, allocated and segregated bullion storage with 24/7 on-line access to your holdings, using multiple levels of auditing, and that you can hold both bullion and cash on your BullionStar account, thereby using your BullionStar account as a real alternative to a bank account in Singapore.

BullionStar Grand Prize Draw - Silver Bars

Throughout the 3 day convention, attendees could enter a draw at the BullionStar stand for a chance to win one of three substantial silver bar prizes. Additionally, everyone who entered the draw received a free 1/10 troy oz silver coin of .999 purity produced by Golden State Mint, a coin with a design based on the Walking Liberty silver half-dollar historically issued by the US Mint.

The prize draw for the BullionStar silver bars took place on Saturday afternoon as the conference was wrapping up. First prize in the competition was a BullionStar 1 kg silver bar worth nearly US $800. BullionStar silver bars are 99.99% pure silver bars with a high-lustre finish produced by German refinery Heraeus on behalf of BullionStar. Second price was a 10 troy oz Heraeus minted silver bar, produced by Heraeus at its refinery in Hanau, Germany, while third prize was a 5 troy oz Heraeus minted silver bar.

Luke Chua, BullionStar COO and Torgny Persson, BullionStar CEO sum up their impressions of FreedomFest 2016

One of the major themes resonating at this year's FreedomFest event appeared to be that the founding principles of the US such as property ownership rights, personal liberty, and freedom of speech are being eroded, and that the government is encroaching on personal privacy. These themes were also picked up by Rand Paul's keynote speech noted in a previous BullionStar dispatch. A common talking point for people who came to the BullionStar stand during FreedomFest was the worldwide banking reporting obligations imposed on banks by the US Foreign Account Tax Compliance Act (FATCA) rules and regulations.

Beyond the Frozen Monopoly - Third Party Candidates

Given the current media focus on Republican and Democratic candidates in the upcoming 2016 US presidential election, US and international media often forget that there are other parties’ candidate nominees running in the US presidential race such as Gary Johnson of the Libertarian Party and Jill Stein of the Green Party. And so FreedomFest was eye-opening in that it was a reminder that other political parties do exist in the US apart from these two powerful incumbent parties, and that there is plenty of political thinking in the US outside the mainstream media's narrowly defined consensus.

In a Reason.TV interview conducted at FreedomFest with Johnson, former governor of New Mexico, and his running mate for vice-president, William Weld, former Governor of Massachusetts, Weld opened the interview with the interesting perspective that there is a “frozen monopoly of the two parties that has frozen a lot of people's thinking in place,… And they think, 'I have to be a right-winger,' or, 'I have to be a left-winger.' They're not thinking, 'What do I think?”

Steve Forbes - Gold Keeps its Intrinsic Value

During another interview at the convention, Steve Forbes, editor-in-chief of Forbes Magazine, posed a very timely and interesting question, asking not which way the Fed will move on interest rates but “Why is the Federal Reserve manipulating interest rates in the first place?”. Forbes highlighted that interest rates are the cost of borrowing money and rewarding lenders, and that “by manipulating interest rates, the Fed has deformed credit markets”.

On the subject of gold, Forbes said that “gold is an insurance policy against turmoil and against government’s mis-behaviour towards the currency” and he underscored that it was important to remember that "gold keeps its intrinsic value", and that the price changes in gold are just people’s changing perceptions of the value of currencies. No doubt most BullionStar readers would tend to agree with these sentiments.

That wraps up our coverage of the FreedomFest 2016 event. We hope that these insights have been helpful, and we look forward to providing readers with updates at future events around the world that BullionStar may attend.

Rand Paul’s keynote at FreedomFest 2016, and BullionStar’s interactive game

BullionStar continues its coverage of the FreedomFest conference in Las Vegas which it is attending and exhibiting at. For previous coverage see "BullionStar exhibiting at FreedomFest in Las Vegas" and "How Safe is your Gold?” – BullionStar CEO’s speech at FreedomFest".

Rand Paul's Speech

U.S. Senator Rand Paul, a Republican representative of Kentucky in the Senate, was a keynote speaker at the second full day of the FreedomFest conference on Friday afternoon. Paul who was himself a GOP presidential candidate this year, is the son of well-known Ron Paul, former Republican congressman for Texas. Rand Paul, like his father, advocates libertarian policies such as limited government, personal liberty, and free market capitalism.

In his speech, Senator Paul highlighted the continual encroachment of government regulations on personal liberty, regulations which are mostly imposed by unelected bureaucrats, the EU being a case in point. Paul referenced the Brexit vote as an example of the growing concern among populations of such bureaucratic unaccountability.

Turning to the US, the senator highlighted the often arduous process of getting bills through the Senate and said that over-regulation and the erosion of checks and balances between Executive and the Judiciary has created a stifling environment of control. This he said, was analogous to invisible barbed wire around the people, but that it is government, and not the people, that should be the ones ring-fenced by this invisible barbed wire.

US Senator Rand Paul speaking at FreedomFest 2016, Las Vegas

On economic issues, Paul said he was concerned that it is becoming increasingly hard for ordinary American people to attain the American dream of pursuing free enterprise to achieve wealth creation and success, but that it was vital for reform and political action to ensure that this remained possible for the current and future generations of US citizens.

Fielding questions from the floor, the senator, said that he was in favor of an independent structure to allow the growth of a viable third political party in the US, and that he was still pursuing the audit the Federal Reserve bill through the Senate.

Earlier that afternoon, libertarian presidential candidate Gary Johnson, a former governor of New Mexico, also spoke at the same forum in FreedomFest.

BullionStar's interactive game - End the Fed

BullionStar's philosophical view is that gold is money part excellence and that the current monetary system is one in which a fraudulent fractional reserve banking system sits center stage. This monetary system is now experiencing round after round of quantitative easing and intervention by central banks, while simultaneously  inflating the global money supply. These developments primarily benefits central banks, governments and the large commercial banks at the expense of everyone else.

As a light-hearted way of illustrating this important message, BullionStar has created an interactive video game which captures this central bank - commercial bank symbiosis, featuring a number of well-known central banker characters such as Mario Draghi and Ben Bernanke. A video show-casing this game has now uploaded to BullionStar's YouTube channel - see above.

How Safe is your Gold?” – BullionStar CEO’s speech at FreedomFest

The first full day of the FreedomFest conference took place 14 July in Las Vegas, USA, an event at which BullionStar is attending and exhibiting. Conference proceedings took the form of general speaker and panel sessions in a large auditorium in the morning, and multiple breakout sessions of speakers and panel discussions in the afternoon. Morning events included the well-attended "The Big Bull vs Bear Debate", a panel session of well-known investment commentators such as Alexander Green and Peter Schiff. Lunchtime speeches included a keynote speech by former supreme court judge and constitutional expert Andrew Napolitano who discussed the topic 'Do We still have a Constitution?".

How Safe is Your Gold?

In an afternoon speakers session, BullionStar CEO Torgny Persson presented on and discussed the topic 'How Safe is Your Gold?".

Defend your bullion from confiscation risks

In his presentation, the BullionStar CEO gave the audience an insightful introduction into how the current global monetary system is based on the fraudulent concept of central banks monetizing debt and debasing currencies, and how commercial banks dilute money supply even more than central banks by creating money out of thin air via their lending practices. Mr Persson highlighted how a fully gold backed US Dollar would require a gold price multiple times higher than the current trading price, and the exorbitant privilege that the US Dollar, for now, retains as global reserve currency. He then illustrated and discussed the purposes and characteristics of money, and the degree to which fiat paper currency and gold fulfill these characteristics.

BullionStar CEO Torgny Persson speaking on the topic "How Safe is Your Gold?"

The discussion then focused on how Singapore is the world's safest place in which to store bullion, due to a number of factors such as the Singaporean government's support for the bullion industry,  the economic and political stability of the city-state, and the near zero crime rate. Further advantages of storing precious metals in Singapore include the lack of sales and other taxes, the fact that there are no reporting requirements to report bullion transactions or holdings to any authorities either in Singapore or worldwide.

The discussion wrapped up with a Q & A from the audience covering topics such as how to transfer in existing bullion holdings from the US to Singapore, generational wealth transfers of bullion holdings, how Singapore would fare off if the US Dollar collapsed, and storage costs of gold and silver using BullionStar's vault storage services.

Exhibition Stand

BullionStar's stand in the exhibition area of FreedomFest near the entrance to the conference auditoriums proved popular with attendees throughout the day, especially in the breaks between speaker and panel debate sessions. BullionStar staff manned the booth, fielding questions on a wide spectrum of bullion and bullion storage related topics from a diverse selection of attendees. BullionStar's decision that all staff members would wear tailored gold suits (see below) proved a popular talking point among attendees. During some downtime we got to chat with fellow exhibitors and media exhibitors in the hall such as Kitco's Daniela Cambone and GoldMoney's Josh Crumb.

Luke Chua, BullionStar COO and Torgny Persson, BullionStar CEO prepare for interview camera

The FreedomFest conference continues on 15 July with its 2nd full day or speakers and presentations. Check back at the Inside BullionStar blog for further updates.

BullionStar exhibiting at FreedomFest in Las Vegas

This week BullionStar is attending and exhibiting at a unique conference called FreedomFest in Las Vegas, Nevada. FreedomFest is the largest pro-liberty conference in the world and it has taken place annually in Las Vegas since 2002. The event was founded and is still organized by Mark Skousen. This year's FreedomFest event runs from Wednesday 13 July to Saturday July 16 at the Planet Hollywood Resort and Casino in Las Vegas, and is expected to attract a few thousand attendees.

FreedomFest is grounded in the Libertarian philosophy and the celebration of free thinking, and the event hosts a huge range of high-profile speakers as well as debates, panel discussions and a film festival. Attendees include representatives of free market think-tanks, those involved in the fields of politics and economics, the investment sector, the media, and the publishing industry. Themes celebrated in the conference include liberty, limited government, economic freedom and free market capitalism.


Topics covered in FreedomFest range from economics, philosophy, technology, finance and investing, to law, geo-politics, art and literature, public policy, science and religion. In the run-up to FreedomFest, an associated event called the Atlas Summit has just wrapped up which focused on the Ayn Rand philosophy of Objectivism – the pursuit of happiness and productive achievement. The film festival integrated within FreedomFest is a libertarian film festival called Anthem Film Festival.

FreedomFest reception area, Planet Hollywood, Las Vegas

The speaker list at FreedomFest this year is large and varied and includes such well-known names as Senator Rand Paul,  Steve Forbes, Judge Andrew Napolitano and George Foreman.

BullionStar's CEO, Torgny Persson, CEO of BullionStar will also be speaking at the FreedomFest conference on Thursday afternoon, 14 July, at 4:20pm local time on the topic of 'How Safe is your Gold?"

Unpacking crates into the exhibition space at FreedomFest, Planet Hollywood

There is an extensive exhibition at FreedomFest and BullionStar is exhibiting from today Wednesday 14 July, to Saturday 16 July. Initial tasks for the BullionStar team last night and this morning involved setting up the display booth on the exhibition floor complete with display cases and audio-visual monitor equipment which had been shipped in for the event.

Assembling the AV monitors and display stands

The BullionStar booth contains product displays and a unique and timely interactive game highlighting the perils of the quantitative easing currently being pursued by the world's largest central banks.

Linking up the AV monitors as the layout of the booth takes shape

BullionStar will be providing regular updates during the FreedomFest conference via this blog, which will highlight interesting speakers, visitors to our booth, and any other topics which we find noteworthy from the conference. So please check back for updates. If you happen to be at the conference, please drop by the BullionStar exhibition booth to meet us, and to find out why Singapore is the best place in the world for storing precious metals. Likewise, if you are in the Las Vegas area, why not drop into the conference or exhibition area to meet us.

Bullion coin sales boost revenues of world’s largest Mints

The world’s major precious metals mints are currently riding high on the back of extremely strong global bullion coin demand and relatively buoyant gold and silver prices. These mints are predominantly run as commercial enterprises. The sheer scale of revenues that the US Mint, Royal Canadian Mint (RCM), Perth Mint and Austrian Mint have been generating over the last number of years is eye-opening. Not surprisingly, due to their high value nature, revenues from bullion coin sales account for the lion’s share of total revenues for each institution and have been a core driver of their overall profitability.

Official Bullion Coin Programs

Each of these four mints has an official bullion coin program. The US Mint’s program consists of the production and sales of American Eagle Silver bullion coins, American Eagle gold bullion coins, American Buffalo gold bullion coins, America the Beautiful silver coins, and American Eagle Platinum coins. RCM's bullion coin program comprises gold, silver, platinum and palladium Maple Leaf bullion coins, as well as the recently added MapleGrams.

The Perth Mint bullion program is slightly more extensive and briefly consists of the following: Australian Kangaroo gold and silver coin series, Australian Kookaburra silver coin series, Australian Koala silver coin series, Australian Platypus platinum coin series, Australian Lunar gold and Australian Lunar silver coin series. The flagship of the Austrian Mint's bullion program is the Vienna Philharmonic gold bullion coin series, but the mint also produces the Vienna Philharmonic as a silver and platinum bullion coin, as well as historical re-strikes of original Austrian circulation gold ducats, gold guilders and gold crowns.

Bullion Coin Sales Drive Revenues

In fiscal 2015 (to September 30), the US Mint generated revenues of US$2.12 billion on its bullion coin sales. This represented 57.6% of the Mint’s total 2015 revenues of US$ 3.69 billion. Revenues from gold Eagles totalled $979.6 million, silver Eagle sales added $785.4 million, and gold American Buffalos contributed another $252.2 million in revenues.

In 2015, the RCM’s Gold Maple Leaf coin sales generated revenues of CA$1.41 billion while the Silver Maple Leaf coins added a further CA$687 million, giving a combined revenue of CA$2.1 billion. This represented over 80% of RCM’s total bullion revenues in 2015, and nearly 71% of RCM’s total 2015 group revenues.

The Austrian Mint’s annual report for 2015 is not out yet but will be published in early July. For calendar 2014, the Austrian Mint generated revenues of €1.14 billion. The biggest revenue contributors were gold bullion coin sales of €464.2 million and gold bar sales of €391.7 million. Together the Austrian’s Mint’s gold coin and bar sales represented a combined 75% of total mint revenues.

However, profit margins on the mints’ bullion coin sales are relatively small. For example, in fiscal year 2015, the US Mint only generated bullion income of $61.1 million on bullion revenue of $2.126 billion, so this was a margin of 2.87%. Nevertheless, it’s important to remember that the bullion sales of these mints, both in coins and bars, supply a global distribution network of precious metals wholesalers, bullion dealers and banks on the downstream side, as well as a chain of precious metals suppliers, refineries and gold miners upstream. Not to forget the ultimate beneficiaries of bullion sales, the investors and collectors. There is therefore an entire virtuous ecosystem built around the bullion coin output of these giant precious metals mints.

Furthermore, an often overlooked point is that with all four of these mints, profits from operations can and often do go to the mints’ owners in the form of either transfers or dividends. For three of the mints, their owners are governments. For the Austrian Mint it is owned by a government-owned central bank, which is essentially the same thing.


Government Ownership and Dividends

The US Mint is part of the US Department of the Treasury, and reports to the Office of the Treasurer. The Mint is structured as a Public Enterprise Fund (PEF) under 31 U.S.C. § 5136 and generates its own revenues without the need for Federal appropriations. Any revenue that the US Mint deems to be excess to it’s needs is transferred to the Treasury General Fund.

For fiscal year 2015 (to September 30), the US Mint transferred $561 million to the Treasury General Fund, however $11 million of this was income from numismatic / bullion products, as the rest was a seigniorage transfer from the sale of circulating coins to the Federal Reserve Banks. But interesting, this $11 million can actually be used to reduce the US Treasury’s budget deficit.

The Royal Canadian Mint (RCM), a federal Crown corporation of the Government of Canada, is 100% owned by the Canadian Government and reports to the Canadian Department of Finance. Like the US Mint, the RCM is not funded by the Government and is predominantly run as a commercial organization except for the Canadian circulation coin program which since 2014 has been operated on a non-profit basis. Although the RCM made a small loss in fiscal 2015 (its year-end is December 31) due to a one-off impairment, it still paid dividends of CA$53 million to the Government of Canada which was a lot higher than previous years due to strong Maple Leaf coin sales.

The Perth Mint, through a holding company called Gold Corporation, is 100% owned by the Government of Western Australia. Western Australia is a state within the Commonwealth of Australia. The Perth Mint group operates on a fully commercial basis and is self-funding. In its fiscal 2015 results to June 30, the Mint made a profit after tax of AU$14 million and also paid a dividend of AU$10.54 million to the Government of Western Australia.

The Austrian Mint (Münze Österreich) is fully owned by Austria’s central bank, the Oesterreichische Nationalbank (OeNB). The OeNB’s capital is itself fully owned by the Austrian government. Although the Austrian Mint 2015 annual report is not yet published, the Austrian central bank has already reported that for 2015, it received a regular dividend of a cool €89 million from the Austrian Mint. In 2014, the Austrian Mint paid the central bank an even bigger dividend of €184.8 million out of its net profit.


Silver - Gold Production Ratio

The relative importance of gold and silver bullion coin sales varies across each mint and between years since each Mint’s bullion program differs, and demand patterns ebb and flow.

In 2015, the US Mint sold 801,500 ounces (24.93 tonnes) of gold American Eagles and 220,500 ounces (6.86 tonnes) of gold American Buffalos, for total gold bullion coin sales of 1,022,000 ounces (31.79 tonnes). Silver American Eagle sales reached 47 million ounces (1,461.85 tonnes) in 2015, with another 1,060,000 ounces (32.97 tonnes) of America the Beautiful 5 oz coins sold, bringing total US Mint silver bullion coin sales to 48.06 million ounces (1,494.82 tonnes).

Using a metric of silver ounces sold compared to gold ounces sold, this gives a silver to gold coin sales ratio of 47:1 for the US Mint. In 2015, the RCM sold 953,000 ounces of gold Maple Leaf bullion coins (29.6 tonnes), and 34.3 million ounces (1067 tonnes) of silver Maple Leaf bullion coins, giving a silver to gold coin sales ratio of 36 for the RCM. Therefore applied to 2015, it is justifiable for the US Mint to say that it was the world’s largest seller of gold bullion coins and silver bullion coins.

Although the Austrian Mint hasn’t published its full 2015 bullion sales statistics yet, it did reveal to Bloomberg earlier this year that its combined gold coin and gold bars sales for 2015 totalled 1.32 million ounces (41 tonnes), and its combined silver sales in 2015 totalled 7.3 million ounces (227 tonnes). This would give a general silver to gold ratio for the Austrian Mint of only 5.53, which highlights the Austrian Mint’s relative concentration on gold bullion over silver bullion.

In 2014, the Austrian Mint sold 483,700 ounces (15 tonnes) of gold coins, mainly Vienna Philharmonics, and 410,364 ounces of gold bars (12.75 tonnes). Total gold sold was therefore 894,000 ounces (27.75 tonnes). The Mint’s silver coin sales approximated 144.4 tonnes of silver in 2014. This would give a silver to gold coin ratio of 9.63 and a silver coin to total gold (coins and bars) ratio of 5.2.

Overall, the world’s largest mints are a useful source of income for their government owners. More importantly though, these Mints actually make the valuable and high quality investment gold and silver coins and bars that are in such high demand right now, and that also provide tangible economic benefits such as employing large numbers of people around the world in highly skilled jobs.

To learn more about the world's top Mints, please see full profiles of these Mints which have now been published on BullionStar's Gold University pages:

United States Mint:

Royal Canadian Mint:

Perth Mint:

Austrian Mint


Gold & Brexit

In what was an extraordinary day for global financial markets, and a day which will no doubt become legendary and enter folk memory in the UK and elsewhere, the electorate of the United Kingdom voted 51.9 % to 48.1% to leave the European Union. As the first count results began trickling in during the very early hours of Friday morning London time from northern England constituencies such as Newcastle and Sunderland, the cosy optimism that had prevailed in the Remain camp became increasingly agitated as the voting majority swung to the Leave side and quickly snowballed, in what was a shock to many.

Gold Philharmonics and Silver Philharmonics with Euro notes

The Sterling – Dollar cable rate plummeted, gold took off, especially in GBP, and BBC presenters became increasingly stony-faced and pale looking. By 3:40am UK time, Leave was ahead by 500,000 votes, and just an hour later the major UK networks of first ITV and then the BBC called the election to the Leave camp. Nigel Farage, promoter of the Leave side and leader of the UK Independence Party (UKIP), who had earlier conceded then un-conceded defeat, reappeared to the press and when asked what he would do next announced that he was going for a celebratory drink. As Farage and his boisterous entourage were undoubtedly finding a suitable early hostelry to settle into in Westminster, an ashen-faced British Prime Minister David Cameron appeared in Whitehall to announce his resignation in what had already become a day of records.

Gold & Silver Prices

All this time gold was soaring and the British Pound was folding. Gold in GBP started moving at 2:45am UK time when it was at £852, and as the voting tide turned, gold in GBP peaked at 5:30am at approximately £1004, an 18% move in less than 3 hours. GBP gold then fell slightly from the peak and has settled into a roughly £950 to £960 range.

Gold In GBP 24th June 2016

US Dollar gold, which had been as low as $1250 before the voting pattern emerged, surged past $1300 before 3am UK time, and peaked at just under $1340 before 6am UK time, for an up move of 90 bucks, before it too fell back slightly into a range of $1310 to $1325.

Gold in USD 24th June 2016

Silver also had dramatic gains intraday, especially in GBP. Silver in GBP 24th June 2016.

Exchange Rates

GBP - USD suffered an unprecedented fall by over 11% at one stage today, moving down 18 cents at one point from $1.50 to a 31-year low of $1.32, a level not seen since mid-1985. It was since recovered partially to trade at $1.375, still down over 8% on the day.

GBP - USD one day rate, 24th June 2016

The Euro weakened significantly against major currencies, one of the reasons being that the uncertainty of the UK’s exit from the EU may precipitate further defections that could include a Eurozone member country. FTSE equity indices fell sharply intraday before recovering somewhat. Bank shares were hammered especially the shares of UK and European banks.

Gold - Flight to Safety

The massive moves and volatility spikes caught much of the financial markets off-guard, hence the dramatic price movements and flight to safety. As gold was bid, it has yet again proved its role as one of the world’s preeminent safe havens and protectors of wealth that investors will flock to in times of crisis and fiat currency uncertainty. According to ICBC Standard Bank, as cited by the Financial Times, the Shanghai Gold Exchange traded a record equivalent of 143 tonnes of gold during its trading day today – 24th June. One person who seems to have been confident of a Leave win is Arron Banks, a rich donor to the Leave side. He was said to have commissioned a poll of 10,000 people (which is a large sample size), and the results of this poll, released today, revealed a 52 – 48 win for Leave. So perhaps some hedge funds and investment banks were privy to similar data last night.

Central Bank Intervention

The world’s major central banks, who were meeting in Basel at the Bank for International Settlements this week, may appear to have been also blindsided by the election result, however, being the conservative types, they seem to have been prepared for this contingency and have, in a not too subtle way, indicated their collective intention to intervene in the FX and funding markets in a coordinate fashion, and with total disregard of the free functioning of financial markets. Central banks are by their very nature interventionist, meddling and secretive in their interventions, so this is hardly surprising. However, its more blatant than usual.

The Bank of England announced that it “will continue to pursue responsibilities for monetary and financial stability relentlessly”. This use of ‘relentlessly, is quite ominous bank-speak and could even suggest intervention in the gold market, since after all, the Bank of England houses its FX and Gold operations on the same desk and is allowed to use all assets of the HM Treasury’s Exchange Equalisation Account (EEA) to pursue monetary stability. So some ‘smoothing operations’ or ‘stabilisation operations’ on the gold price by the Bank of England (or by the BIS) are not beyond the bounds of possibility. In fact, it is logical for the major central banks to intervene in the gold market since they do not want gold to play the role of canary in the coalmine as this counters their ‘stability’ meme.

The ECB said this morning that it “stands ready to provide additional liquidity in Euro and foreign currency, in close contact with other central banks

In its statement today, the Bank of Japan said that it has ”a network of currency swap arrangements is already established by the central banks of major countries. The Bank of Japan will take appropriate measures as necessary, including activation of this network”.

Meanwhile, the US Federal Reserve announced that it is "carefully monitoring developments in global financial markets, in cooperation with other central banks,….The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets..”

Not to be outdone, the Swiss National Bank (SNB) didn’t just threaten to intervene, it did intervene today as the ‘Swiss franc came under upward pressure’. According to an email sent to Bloomberg by the SNB “has intervened in the foreign exchange market to stabilize the situation and will remain active in that market”.

Demand for Physical Gold

BullionStar saw noticeably higher website traffic today with higher demand and sales than normal, but BullionStar does not have the shortages in inventories that are being reported by other dealers. In fact, BullionStar has plenty of stock.

Where there does seem to be tightness in the physical gold market is in the London wholesale market, where gold has now flowed into London from Switzerland for 3 consecutive months (69 tonnes in May, 80 tonnes in April, and over 40 tonnes in March), most likely to top up gold holdings of the SPDR Gold Trust, whose inventory has now recorded a latest multi-year high of 915.9 tonnes. This importation of gold into London from Switzerland does seem to indicate that there is not much free float of gold sloshing around the London Gold Market.

The seismic shifts brought about by today’s extraordinary day in the UK will not settle quickly and may only just be the beginnings of further tremors that have been unwittingly released in into the global economic system. Politically, the UK is in a place where it did not think it would be. Cameron is resigning, Boris Johnson is favourite to take his place, and there is pressure on the opposition Labour leader Corbyn to resign with accusations that he is out of touch with the electorate. In the financial markets, the major banks are in deep trouble and dollar funding is an issue, even according to the central bank interventionalists. In such a climate of evaporating paper wealth, gold, and to an extent silver, are stepping forward to play their traditional roles of war chest assets, assets with real intrinsic value.

Saving in Gold vs. Investing in Gold

There are differing views on choosing the optimal percentage of gold to hold in an asset portfolio.

These different viewpoints depend on how one views gold. Those looking for a return on their money in currency terms perceive gold as an investment which they can sell at a currency price higher than what they bought it for.

We would however argue that the idea of trading your fiat paper currency for gold today, hoping to trade the gold for even more fiat currency in the future, defeats the purpose of owning gold in the first place. Saving in gold is an insurance against the failure of fiat currency, not a means of accumulating more of it.

The healthiest and most natural way of looking at gold is to view gold as savings or as a form of wealth preservation.

Saving in Gold

Gold is, and for thousands of years has been, the focal point for many prominent savers of wealth. The European aristocrats, the Middle East oil barons, the ultra-rich, and even the central banks, all save in gold to preserve generational wealth. They save in gold without thinking about the return in currency terms because they understand the fundamental principle of gold as a generational and long-term store of value. They understand that gold is not an investment but that its a form of money that cannot be printed or controlled by central bankers.

As the world's financial and monetary systems become increasing fragile, saving in gold is the ultimate safe haven for protecting you against a systemic collapse. In the inevitable transition that will follow such a collapse, holding gold as wealth is the ultimate strategy for survival.

Prudent savers understand that gold cements wealth over time which is why you do not need to care much about the ‘gold price’ as denominated in fiat currencies.

If you do not want to bear the high risk associated with chasing returns on the currency markets, you should save in physical gold because gold is the safest form of liquid money. Staying liquid is the same as keeping your wealth in gold. There is nothing wrong with investing, but buying physical gold is not an investment in the real sense – it is a timeless wealth-preserving asset.

When fiat currencies crash, your gold will become a truly priceless asset that will empower you through the transition.

A 100 trillion dollar note can't buy you any bullion. By saving in gold you can sleep at night.

Gold as Wealth

If you are trapped in relentlessly chasing paper profits while worrying about your positions, it is time to consider a shift of mind-set. To become a saver, you have to shift your focus from profit-seeking to sustainability, from chasing egoistic personal highs to becoming a family provider for generational wealth.

With a mind-set of viewing gold as a savings asset, you will not only solidify your own wealth but have the power to pass on your wealth to the next generation. This has been the case for many European aristocrats who were able to pass on wealth from generation to generation.

As we can appreciate from history, cash is not king when the cash is not backed by anything. In fact, the world’s fiat paper currencies have all lost 99% or more of their value in the last century.

Gold is the safest and most stable store of value known to man. No other asset class comes close to gold in terms of stability over history. Gold is not an investment per se. Gold is money. Gold is savings. Gold is wealth.

If you have the mind-set of a saver and want to minimise your risk, it is actually natural to keep most of your savings in gold. If you are unable to determine a favourable risk-reward ratio for any of your potential investments, you might even consider keeping close to 100% of your savings in gold. It is certainly better to keep 100% of one’s savings in gold than keeping one’s savings in the form of constantly depreciating fiat currencies. Ask yourself, are you buying gold as a means of generating fiat currency returns or are you acquiring currency as a means to buy gold (as wealth). We much recommend the latter.

Work and invest to acquire currency but hold your wealth in gold. This is the fool-proof strategy that has worked for thousands of years.

Saving in gold frees your mind. With gold, you can sleep well at night and do not need to worry about inflation, financial markets and currency risks. By saving in gold you can stand strong and avoid the flawed western mentality of chasing paper money returns.

Investing in Gold

If gold is viewed from a western investment portfolio perspective, studies have shown that the gold price is inversely correlated with the prices of most other financial assets. Adding gold into an existing investment portfolio can therefore lower portfolio risk. This use of gold as a risk-reducing strategic asset class has been empirically validated by numerous studies (such as studies by the World Gold Council), and from the perspectives of different classes of portfolios, different investor backgrounds, and varying base currencies. Optimal allocations of gold in multi-asset portfolios by these empirical studies are usually found to be in the 5 - 20% range.

The reason that there is a negative correlation between the gold price and other asset prices is due to the gold price not being as dependent on economic and business cycles as most other financial asset or commodity prices. Therefore, the gold price does not react to events in the same way as the prices of most other asset prices react.

However, we advice you to view gold as savings/wealth rather than as an investment. Gold has the power to change your life for the better. It can give you peace of mind like nothing else if you just let it sit there without worrying about it.


Gold Price: USD 65,000/oz in 5 years?

16 June 2021 is exactly five years from today. What will the gold price be on 16 June 2021?

Currencies are Worthless

As the world’s fiat paper currencies have lost 99% or more of their purchasing power over the last 100 years, its critical to understand that fiat paper currencies are not a suitable unit of account for accurately measuring prices.

In fact, gold is a far superior measuring stick of value than paper currencies.

A paper currency doesn’t measure anything. It merely has an arbitrary value placed upon it by the population using it. It’s not backed by anything and it can fail at any time. From historical experience, we know that the unbacked fiat paper currencies used today will ultimately destruct and become worthless. All unbacked fiat currencies throughout human history have failed.

A more accurate measurement would be to measure fiat currencies in gold. If we look at the US Dollar measured in gold, we can see that the US Dollar has utterly failed in retaining its value, as its value has plunged about 98% over a mere 50 years. It cannot therefore be seen as a store of value.

Chart of US Dollar measured in Gold. USD price instead of Gold Price.Source: Gold Price Charts, BullionStar

Extrapolating into a likely future, a future in which you will need a stack of USD 100 bills to buy a carton of milk and a couple of eggs, underlines that the US Dollar gold price is meaningless as an indicator of value. When discussing the price of gold, the key is to recognise that gold retains its purchasing power over time. If a 1 oz gold coin can buy an exclusive men’s suit today at USD 1,300 and the same 1 oz gold coin buys an exclusive men’s suit at USD 2,600 tomorrow, this only means that gold is still reflecting USD 1,300 in today's purchasing power and hasn’t gained in value. It’s the US Dollar that has depreciated vis-à-vis gold. Similarly, if the gold price goes to USD 650 and it can still buy the same suit, then it’s merely the US Dollar that as appreciated vis-à-vis gold.

With a gold price of USD 65000, what will the USD be for Milk, Egg and Bread

As a society, we should by now have transcended the idea of measuring value in fiat currencies. Currencies are not a reliable measuring stick. Just imagine if the centimeter, meter, yard or foot were to fluctuate in length.

100 cm 100 years ago has become 2 cm today. Think about it. This is what has happened with our currencies.

The Gold Price                                  

The gold price is an interesting term because the gold price doesn’t reflect what’s happening on the physical gold market whatsoever.

In today’s marketplace, a lot of things are regarded as “gold”. On the London Gold Market alone, there’s 600 times more gold traded each day than there is gold mined globally on that same day.

All sorts of paper gold passes for “gold” on the financial markets. The vast majority, certainly more than 95%, and likely more than 99% of this paper gold is not backed by any physical gold.

“Gold” is created out of thin air as paper obligations. The demand for and supply of this paper gold has little to do with the physical gold market.

During the last couple of year, demand for real physical gold has been insatiable , however the price of gold has not reflected this huge demand. Physical gold has been flowing from the Western vaults to Asia. The Chinese in particular have been vacuuming the London vaults for gold. However, this substantial physical demand hasn't been reflected in higher gold prices because whereas Easterners have been buying physical gold, Westerners have been selling paper gold.

Given that the price of “gold” is set on the OTC paper market in London and on the COMEX futures market in New York, the US Dollar denominated gold price continued to fall between 2012 and 2015 despite the massive physical demand, and instead, it created a physical shortage of gold.

Whether physical demand is up or down 5 tons in China or India matters little when there’s 5,500 tons of paper gold traded each day in London  as visualized in this infographic. London, and to a lesser extent COMEX in the US, are the price discovery markets for gold. However, paper gold on these markets is almost exclusively cash settled with less than 1% of the contracts/futures settled with delivery of physical gold.

The gold price is therefore not dependent on the market fundamentals of physical gold but this may very well change in the future.

With China picking up all physical gold available every time the price slides, widespread shortages are a likely outcome if the gold price ever were to decrease significantly again. Given that the historic vaulting capital of the world, London, has already been running out of stockpiled gold, there just wouldn't be enough physical gold to satisfy demand if the price were to ever plunge significantly again.

It's actually been a healthy development for the physical market’s demand/supply balance  that the gold price has increased 22% in USD Year-to-Date 2016. However, we have to understand that the largest potential for a revaluation of the gold price paradoxically may be preceded by a decrease in gold prices.

When trend seeking Western investors sell their paper gold and the price slides, Easterners take the opportunity to buy physical gold at bargain prices, thereby stressing the physical market with shortages as a result. Such shortages may very well be what ultimately breaks the neck of the paper markets. Because when there is no longer any physical gold available at the price dictated by the paper markets, there will be a disconnect between the price of paper gold and the price of physical gold. Paper gold will go towards zero whereas the price of physical gold will skyrocket.

Such a revaluation of physical gold will bring the fiat paper currencies to their knees as their worthlessness as a store of value will become clear to all.

USD 65,000/oz

What will the price of gold be in 5 years’ time?

Gold is savings - Gold is wealth, and as such, the price denominated in something as inferior as the US Dollar isn't very important.

For the sake of reflection, we can play with the idea of what the price of gold would have to be if the US Dollar were to go on a fully-backed gold standard.

The US gold reserve officially stands at 8,133.5 tons although it has never been properly independently audited. At USD 1,300/oz, this would be equivalent to 340 billion dollars. The total US money supply is about 17,000 billion dollars. For each "gold backed" dollar today, there are therefore 49 unbacked dollars. The gold price would thus have to increase 50-fold to USD 65,000 if the US Dollar were to be fully gold-backed by 16 June 2021.