Why Singapore is Buying So Much Gold Reserves

Singapore has emerged to become one of the largest  holders of gold reserves in all of Southeast Asia. Here’s a graph on the gold reserves of the  biggest economies in the region. Here you can see that Singapore has over 220 metric tons of gold  which puts it as the second-largest in the region, just behind Thailand which has 235 tons. 

It is above all other major Southeast Asian economies like Indonesia and Malaysia,  and is above many, many economies out there. But this isn’t really the trend that  we want to talk about in today's video. Singapore would undoubtedly emerge as one of  the largest holders of gold.

That is simple to understand because of their economic status.  Their economy far surpasses that of any other economy in Southeast Asia. They are rich, well  managed and are sought after by the international community.

That simply means that they have the  resources to buy up gold, which unlike developing countries like the Philippines or Indonesia has  limited reserves due to economic constraints. The real story that you want to understand here  is actually about Singapore's gold buying spree. If we graph out the accumulation of Singapore’s  gold reserves over the past few years, we get to see that the island nation has acquired so much  gold in 2021 and in 2023.

Here, just before the accumulation of gold, Singapore had only about  127. 4 tonnes of gold in the 2nd quarter of 2021, which at market value at that time was worth about  $7. 4 billion.

But in just a short span of time, Singapore aggressively increased its gold  reserves. In the 1st quarter of 2024, Singapore’s gold reserves amounted to over  236. 6 tonnes, which at market value was worth $15.

5 billion. This means that in  less than three years, Singapore nearly doubled its gold reserves, making it one of  the fastest accumulators of gold in the world. So, that is what we want to understand in  today's video – why is Singapore rapidly buying gold reserves.

Does it  signal some kind of shift in global finance? Or is Singapore  preparing for something bigger? Well, before we go on and try to understand that, we must first talk about the role  of gold in today’s foreign reserves.

Gold has been regarded as money  and a store of value for thousands of years. Throughout history, it has  served as a hedge against inflation, a means of protecting wealth during  economic downturns, and a trusted asset in times of geopolitical turmoil. When  modern economies face uncertainty—from financial crises to currency devaluations—gold  often outperforms many other asset classes.

And over the past few years, especially  since the 2020 Covid-19 pandemic, the entire economic environment that the world  was in had shifted dramatically. There was a surge in inflation, supply chain disruptions,  and massive government stimulus spending, all of which weakened confidence  in traditional fiat currencies. That is why when we graph out the gold  purchases by country, we get to see a rapid increase in many economies.

Here, you can  see that several economies, particularly China and Russia, have rapidly accumulated gold in  the past ten years, from 2013 to 2023. This, however, is over the past ten years, and  Singapore had only been accumulating gold since 2020. But there’s a good reason why  these economies have been buying up gold, which may also be a reason for  Singapore’s gold-buying spree.

That reason is de-dollarization  and financial independence. For years, the global financial system has  been heavily dependent on the US dollar, which has been the dominant reserve currency.  However, several countries—including China, Russia, and now Singapore—are increasing their  gold reserves as part of broader efforts to diversify their holdings.

While some nations are  actively pursuing de-dollarization, which involves shifting foreign reserves away from the US dollar  and into other assets like gold, the euro, or the yuan, Singapore’s approach is more nuanced. Rather  than signaling a move away from the US dollar, its gold purchases appear to be a strategic  hedge against global financial instability. But you’ll most likely think that it’s  easy to see why Russia and China did it.

They did it because they would potentially  have a conflict with the United States, and being heavily dependent on the US dollar  would leave them vulnerable to sanctions, financial restrictions, or economic  manipulation. But Singapore? A country that has long maintained strong ties with the  West, why would they be making such a move?

The answer lies in financial resilience rather  than political confrontation. Unlike Russia and China, Singapore isn’t under any immediate  threat from US-led sanctions or trade restrictions. Instead, its gold accumulation  appears to be a calculated decision aimed at strengthening its economic stability  in an unpredictable world.

Put simply, Singapore is managing risk, not rejecting  the dollar. By increasing its gold reserves, the country is ensuring that it holds a  stable, non-currency-dependent asset that retains value regardless of geopolitical  shifts, financial crises, or inflationary pressures. This move aligns with Singapore’s  long-standing strategy of economic prudence, diversification, and safeguarding its  financial system from external shocks.

And that’s not the only reason for  that. There’s loads of reasons, and even more specific reasons as  to why Singapore is buying up gold. But there have been no publicly disclosed  specific reasons for the increase in gold, so we’ll leave it to this kind of global  trend in the accumulation of gold reserves.

Now, if we were to graph out the  gold purchases of Singapore again, we actually get to see that even though  the island nation had been acquiring so many gold reserves in the past few years,  the country, in the past few quarters, have actually been selling them. Here you  can see that in the 1st quarter of 2024, Singapore had over 236. 6 tonnes of gold, which  made it the largest holder of gold in all of Southeast Asia, surpassing Thailand.

But in the  latest quarter available for the fourth quarter of 2024, we get to see that Singapore’s gold  reserves had come down to just 219. 6 tonnes of gold. That may not seem substantial, but  it requires some explanation.

After all, if the entire world is seeing a surge in gold  demand – why is Singapore starting to sell them? Well, the answer can lie in the price of gold.  If we were to graph out the price of gold, we would get to see that the price of gold  has surged in the past few years as well, which is quite in line with the demand  for gold by central banks.

Here you can see that the price of gold skyrocketed.  Prior to the Covid-19 pandemic in 2019, the price of gold per ounce was around $1,700.  But in just a few years, the price of gold had reached over $2,880 per ounce as of the time  of writing.

Some analysts even suggest that the price of gold would continue to rise as  global demand for it would stay the same. At these prices, it makes sense for one to  sell their gold right? If Singapore were to buy these gold at lower cost in previous years,  and sell them today or in the past few months, wouldn’t it mean that they  would book a profit?

Well, that’s correct. But that is only one of  the reasons why we think Singapore has been selling their gold. Maybe it’s because of  the price of gold which if sold at the right time would help Singapore profit from them. 

It’s what Singapore has always been doing. You see, an article by Bloomberg even reported in  August of 2024 that Singapore had actually seen a record drop in gold reserves in June, which  was the largest monthly decline since 2000. And they said that Singapore’s decline, despite  the global central bank buying gold, is an anomaly to the general trend.

But it’s Singapore  that we are talking about. Singapore has always been different from the rest. They are probably  seeing something that other countries are not.

For instance, it could be  that they are seeing profit, which we just mentioned earlier. Or  it could also be because Singapore is just rebalancing its foreign reserves.  Singapore’s foreign exchange reserves are actively managed by the Monetary Authority  of Singapore, and the MAS may have shifted funds to other assets such as US treasuries,  bonds, or other high-performing investments.

So, Singapore’s buying spree of gold is due  to several reasons ranging from shifting economic environment to maintaining  financial independence. But anyway, do let us know what you  think. Thanks for watching!