Asian desire for gold is on the rise, and that’s creating more demand for vaults in which the metal can be stored.
China's gold purchases totaled 176.8 tons in the third quarter, up 47.1 percent from the same period three years earlier, according to the World Gold Council. Hong Kong’s demand surged 56.8 percent.
This is good news for companies involved in the vault industry, The Wall Street Journal reports.
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For example, security company Brink’s more than tripled its storage space for precious metals in Singapore during the last year, and it’s putting up a bonded warehouse in Shanghai to house those valuables.
"We are growing, and driving that growth is the storage of precious metals and also bank notes," Jos van Wegen, Brink’s senior manager of global services in Singapore, tells The Journal.
The drive to increase vault space is leading security companies to obtain high-tech surveillance systems and 2-ton steel doors and to utilize more armed guards.
To be sure, if the recent decline in gold prices continues, it could put a damper on Asian gold buying and plans for expanding vault capacity.
On Friday, spot gold hit a four-month low of $1,625.79 an ounce. But some experts don’t expect the slide to last.
"Investors think that the [U.S. December] payroll report is still not enough to change the [Federal Reserve’s] accommodative policy, which is a positive for gold," HSBC metals analyst Howard Wen tells Reuters.
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