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Gilded guarantee: Michael Kempinksi

Michael Kempinksi Managing Director of Degussa Singapore

More and more people are turning to safe-haven investments for financial security. For those unfamiliar with the term, it basically means a reserve that will keep its worth after everything else goes belly-up, which, sadly, could be any day in this volatile political and economic climate. The standout safe haven is gold, the world’s oldest form of currency.

So it’s no wonder precious metals provider Degussa is booming. The German company opened its first Asian branch two years ago, and the Managing Director of Degussa Singapore, Michael Kempinski, has been there since day one, helping clients make the transition from bank savings to bullions.

The former precious-metal banker, with more than 20 years of experience in the physical market, built the branch up from scratch, overseeing the fit-out of the magnificently opulent Orchard Road shopfront and personally recruiting his staff.

Michael Kempinksi explains why gold is a safe-haven asset

“We have learned that banks and governments can go bankrupt, so there is no protection in a debt crisis,” Michael says emphatically. “The US continues to fall into more and more debt; we all saw what happened with Greece; Italy is up to its neck in debt; and Portugal and Spain are in trouble too. And these governments continue to take on new debts to pay the old ones; nobody ever talks about paying back what they owe.

“Hence, why Germany became such a big importer of physical gold is that they understood there was a bug in the system. You can protect yourself with commodities like gold, silver and platinum, because they can’t simply be reproduced or printed; they have to really mine hard for it. People don’t want to have anybody or any instance between them and their safe-haven investment.”

If something does go wrong, you’ll sleep better knowing you have an asset that you have direct access to.

Michael continues: “So gold is really for the worst-case scenario. We never advise clients to put 100% of their savings into gold, but we definitely encourage investing up to 25%, depending on each individual portfolio. This is really the money you don’t need right now.

“If all goes to plan, you can pass it on to your successors in many years, but if something does go wrong, you’ll sleep better knowing you have an asset that you have direct access to.”

Degussa is the number one gold retailer in Europe, with branches in Germany,Spain, Switzerland and the UK. It imports its gold from Switzerland, and Michael says the most popular products are the one ounce (approximately S$1,800) and one kilogram (approximately S$57,000) bars.

Degussa provides a one-stop-shop solution

While Degussa is still in its infancy in Singapore, its client base continues to grow. What sets it apart from its competitors is that Degussa provides a one-stop-shop solution. It buys and sells gold, silver and platinum, and boasts a state-of-the-art vault in which you can safely store your stockpile. “Our business model is unique,” he explains.

“There are no other precious-metals traders that offer such a vast product range plus a rental service for safety deposit boxes. We imported this high-tech vault from one of the best producers in Germany. But Singapore is very safe, so unlike our German stores, we don’t need an armed guard out the front, nor do we need our staff to be stationed behind bulletproof glass. This allows us to engage in very open conversations with our clients.”

Another noticeable difference between the Singapore and German markets is the clientele. “We chose Singapore as our first Asian destination because it’s also an offshore location for our European clients,” he explains. “So, when you want to diversify your portfolio, you put your gold in safes in Germany, in Zurich, and Singapore.

“We’re a new brand in Singapore, so we don’t get too much walk-in traffic. But, in saying that, we have more wealthy clients. The transaction sizes are generally much bigger than in Germany. We can be selling as much as 500 kilograms worth of gold to wealthy individual clients and financial advisers.

Usually, the clients that come to us know about precious metals already and understand the investment advantages. They don’t want a piece of paper printed from an ETF (exchange-traded fund), promising something in the future, because there’s the risk the institution won’t exist anymore in two years, or there will be new rate rules in play.”

Trust is crucial in the safe-haven business

Trust is crucial in the safe-haven business; investors need to be sure that Degussa staff are not only looking after their best interests but can impart their expert industry knowledge. “We see ourselves as being in a long-term relationship with our customer, as gold is a long-term investment,” Michael says.

“We are not looking for the fast sell; we are really looking to provide customer satisfaction. By achieving that, over the long run, they’ll come back, and they might even bring friends and introduce us to more clients. This is what we are achieving in Singapore right now.

“We also send our staff to our headquarters in Germany to be trained. Because we buy scrap gold as well, we have to be certain we’re buying back the real thing,” he explains. “So we are given intensive training from the goldsmith on how to evaluate the gold and how to test it to make sure it’s real.

“In fact, we offer a testing service instore. When our clients are buying their gold bars, we show them the testing machines and the testing response so they can be 100% sure it’s real gold. We don’t offer this in Europe because we are already an established and trusted brand there, but we are very happy to do so in Singapore, because we don’t want our clients left with any doubt about their investments.”

You can guarantee there’ll be no doubt about your investment when you’re holding your very own glistening gold bullion embossed with the Degussa name and mark.

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