March 2013 Silver Bullion Newsletter - S.T.A.R.+ and the Transfer-In Program

Dear Subscriber,

Back in 2008 - when I first wanted to buy physical bullion in Singapore - the options were few, especially for silver. Storage in Singapore often meant storing the bullion under your bed as silver's size and weight made it impractical to store it in safe deposit boxes or small safes. Authentication pretty much meant weighing the coin or/ the bar and comparing the item to another bar or coin.

Furthermore, bullion ownership was made more expensive as Singapore's 7% GST was imposed upon importation. This added tax made it less appealing for institutions to participate in the gold bullion trade and virtually none would buy silver. With no primary market involved, bullion was an illiquid asset in Singapore, leaving only the secondary market such as eBay or that odd newspaper classified advertisement as the sources to trade bullion. It was difficult to buy or sell bullion back then, but it was also oddly exciting and it felt like we were at the frontier of an up and coming industry.

By 2013 this market environment in Singapore has changed drastically and we have had the privilege to experience, and in some cases influence, the changes firsthand while bringing over 1.6 million ounces of gold and silver to Singapore. Today developing the bullion industry has become a national priority, IPM gold and silver have been exempted from GST and, by end of this year, a major refinery will start operations in Singapore. However retail liquidity is still constrained by the lack of an industry recognized, non-destructive, authentication process.

It is partly for this reason that we have developed, and continue to fine tune, DUX Bullion Testing as a 3-test process that combines Density, Ultrasound and X-ray bullion testing to reliably assess the authenticity of bullion. The DUX program and development is now overseen by a dedicated Materials Engineer and I expect to have a number of exciting news within the next few months regarding testing standards.

In the meantime DUX and S.T.A.R.+ are enabling us to introduce a transfer-in storage service which allows bullion owners to send us their bullion, have it authenticated, parcelized, stored by Silver Bullion and optionally sell us their bullion, even if it was not originally bought from us.

On a related note, we will not have a dedicated stand or speech at the Singapore Coin Show at the end of March this year as I will be attending an important conference in Santiago, Chile but DUX testing will be represented by James who is scheduled to give a short - not too technical - presentation on how to spot suspicious bullion.

Lastly, on a personal note, the Singapore Business Times recently had an extended article on page 2 about myself and my reasons for moving and starting Silver Bullion in Singapore. You can see an article at: Asia One.

DUX testing, along with S.T.A.R.+ parcelization and the installation of an additional 16 CCTV cameras in our processing / depository center, has enabled us to launch the bullion Transfer-in program this month. Transfer-in allows customers to send their existing bullion to our depository where the bullion is authenticated with DUX, packaged into S.T.A.R.+ parcels, sent to the vaults and kept for long term storage with the option to sell the bullion to us online.

Traditional storage solutions treat transferred bullion on a "said to contain basis" and do not provide authentication or buyback options, making S.T.A.R.+ Transfer-In a unique innovation. This program has been under a pilot program phase in the last few months and we have already processed over 100,000 troy ounces for a few key customers. The pilot program should ensure a smooth launch and a solid integration with the S.T.A.R.+ Storage system.

Please note that the transfer-in program has a number of restrictions with regards to the type of bullion that can currently be imported. Most notably the S.T.A.R.+ was introduced to allow us to store standard weight bullion coins or bars which are common in the retail environment. LBMA good delivery bars such as 1000 ounce silver bars, although cheap, are very crude and often have positive or negative weight variances of 30 ounces making them ill-suited to our standardized weighed parcel model. Bullion must also be IPM Tax Free and must be authenticated through our DUX testing program.

Find out more about the Transfer-in program.

Bullion investors are people who have lots of questions about their bullion, and rightfully so. However in this industry most dealers white label or outsource storage to third parties and have little real control about the back-end processes.

We are following a different approach as physical bullion storage is about minimizing counterparty risk while maximizing transparency and controls. Our processes are designed to provide solid answers to the following four questions:

1. Where is my bullion and how do I know that it is indeed there ?
2. How do I know that my bullion was not sold or encumbered to other parties ?
3. How do I know it is genuine bullion ?
4. What have you done to prepare for a possible confiscation or nationalization ?

The original S.T.A.R. Storage program had concentrated on points 1 and 2 (see S.T.A.R.+ Storage) while S.T.A.R.+, which in-sources parcel processing and further minimizes vault operator exposure to the United States, greatly improves on point 3 and 4. (see S.T.A.R.+ Locations / Fees)

S.T.A.R.+ has been so successful over the past few months (with more than 95% of storage customer choosing it) that we are standardizing all new storage operations on S.T.A.R.+. Existing customers will also have the option to transfer existing bullion to S.T.A.R.+ in the coming months.

Agreement Update:

• Addendum A was added to cover DUX Testing
• Local Pickups orders - Storage charges will apply if a customer does not pick up his/her bullion ordered for pick-up within two (2) months. We have had a few cases whereby customers did not pick up their paid-for bullion for 8 months requiring a process to handle such cases.

• S.T.A.R. + - process description
• Addendum A - covers the Transfer-in process
• Account types - We now allow multiple types of customer accounts these are personal, joint, corporate or trust.
• Bullion Receipt / Parcel Receipt Documents - evidence of receipt for Transfer-In bullion

Platinum Coin Maple Leaf - 1 Ounce
Interested in Platinum ?
Canadian Maple leaf coins are among the world’s most recognized coins and are issued by the Government of Canada through the Royal Canadian Mint. The coin's content, weight and purity are guaranteed by the Canadian Government making the silver maple leaf highly desirable for investors and collectors alike.

• Silver Maple Leaf - We keep good availability of these coins - currently 15,000+, as we continue keeping large inventory of Maple Leaf coins.
   
• Silver American Eagles - American Silver Eagle availability has improved. Note that the silver coin is tax exempt in Singapore but the gold American Eagle bullion coin is not.
   
• Johnson Matthey 100 oz Poured Silver Bars - about 5,000 oz just arrived and are available in stock. These bars are available in both S.T.A.R.+ Storage and for immediate pickup.
   
• .9999 Royal Canadian Mint 100 oz Silver Bars - we just received over a ton of these bars and have about 12,000 oz parcelized in S.T.A.R.+ and a similar amount for local pickup.
   
• Gold Bullion - Gold Maple Leaf coins are on the way as are more 10 oz Credit Suisse Gold bars.

• Perth Mint Silver Coins and Bars - Availability of most coins and bars is good. 1 KG and 10 oz bars will be arriving very soon.
   
• Perth Mint Gold Coins and Bars - Gold Kangaroo coins are almost sold out, 100 gram bars are still available for immediate pickup locally.
   
• Libertad Coins - Limited numbers left. These coins come sealed from the mint with very secure metallic seals on the ‘bank bags’ providing much better tamper protection during shipment.
   
• Platinum - We have added platinum maple Leafs coins. These are available for local pickup.

If you plan to import bullion into Singapore make sure you understand what type of bullion is classified as Singapore IPM Tax Free and what type is not, so that you are not burdened with unnecessary import taxes. See IPM Criteria & Tax Free Bullion for details.

See more products and prices at www.silverbullion.com.sg.

Information provided here should not be considered as advice or as an offer or enticement to buy, sell or trade. The contents of this publication, including any opinions and analysis, are strictly intended for educational use. Opinions expressed in bylined articles are those of the individual author and do not necessarily reflect the views of Silver Bullion Pte Ltd.

Silver Bullion Pte Ltd. makes no warranties, whether expressed or implied, as to the accuracy of the information provided or for eventual results obtained by using the information. In no case shall Silver Bullion Pte Ltd. be liable for direct, indirect, or incidental damages resulting from the use of the information.

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