Precious metal investors now have a new platform to trade with the launch of the Singapore Precious Metals Exchange. Rishaad Salamat talks to Victor Foo, Founder and Chief Executive of SGPMX about the platform.
We have drop in gold prices and raising something like $66 billion from the value of investor holdings, but that hasn’t stopped the Singapore Precious Metals Exchange from launching today. The exchange claims to be the world’s first precious metals exchange with physically backed bullion storage facilities.
Let’s get more from the Founder and Chief Executive, Victor Foo. Victor, thank you very much for joining us. Tell us how it all works first of all.
Good morning, Rish. First of all, let me say this is the first and is only one of the only kind in the world, where we have an opportunity where customers can have a peer-to-peer trading on their exchange, which is physically backed and fully allocated.
Well exactly so if I buy let’s say gold it will automatically be put in into a vault by you, right?
Yes, this unlike other precious metals exchange, this is the only one that has physically backed. So we are able to basically allow customers to trade for as little as one ounce up to 1,000 ounces, which we have different denominations ranging from small denominations to even the large bars. So everything is stored with Certis Cisco, who is our custodian. And as you know, Certis Cisco in Singapore is the auxiliary police unit. Our customers have the assurance that whatever bullion they stored is safe.
Tell me something. Who are you targeting here? More specifically what sort of customer you looking at and what advantages this give me over, let’s say me walking into a bank buying gold coins and putting in a safe deposit box?
Our business basically is made of four quadrants.
The first being procurement. We’ve been actually retailing bullion for the last four years. So our customers are having the option to be able to source products from multiple international mints; from Australia and New Zealand the states, UK and also in Switzerland. So like the retail store, we are also able to provide the additional conduit where customers can buy from us at real time prices with minimal hassle.
And we also have a storage with Certis Cisco as I mentioned.
And the third quadrant will be actually an option for customers also take their bullion back home. We have international logistics partners as well.
But the most important thing is the fourth quarter which is the exchange which we are launching today. With a minimum only a US$1,000, you are able to basically trade. So liquidity is always very important like any investment. So by a click of a mouse you can basically sell or buy whatever they start with us.
So again the first part of that question was who are you targeting what sort of custom are you looking for?
With minimum of US$1,000, we can essentially target to anyone. The average man on the street. As you know there’s been a recent rash of many financial institutions setting up storage facilities in in Singapore. Most of them are targeting the medium high net worth individuals. So with this minimum of US$1,000, everybody can buy. And the current prices is actually the best thing that can happen to us because it’s actually bullion on sale.
Victor, it does seem a bit of an odd time for you to be launching an exchange which of course trades gold here at the moment, and indeed precious metals generally. Given the falls that we’ve seen this year, tell me, why launch now?
It’s as I mentioned just now, the bullion on sale. But let me reiterate. Unlike most people who buy or trade bullion with paper exchanges, most of our customers, not all, who by physical bullion are basically long.
So this is a time where they can actually come in to have the best position to pick up whatever physical bullion they want. And with our total offering we provide all the necessary services i.e. storage, logistics and a marketplace for them to sell. So this couldn’t be the best time for us.
Victor you brought some gold in with you as well didn’t you it shows that what you brought in and also tells us what your view is on the on bullion and where it goes next.
I have some silver and some gold wafers with me, and also some gold coins.
Well, I think the prices are at the all time low. I’m no guru in terms of gold, but as an exchange we don’t take positions. But I think it’s a time to buy. And prices may have a slight dip in this short future, but nevertheless it’s bullish.
What are the chief trends you see at the moment when it comes to the precious metals market?
I think looking what is happening globally with all the different changes, we see bullion as a preserve wealth. As you know traditionally where in Asia or even Europe, people have actually rushed to bullion as a preserve for wealth. So in times of certainty or uncertainty, we always have the position to basically set ourselves apart from markets. So I would say prices may hover at these levels, it might take a dip. But as I mentioned before, in the long term we set to soar again.
Victor, great talking to you and good luck on your first day. Victor Foo there. Singapore Precious Metals Exchange launching today.
Source: Bloomberg Businessweek, July 3, 2014