Singapore Removes 5% Cap on Precious Metals Holdings in Certain Funds
Key Takeaways
- •The Monetary Authority of Singapore removed the 5% limit on precious metals holdings for qualifying funds and family offices under Sections 13O and 13U.
- •The rule change follows a period when some funds had to sell part of their gold and silver holdings as prices climbed.
- •Some investors may increase their gold and silver allocations now that the cap is gone, while others plan to keep current levels but value the added flexibility.
- •Julius Baer said the adjustment may encourage investors to reconsider physical precious metals in portfolio strategy and could support Asian gold demand over time.
- •The article links Singapore’s policy shift with Hong Kong market developments as part of a broader move of gold-trading infrastructure from West to East.
Singapore Removes 5% Cap on Precious Metals Holdings in Certain Funds
Mike Maharrey
The Monetary Authority of Singapore has removed a 5 percent cap on precious metals holdings for investment funds and family offices regulated under Section 13O and Section 13U tax-exemption schemes.
The change comes after many funds were forced to liquidate part of their gold and silver holdings as prices climbed to $5,500 last January.
Under Sections 13O and 13U, certain investment income and gains are exempt from Singapore income tax if the fund or family office meets specified statutory and regulatory conditions, including the 5 percent cap on precious metals allocation. Removing that cap gives qualifying funds more room to manage physical gold and silver within those structures without the same tax-linked constraint.
According to the Business Times, “The removal of the cap is likely to improve investment flexibility amid geopolitical uncertainty, and boost Singapore’s competitiveness as a regional gold-trading hub.”
The Times reported that some funds and family offices plan to raise their gold and silver allocations above 5 percent now that the investment cap has been removed. Others, including Raffles Family Office, plan to keep allocations at 5 percent but welcomed the change because it allows for higher allocations in the future if needed.
“What it really does is if the market calls for it, we can go heavier and keep the whole position tax efficient. It does not move our base case, but it will give us more flexibility,” William Chow said.
Julius Baer head of FX and precious metals trading Asia Christopher Irwin said the changes are “likely to encourage investors to revisit the role of physical precious metals within a strategic portfolio context.” He added that the move could more broadly support Asian gold demand in the future.
“We have long held the view that if Asian investors begin to meaningfully increase their exposure to gold, it could have a significant impact on regional investment demand over time.”
Irwin said loosening the tax rules may not produce an immediate measurable effect, but he described it as a constructive step over the longer term.
“We may not see an immediate and dramatic reallocation, but the change removes a structural hurdle, allowing clients greater flexibility to hold physical gold where they see value.”
Irwin placed the rule change within a broader effort to establish Asia as a global precious metals hub. London, New York, and Switzerland have served as the center of the gold trade for nearly two centuries. However, as gold increasingly flows from West to East, China and other Asian hubs are building infrastructure to challenge Western dominance.
Earlier this year, Singapore announced plans to create an over-the-counter gold-clearing system and central bank gold vaulting by the end of 2026, among other measures.
Meanwhile, Hong Kong’s revamped dollar-denominated futures contract reported record physical gold deliveries. A day after the revitalized futures contract launched, Hong Kong began trial operations of its gold clearing and settlement system. The government-owned clearing system will reportedly “mirror” the financial infrastructure used by the LBMA in London.
Taken together, the developments in Hong Kong and Singapore point to a gradual migration of the gold trade from the West to the East, with policy changes and market infrastructure moving in parallel.
