There are really only three ways to store your gold—keep it at home, use a bank’s safe deposit box or pay a third-party storage firm. There are two ways to buy physical gold. Buy it and store it yourself, or buy it and have someone store it for you. Each alternative has advantages and disadvantages, so everyone needs to weigh these and decide which alternative—or maybe both—works best for their own individual needs.
When it comes to storing them at home, you lose it, it’s gone. It’s not like your stock certificate where you can generally pay an administrative fee and have it replaced. If you lose your 10-ounce gold bar, it’s gone. You can insure them under certain circumstances. We ship precious metals to people who want to bury it in the backyard, literally, or store it in their garage in a hidden place. They feel good about it because it’s within reach, but it’s fraught with all kinds of problems.
A major problem with storing gold at home is the illiquidity factor.
To make it liquid, you need to return your coins and bars to a dealer to sell them, which is a hassle. And to make it worse, before the dealer accepts them, you may even need to get your gold bars refined so the dealer can verify the gold content, which costs money and takes time.
Hence, the key consideration is whether the metal is conducive to a quick resale. However, the safe deposit box option is not without its flaws. The obvious one is access. Bank hours are limited, as is your opportunity to get to it. And example as such, if there’s a huge market move on Friday afternoon and you’re at work and gold price just went skyhigh today, you can’t get to the bank before it closes. You may need wait until Monday morning to get your coins out of the bank to get to a dealer to buy them. That all takes time and the market move, whether it’s for you or against you, may evaporate.
The bank usually don’t insure the contents of a safe deposit box. If you want to feel really comfortable and secure, you have to buy separate insurance, which can be expensive, and it’s hard to get for precious metals in safe deposit boxes. You also have the security risk going to and from the bank.
The final option for storing gold is using a private firm, known as a depository or a vault. Small sees the wisdom of that for those investors with larger holdings, especially if they want to spread their holdings among several countries.
Using a depository has become increasingly popular.
In addition to benefiting from secure, specialized bullion vaults that are insured, you obtain good geographic and political diversification for your gold. Also, you have exceptional liquidity because you can sell your metal 24/7 and have the proceeds wired the same day to your bank account anywhere in the world.
When considering storing gold in a depository, investors should always ask if their investment is being held on or off of the holding company’s balance sheet. If their precious metals are being held on the company’s balance sheet, they should understand that their investments are co-mingled with the assets of that company, and they will become general creditors in the case of the company’s bankruptcy or failure.
In such a circumstance, investors will receive whatever portion of the company’s total assets the bankruptcy court or ‘receiver’ may determine, which may very well be only a fraction of the actual market value of their precious metals.
If held off the company’s balance sheet, investor assets are held separate and apart from those of the company, and thus, they will not get tied up in bankruptcy proceedings should the company fail.
Finally, investors should be certain their metals are in an account or sub-account titled in their name, so in the event a company fails its records will show who owns what.
No matter which storage option investors choose, most agree peace of mind is worth its weight in gold.