SFO physical investment precious metals policy review

An SFO physical investment precious metals allocation should be reviewed as an investment, custody and tax-incentive decision, not as permission to hold unlimited gold. Current professional summaries of MAS Circular FDD Cir 05/2026 report that the former 5 per cent cap on physical investment precious metals as designated investments was removed from 1 August 2026. The SFO must still confirm the circular, its award letter and every other applicable condition.

Update the investment policy only after the family defines the purpose, risk limit, approved instruments, custody model and evidence required. A tax classification should not drive a concentration that the family would otherwise reject.

Confirm which rule set applies

The DLA Piper summary of the MAS circular reports that the 5 per cent physical investment precious metals cap was removed from the designated-investment list with effect from 1 August 2026.

For this reason, the SFO should not apply that sentence in isolation. Record the fund incentive section, award date, applicable conditions, transition terms and any written MAS approval. Compare those records with the final circular and current Income Tax Act 1947 framework.

If the award letter uses an older condition set or contains a specific restriction, obtain written advice before changing the portfolio. Keep the advice with the investment committee paper.

Define what the policy means by physical metals

The policy should identify the metals and forms permitted, such as investment-grade bars or coins that meet the relevant definition. It should separately address exchange-traded products, futures, options, tokenised interests, mining shares and operating businesses because they create different rights and risks.

In practice, do not assume that a digital token is equivalent to allocated physical ownership. Review the legal claim, custodian, redemption rights, insolvency treatment, fees and transfer restrictions. The underlying asset label does not settle the classification.

Record whether the family seeks inflation protection, liquidity, crisis diversification, tactical return or a long-term store of value. This purpose guides the limit, benchmark and review frequency.

Set a risk limit despite the removed tax cap

A removed designated-investment cap is not a recommended allocation. The investment committee should set its own strategic range, tactical limit and escalation point based on the family’s liabilities, liquidity needs and total portfolio.

At the same time, Model price falls, currency moves, wide dealing spreads and delayed access to vaulted assets. Show the impact on near-term distributions, capital calls, tax payments and operating expenses. A metal allocation that cannot be liquidated when needed may not serve the stated purpose.

State whether borrowing, leverage or derivatives are permitted. If they are, set counterparty, collateral, margin and loss limits. Do not allow a simple physical-metals mandate to expand into an unapproved trading strategy.

Approve the custody and title model

Choose between allocated and unallocated arrangements only after reviewing legal title, segregation, reconciliation, insurance, audit access and the custodian’s insolvency terms. Record where the metal is stored and which law governs the custody agreement.

As a result, Require independent confirmation of holdings. The confirmation should identify bar numbers or other asset details where available, reconcile quantities to the custodian statement and explain any movement during the period.

Limit who can instruct a transfer, change delivery details or add a settlement account. Use strong authentication, dual approval and an independent callback for a new instruction. Keep the approval trail outside an email chain that one compromised account could alter.

Establish valuation and reporting rules

The investment policy should name the price source, valuation time, currency, foreign-exchange source and treatment of premiums, transport, storage and insurance. Apply the method consistently across performance, financial reporting and tax records.

For example, Separate market value from realisable value. A quoted spot price may not reflect the price available for a particular bar, location or delivery date. Show custody charges and dealing spreads in the net return.

Report concentration by metal, custodian, vault location, currency and legal claim. Include any amount pledged, lent or used as collateral. The family should be able to see its actual access and counterparty exposure, not only the percentage labelled gold.

Use a committee review record

Keep operating-business risk separate

The RSM Singapore SFO summary describes the designated-investment change and the broader 2026 condition updates. It also reinforces the need to apply the correct award vintage and scheme requirements.

In addition, a family that owns a jewellery, bullion, mining or precious-metals trading business should not mix that operating activity with an investment-fund conclusion. Document commercial purpose, related-party dealings, transfer pricing and who bears inventory and market risk. Obtain specialist advice where the facts overlap.

Do not route operating profits through an investment vehicle merely because physical metals can be designated investments. The facts, contracts and conduct must support a bona fide investment arrangement.

Update the policy and annual calendar

Amend the investment policy with the approved range, asset definition, counterparties, custody standard, valuation method, reporting frequency and breach process. Record the effective date and the meeting that approved it.

For this reason, add quarterly custody reconciliation, annual legal and tax review, insurance confirmation, counterparty due diligence and stress testing to the operating calendar. Recheck the MAS circular and award terms before the tax return is finalised.

The family office operating model is the pillar cornerstone. The investment policy statement guide covers mandate design, while the SFO first-year guide covers current incentive operations. The Family Office and UHNW Advisory hub connects related guidance.

The best outcome is not the largest permitted holding. It is a documented allocation whose purpose, title, custody, valuation and tax treatment can each withstand independent review.