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Mustafa Centre: Gold in Singapore

While there are a number of specialist companies such as BullionStar servicing Singapore’s retail gold bullion market, the most unusual place to buy gold bars in Singapore must be the Mustafa Centre in the Little India neighborhood.

Located in a building on Syed Alwi Road, and part of another adjacent building on Serangoon Road, the Mustafa Centre is a cluttered haphazard department store and arcade that seems to sell everything from clothes to electronics, from perfumes to gold jewelry, and everything in between. It is also known as being one of the biggest gold jewelry outlets in Singapore.

Crowded and Congested

The Mustafa Centre itself is frequently crowded, often congested, and stays open 24 hours a day. Even trying to approach one of the entrances to the Mustafa Centre can be a stressful experience, and this is after navigating through a maze of often crowded streets if you find yourself approaching from the nearest MRT Station, which is itself a 15 minute walk from Mustafa’s premises.

Once you do happen to find Mustafa’s gold jewelry section, which is located in the basement 1 level of one of the centre's buildings, you will have to navigate past a floorspace crammed with clothes displays before stumbling upon a series of interconnected aisles assigned to gold jewelry.

While this jewelry space is about the size of a basketball court and stacked full of counters displaying gold earrings, gold rings, and gold chains and necklaces, the gold bar and gold coin display is relegated to a tiny rectangular counter, as if it was an after-thought among the masses of gold jewelry being hawked. This small gold bar and coin counter is itself cluttered, and badly presented, and is reminiscent of the display cases of a second-hand IT equipment shop.

Limited Selection

The advertised prices for the limited selection of gold bars and gold coins that are on offer at Mustafa consists of a partially typed and partially hand-written price list page that sits on top of the counter. When this correspondent visited on the Sunday afternoon of 29 October, the price list strangely had the dates 28 - 29 October scrawled at the top, as if it had just been written one time that weekend on the Saturday and then not updated over the weekend.

The accuracy of the prices on that particular price list are therefore called into question. Where the Mustafa Centre sources its gold prices or 'Gold Rate' from is also not clear. In India and India's expat communities, 'Gold Rate' is a term often used to refer to the gold price.

Mustafa's bullion products and their prices, although typed, are squashed on to the list, with various hand-written notes along the left and right side margins. Strangely, parts of the list are highlighted in yellow highlighter marker. What this signifies we do not know, but perhaps it refers to the products that are in stock as opposed to out of stock.

Mustafa's gold product price list, 28-29 October

Within the actual display cases of Mustafa's gold bar display cases, the gold bars are very much crammed into the display area as if everything in stock is actually on display. The old adage of "more is less" as regards presentation and visual display seems to have been lost on whoever lays out the Mustafa display cases.

Mustafa's gold bar display cases - Pack 'em in, Pile 'em high...

Disappointingly, there is also a very limited range and brands of gold bars and gold coins actually offered by Mustafa's gold bullion counter, with nearly everything in the bar section being of the PAMP brand, and with very few gold coin types at all.

Mustafa's gold bullion display cases - hidden in a small section of the gold jewelry store

A number of precious metals research consultancies regularly do field trips to bullion markets around the world, including Singapore, so as to gauge at first hand the level of retail demand for bullion in a particular market. As regards Singapore, some anecdotal evidence we have heard from these consultancies is that it is virtually impossible to calculate the level of gold bullion demand in the Little India area.

Some of the reason for this is because gold bars and gold coins regularly arrive into Little India that have been hand carried from countries such as Dubai or other regional markets. And so this gold would not be reflected in the Singapore supply statistics of, for example, the Swiss refineries or the Canadian and Australian mints.

There are also a lot of resales of gold bullion in Little India, such as a parent swapping gold bars for gold jewelry to give to a sibling as a wedding present. It is therefore difficult to estimate where the gold bullion sold in Little India comes from. Not Mustafa specifically, but this issue must be borne in mind as regards Little India in general.

BullionStar's Spacious Shop and Showroom

In contrast to Little India's Mustafa, BullionStar could not be more different. BullionStar's shop and bullion showroom in central Singapore is located in an easily accessible and well-known section of New Bridge Road across from Clarke Quay Central Shopping mall. BullionStar's premises is also adjacent to the Clarke Quay MRT station. Those working in the Central Business District (CBD) will find that BullionStar is just a short lunchtime walk from the CBD.  And from Chinatown, BullionStar's showroom is less than a 10 minute walk.

Spacious Display Cases in BullionStar's Shop and Showroom

All of the gold bars and gold coins in the extensive range of gold bullion stocked by BullionStar are sourced either directly from the world's most prestigious precious metals refineries and mints such as Argor-Heraeus, PAMP, Heraeus, Valcambi, and the Royal Canadian Mint, or are supplied directly to BullionStar by the world's most renowned precious metals wholesalers such as Dillon Gage and A-Mark. BullionStar staff are also knowledgeable about all aspects of the range of gold and silver bullion stocked.

In BullionStar's shop and showroom, the floor-space is generous, the design calm and ergonomic, with many display cases devoted to gold bullion and silver bullion. Nothing is cluttered, and visitors and customers entering the air-conditioned showroom will be able to browse and view a huge range of gold bars and gold coins, and silver bars and silver coins, with every product type stylishly and spaciously displayed in its own display case. All display cases are also well-lit and well presented.

An impressive feature which BullionStar customers find useful are the electronic screens next to each display case which show updated prices for those products. These prices are live and are displayed electronically and updated electronically in real-time.

A final point to note is that the Mustafa Centre's gold bullion counter does relatively poorly in customer reviews, with customer feedback of poor customer service, dis-interested staff, and prices higher than elsewhere in Singapore. Based on reviews on the Singapore website 'Bullion Reviews', Mustafa scores lowest out of all 6 Singapore bullion dealers featured, with Mustafa getting a total score of 3.9 from 27 reviews.

In contrast, on the same review site, BullionStar receives a total score of 9.1 from 131 reviews. And BullionStar's prices are generally perceived to be some of the most competitive, if not the most competitive, in Singapore.

Degussa Singapore Closing its Bullion Shop

Just 2 years after opening its first precious metals store in Asia, on Orchard Road in Singapore, German company Degussa GoldHandel has now surprisingly announced the imminent closure of this store.

According to the Degussa Singapore website:

Degussa Singapore will cease its retail operation at 22 Orchard on the 31 October 2017.

A Singapore branch of Degussa was opened by German company Degussa GoldHandel in October 2015 as part of its international expansion strategy, wherein it saw Singapore as a location that it regarded “as having a high growth potential for Degussa.” Degussa Goldhandel is a shortened version of Degussa Sonne / Mond Goldhandel GmbH, the full name of the German corporate parent.

Degussa operates in Singapore as “Degussa Precious Metals Asia Pte Ltd”, and is known as Degussa Singapore. Degussa Singapore had offered Degussa branded precious metals bars, a range of precious metals coins and collectibles, and storage facilities in the form of safety deposit boxes and other secure storage facilities.

Degussa GoldHandel also operates 10 bullion product stores in Germany as well as branches in Switzerland (Zurich and Geneva) and Spain (Madrid). Degussa GoldHandel also fully owns London bullion dealer Sharps Pixley in central London.

Degussa’s exit from Singapore so soon after committing to the Singaporean and wider Asian market is surprising, but may be related to its loss-making financial position. For the full year ended 31 December 2016, Degussa Precious Metal Asia Pte Ltd registered a net loss of SGD 2.8 million on revenues of SGD 59 million. At the same time, Degussa Singapore’s total liabilities exceeded total assets by SGD 4.35 million. This followed its first full financial year which ran from its date of incorporation on 20 November 2014 to 31 December 2015, a period in which Degussa Singapore made a net loss of SGD 2.05 million.

Although Degussa Singapore’s 2017 financial year results are yet to be published, it’s possible that continued financial losses at Degussa Singapore during 2017 were influential in the parent company’s decision to close its Singapore branch. Degussa Precious Metals Asia Pte Ltd (Degussa Singapore) is a wholly-owned subsidiary of Degussa Sonne/Mond Goldhandel AG, incorporated in the Canton of Zug in Switzerland, which in turn is owned by Clair AG, a holding company also incorporated in the Canton of Zug in Switzerland.

Orchard Road
Orchard Road, Singapore

Degussa Customers

Existing Degussa Singapore customers who may be concerned about where in Singapore to purchase their bullion products in future will be interested in learning that BullionStar’s precious metals store and showroom in central Singapore offers a full range of investment grade bullion bars and coins from the world’s most prestigious precious metals refineries and mints. BullionStar also buys all forms of investment grade bullion bars and bullion coins from the public, including Degussa branded precious metals bars.

Degussa Singapore customers who currently use Degussa’s safety deposit boxes or offsite storage facilities in Singapore to store their precious metals may also be interested in now considering BullionStar’s secure vaulting service as a future alternative for continued storage of their precious metals within the Singapore jurisdiction.

BullionStar's Financial Strength

In Singapore, BullionStar (BullionStar Pte Ltd) remains in a very strong financial position, and the company continues to grow strongly in terms of revenues, customer base and corporate presence. For the financial year ending 30 June 2017 (FY 2017), BullionStar recorded sales revenues totaling SGD 186.2 million, which was a 38.7% increase over corresponding revenues of SGD 134.2 million in FY 2016. BullionStar has also been profitable since inception.

BullionStar operates its precious metals shop, showroom and vault in central Singapore at 45 New Bridge Road, a convenient location adjacent to Singapore's Central Business District (CBD) and next to Clarke Quay MRT Station. BullionStar also operates a sophisticated online transactional platform and now has customers from 101 countries around the world.

Bullion Product Range and Depth

One of the peculiarities of the Degussa Singapore bullion bar range was that it only offered a limited selection of gold, silver and platinum bars, all of which were branded with the Degussa logo.

In contrast, BullionStar offers a full range / very wide selection of investment grade gold bars from the world’s most prestigious LBMA accredited refineries and mints including Swiss PAMP, Heraeus in Germany, the Perth Mint, and the Royal Canadian Mint, a full range of investment grade silver bars from leading refineries including Heraeus, PAMP, and the Royal Canadian Mint, and investment grade platinum bars from such well-known refineries as Heraeus in Germany and Valcambi in Switzerland.

In addition, customers can purchase BullionStar’s own branded 100 gram gold bars (produced by Argor-Heraeus in Switzerland), and 1 kilogram silver bars (fabricated by Heraeus in Germany). These BullionStar gold bars and silver bars have no spread between the buy and sell price.

BullionStar also stocks a very extensive precious metals coin range spanning investment grade gold coins, silver coins, and platinum coins from the world’s major mints including the Royal Canadian Mint, Royal Mint, Perth Mint, US Mint, and Austrian Mint among others.

Nearly all precious metals bars and coins in the BullionStar bullion product range are exempt from Singapore’s Goods & Services Tax (GST) since they qualify for GST exemption under the Inland Revenue Authority of Singapore (IRAS) exemptions on Investment Precious Metals (IPMs).

BullionStar also stocks a very wide range of precious metals coins and gifts in the form of numismatics, collectibles, and gold bullion jewellery.

BullionStar's Online Store

Degussa Singapore online store users will also be interested to know that BullionStar operates a sophisticated online transactional platform for buying and selling precious metals online.

This platform transparently quotes bullion product prices in Singapore Dollars, Euros, US Dollars, and Bitcoin. Opening an online account with BullionStar is a short and simple process. and payment can be made in SGD, EUR, USD and Bitcoin. Payment mechanisms are flexible, including bank transfer, cash, NETS (in Singapore Dollars), and cheque, and of course, Bitcoin. For each product on the BullionStar website, the product's price premium compared to the world gold price is displayed, as well as the product's spread between buy and sell price.

Precious metals purchased online on the BullionStar site can be delivered to a customer's home address, picked up at the BullionStar store, or else stored in BullionStar's secure vault storage facility, using the BullionStar "My Vault" storage option. As always, customers in Singapore can walk into the BullionStar shop and showroom and buy investment precious metals bars and coins, and also sell precious metals bars and coins and scrap gold to BullionStar.

New Bridge Road, Singapore
New Bridge Road, Singapore

BullionStar's Secure Storage Vault

Degussa Singapore had offered its customers safety deposit boxes facilities on site at its 22 Orchard Road location in Singapore, as well as other offsite storage facilities in Singapore.

A primary motivation for storing physical precious metals in Singapore is safety and security. There is a strong rule of law in Singapore and virtually no crime. There are strong property rights in the Singapore jurisdiction, and no reporting requirements on buying, selling, or storing precious metals. Additionally, there are no sales taxes or GST on transacting in investment grade precious metals in Singapore, nor are there any capital gains taxes. All of this means that investors currently storing their bullion in Singapore should continue to do so, and not need to face the prospect of having to have their bullion transferred for storage outside Singapore.

Customers of Degussa Singapore who currently avail of a safe deposit box at Degussa in which to store their precious metals may be interested in now availing of BullionStar's secure storage vaulting service which utilises a high security vault integrated into BullionStar's New Bridge Road facility in downtown Singapore.

All customer bullion bars and coins stored in BullionStar's secure vault are held in allocated storage, with customers at all times holding full unencumbered legal title to all their stored bullion. All BullionStar customer bullion products are handled under camera surveillance and this handling is meticulously documented. BullionStar is insured by insurance underwriter XL Insurance against all risks at full replacement value for all precious metals stored in the vault.

BullionStar employs no less than 5 levels of auditing to verify and confirm the existence of all bullion products under secure storage in its vault facilities. This includes a Live Audit Report which lists all customer owned bullion stored in the BullionStar vault, with which a customer can verify online his/her bullion in the vault by vault account number. BullionStar vault customers are also welcome to inspect their bullion via a personal customer audit on site at BullionStar's Singapore shop and showroom. BullionStar's vault auditing furthermore includes twice yearly physical auditing of all customer owned bullion by LBMA approved independent auditor Bureau Veritas.

Singapore's Retail Bullion Sector

Overall, BullionStar is a key player in the retail gold bullion sector in Singapore and has a growing presence. According to data from the World Gold Council (WGC), overall gold demand in Singapore in 2017 totalled 17.1 tonnes, slightly lower than overall gold demand of 18.1 tonnes in 2016. WGC figures also show that demand for gold bullion in Singapore in 2017 totalled 5 tonnes, down from 5.9 tonnes in 2016.

With BullionStar having sold approximately 2.3 tonnes of gold in 2016, this represents 46% of all gold bullion sold in Singapore, and 13.5% of all gold sold in Singapore over the same period.

During financial year 2017 (FY 2017), of BullionStar's total sales of SGD 186.2 million, 60.3% by value represented gold bar sales, the lion's share of which comprised 100 gram gold bars and 1 kg gold bars. By value, 12.6% represented gold coin sales, the majority of which were Gold Maples from the Royal Canadian Mint and Gold Kangaroos from the Perth Mint. Silver bar sales represented 21% of FY 2017 revenues, the majority of which were 1 kg silver bars, followed by 100 gram silver bars. Silver coins sales represented 4.6% of FY 2017 revenues, with Canadian Silver Maples being the top seller followed by Perth Mint Silver Kangaroo coins.

Conclusion

The retail bullion market in Singapore remains in robust shape despite the recent surprising closure announcement from Degussa. Clients of Degussa Singapore who have previously transacted in bullion products can rest assured that they can now access a full range of the world's foremost bullion bars and coins from BullionStar's shop and showroom in Singapore and through the BullionStar online transaction platform. Degussa storage customers who wish to retain precious metals storage facilities in Singapore can also have future piece of mind by considering the use of BullionStar's secure precious metals vaulting facilities in central Singapore.