Malca-Amit Global Ltd., a Hong Kong- based company that stores and transports precious metals and diamonds, plans to open a vault in Beijing and is doubling space in Singapore as rising demand spurs gold’s 12th year of gains.
The Beijing facility at the city’s airport will open by the end of the year, Ofer Wilner, regional manager of the Far East unit, said in an interview. A $2-million expansion at the Singapore FreePort will be ready in six months, adding three vaults to the existing pair, which are 80 percent full, he said.
Malca-Amit, founded in Tel Aviv in 1963, is joining lenders such as Deutsche Bank AG (DBK) and storage companies including The Brink’s (BCO) Co. in opening or expanding vaults to tap demand for secure space to house commodities used to protect wealth. China may become the world’s largest gold market this year, displacing India, according to the World Gold Council.
“The whole point of owning gold or buying gold is that you’re buying a form of financial insurance,” said Mark O’Byrne, executive director of Dublin-based GoldCore Ltd., which stores customers’ bullion at the Perth Mint in Western Australia and in a depositary in Switzerland. “You need to own gold in the safest way possible in order to reduce counterparty risk.”
Spot gold hit a record $1,921.15 an ounce on Sept. 6, and has rallied more than sixfold since the end of 2000. The metal, at $1,732.28 at 5 p.m. in Singapore, has gained 11 percent this year as Europe’s debt crisis buoyed demand. That’s beaten the 10 percent climb in the MSCI All-Country World Index (MXWD) of equities, as of today, and 6.8 percent climb in the Standard & Poor’s GSCI Spot Index of 24 commodities as of the Feb. 17 close.
Malca-Amit, which holds assets for banks and individuals, opened its first metals vault in 2010 in Singapore and has space in New York, Zurich, Geneva, London and Bangkok, where it plans to add another facility, Wilner said. A facility in London’s Heathrow area that can hold more than 300 metric tons of gold and 1,000 tons of silver opened earlier this month.
Investors held a near-record 2,389.7 metric tons of gold as of Feb. 16 in exchange-traded products, according to data tracked by Bloomberg. The financial products enable buyers to own precious metals without taking physical possession of them.
Brink’s, based in Richmond, Virginia, said in September that it may add more storage after opening a London vault in 2011. Barclays Capital is also building a vault in the U.K. capital that may open this year, and Frankfurt-based Deutsche Bank said last year that it may expand facilities and build new ones to meet demand.
Prices may keep rising, according to Morgan Stanley (MS), which predicts gold will average $1,845 this year. That’s 17 percent higher than last year’s average. Investment demand will climb 60 percent to 1,722 tons this year, accounting for 39 percent of total demand, according to a Feb. 13 report.
“Not many banks are equipped to deal with physical metals,” Wilner said, declining to disclose the size of its Asian facilities or clients’ identities. “We are being approached now by more and more banks whose clients want to purchase physical gold.”