Creating A Safe Haven For Generational WealthBy Gregor Gregersen, Founder & Director, The Reserve
The future is becoming less predictable. Following the COVID-19 pandemic, the world is struggling with serious geopolitical tensions and the resurgence of 1970s-style stagflation, aggravated by decades of record deficit spending and unfunded pension systems.
Given this backdrop, the demand for inflation-proof physical assets – which can be owned outright as private property with minimal counterparty risk – is a sensible wealth refuge in times of financial and geopolitical turbulence. Interconnectivity between physical assets and public blockchains will further enhance the utility of physical assets, especially gold and silver.
Over the past decade, by developing reliable storage, authentication, liquidity, digitisation, and collateralisation services, we have helped create the infrastructure, processes, and technologies to enable physical wealth solutions with minimal to zero counterparty risk.
We proudly present The Reserve – a new type of high-capacity vault and alternative asset center that incorporates vaulting, technology and asset protection lessons learned since the 2008 financial crisis.
The Reserve is a 180,000 ft2 facility in Singapore that is currently undergoing extensive renovation to create a vaulting icon, representing the broader resurgence of physical assets and popularising the concept of systemic wealth protection.
When completed in 2023, the facility will feature event spaces, lounges and meeting rooms for wealth managers, testing laboratories, a watch atelier, safe deposit boxes, and on-site storage for precious metals, rare and strategic industrial metals, luxury watches, and art. In addition to office space, the facility will feature three distinct kinds of vaulting lease options:
Gold, diamonds and luxury watches are compact and valuable. Banks, logistics providers, and fund managers that store large quantities of gold can usually save on insurance premiums by using highly secure UL Class 2 vaults. These vaults, even if empty, often weigh up to 25 tonnes and are made of 15-cm thick composite alloy steel panels.
Typically, these vaults will each hold between US$100 million to US$800 million worth of valuables and can be either exclusively operated by a tenant, vault operators on behalf of a tenant, or through a hybrid arrangement whereby access is permitted only when both the client and vault staff are present simultaneously (similar to a traditional safe deposit box).
Such vaults are well-suited for long-term storage of high-value items like gold and can be branded on its external panels by the tenant. The Reserve will lease 14 such vaults to third parties.
Gold vaults at The Reserve
Wealthy art collectors prefer to segregate their assets in a dedicated vault, usually comprised of high-strength concrete panels. Because art pieces tend to be both bulky and fragile, segregated art vaults are often 600 to 1,200 ft2 in size and feature reliable humidity and temperature control and nitrogen fire suppression systems.
The Reserve will offer 13 art vaults complete with supporting infrastructure, including a photo studio and – having received regulatory permission – the ability to host third-party auction events.
Art vaults at The Reserve
Bulk vaulting, combined with heavy lifting equipment, allows for high efficiency and low-cost storage of valuable metals limited only by the floor load capacity and ceiling height.
Because of tighter insurance requirements and because most vaults usually do not incorporate bulk vaulting, there is currently an industry shortage of storage for metals that have become too valuable to be stored in regular warehouses yet remain too bulky to store in traditional high-value vaults.
The Reserve incorporates an extremely high floor loading capacity (up to 45 times that of a typical car park) that can securely store up to 15,000 tonnes of silver or other valuable metals in bulk storage layout. For reference, 15,000 tonnes represent nearly 28% of above-ground silver reserves.
The Reserve’s wealth management offices.
We believe that trust is best built through transparency, and, over the past decade, have developed a “transparency by design” approach to tracking physical assets, to enable a common architecture that allows third parties to securely collateralise and digitise physical assets.
Our latest iteration of this design philosophy is our GramChain Asset Tracking system, which stores event data hashes in real-time on public blockchains to provide unquestionable tamper evidence and usage flexibility.
GramChain standardises information into flexible “event” data structures which, in addition to physical asset characteristics, tracks public asset custodianship, public asset encumbrances as well as third-party asset audits, valuations, authentications and other custom events.
In addition to our own Singapore vault, GramChain currently tracks gold bars in Dallas, Zurich, Dubai, and Frankfurt. GramChain enforces industry standards for proof of origin while at the same time adjusting gross weight by purity. The system facilitates fungibility, enabling practical swapping of gold and other precious metals between storage locations as well as physical redemption through fungible tokens.
GramChain’s transparent architecture was adopted by CACHE Gold to monitor the gold reserves backing its tokenised gold product known as the CACHE Gold token (CGT). CACHE Gold also uses Chainlink Proof of Reserve to automatically monitor its gold bullion inventory as reported by the GramChain API, delivering this data on-chain so that its reserves are transparent and verifiable by anyone.
GramChain is working with Chainlink Proof of Reserve to establish a solid technical infrastructure to enable linking physical assets to fungible tokens (such as CACHE Gold) and eventually non-fungible tokens (NFTs) backed by real, physical assets.
Gold and silver tend to perform well in periods of financial turbulence while also being excellent inflation hedges, therefore these metals tend to grow in popularity during stagflation periods.
By 1981, towards the end of the previous stagflation, gold and silver holdings represented 6–8% of all US-based investment funds. In contrast, as we currently enter another period of stagflation, only 0.5% of US investment funds are allocated to gold and silver, thus a 12-fold increase gold and silver demand is not unreasonable.
Finalising The Reserve is an effort to create some of the physical vaulting capacity to capture this growth, while GramChain seeks to transparently expand the utility of physical gold and silver and further enhance growth in investing in hard assets.
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