In light of precious metals’ strong 2020 showing as well as the expectation gold and silver will continue to surge this year, you can bet that metals are on the mind of a lot of folks. As a matter of fact, a New York Times article published in July of last year highlighted the results of one survey that revealed roughly half of Americans “are seriously thinking about buying gold.”
That’s a lot of potential precious metals owners. And as that same Times article points out, the prospect of so many people buying gold (and silver) highlights a related issue that few purchasers consider until they must: storage.
There’s no getting around the fact that physical precious metals take up space. And if you own sizable quantities of them, they can take up a lot of space. Complicating storage considerations is the obvious fact that precious metals are very valuable. So it’s not enough to merely find room for your gold and silver. You have to be certain the place you store them is appropriately secure, as well.
If you’re part of the apparently vast group of Americans who’s “seriously thinking about buying gold,” where do you plan on storing it?If you’ve not given much thought to that aspect of owning metals, perhaps it’s time to begin doing so.
There are three places that have proven to be particularly popular as storage locations for metals: home, a bank safe deposit box, and a precious metals depository. For those who imagine they’re better served by keeping their gold and silver close at hand, the first two options may seem especially appealing. But there are significant potential disadvantages to stashing your stash at your home or at the bank down the street. And while you may not have envisioned keeping your gold and silver tucked away at a Fort Knox-like facility, it may just prove to be your storage location of choice once you learn more about the benefits of doing so.
Keeping one’s physical gold and silver stash squirreled away at home perhaps is the most idealized storage solution of those who own metals in part because they’re concerned about the possible total collapse of the economy. With the home storage option, you own your metals in the most definitive, absolute sense. They are on your property and therefore under your control and within your reach 24 hours a day. In terms of certainty of ownership, there’s no better option.
But home storage of physical gold and silver is not without potential hassles. For example, if you do need to raise cash, it can be inconvenient to liquidate your metals, especially if you must do so in a hurry. You’ll be responsible for the shipment of the gold and silverto the dealer for liquidation – including arranging insurance coverage for the metals while they’re en route – and otherwise overseeing the transportation and liquidation process.
A far bigger concern is the risk of loss or even theft of your home-stored metals. Note that standard homeowners insurance coverage limits for precious metals typically are very low. So if you do store metals at home, you’ll want to purchase additional coveragein the form of a floater policy. Be sure to consult with your insurance agent to make certain you’re appropriately protected.
But even if you have sufficient insurance coverage for your gold and silver, that doesn’t eliminate the risks you could be injured – or worse – in an attempted robbery of your valuables.
In a November 2017 article for Forbes, Olivier Garret wrote that as CEO of the Hard Assets Alliance, he had numerous clients whose home-stored metals were stolen. He underscored that, in many cases, the perpetrators turned out to be family members who had foreknowledge of the gold and silver. He even references clients who were robbed at gunpoint of their metals. The bottom line is that if you do store metals at home, you probably should tell as few people as possible – even if that excludes children and others in whom you normally confide everything.
That’s not because those closest to you necessarily pose a direct threat. Rather, it’s because you have no control over what they may sayinadvertentlyto others who exist outside of your inner circle.
Suffice it to say, while home storage likely will be preferred by those who want maximum control of – and access to – their metals, there are other considerationsof which to be mindful. In my opinion, any gold and silver stored at your home should be limited to a modest amount. For more substantial quantities, I think there’s a better option: depository storage, which I’ll discuss shortly.
Bank Safe Deposit Box Storage
When it comes to the storage outside the home of anything valuable, people often think first of banks. It’s understandable. Banks are synonymous with the secure storage of financial assets, even as they’re really not in the business of providing physical security for money and valuables.
Accordingly, one of the popular options for metals storage is the bank safe deposit box. The combination of a deposit box with “safe” in the title along with the fact that deposit box is located deep behind the walls of a bank certainly suggests that anything stored in it enjoys rock-solid protection. That’s not necessarily the case, however.
A 2019 New York Times articlehighlights perhaps the biggest problem for bank safe deposit box customers: Even though the deposit boxes are located inside the physical bank, there effectively are no laws that govern them or otherwise provide any protection to box owners. Not only does the standard FDIC insurance that protects financial deposits not apply to safe deposit box contents, there is no bank or government insurance of any kind that covers deposit boxes. Noting that deposit boxes live within a “legal gray zone within the highly regulated banking industry,” the Times article says flatly that “no rules require banks to compensate customers if their property is stolen or destroyed.”
Another potentialproblem concerns the matter of access to your metals in the event a serious financial crisis results in the closure of your bank. Granted, the contents of your safe deposit box are separate from the bank’s assets. But the practical reality is that if the bank branch at which your box is located is shuttered, it could be difficult – or even impossible – to retrieve your gold and silver.
All of this said, keeping your gold and silver in a bank safe deposit box might make sense for you in select circumstances, depending on your specific goals and objectives. If you DO decide to store your precious metals in a bank safe deposit box, I highly encourage you to purchase insurance coverage for the gold and silver you plan to store in it. Speak with your insurance agent beforehand about adding a rider to your existing homeowner’s policy that will cover the value of the box’s contents.
Keeping physical gold and silver in a non-bank depository facility that specializes in the storage of precious metals is, in my opinion, the best overall optionfor the safekeeping of metals assets.
Because precious metals depositories are not banks, you run none of the risks associated with keeping your metals in a bank safe deposit box (that, as it turns out, the bank probably prefers you didn’t use, anyway).
Beyond that, precious metals depositories are highly secure entities that provide a variety of protections for customer assets. The most recognizable names in precious metals depositories, such as Delaware Depository, offer nothing less than state-of-the-art physical security on behalf of customer gold and silver.
In addition to the robust physical security measures characteristic of reputable depositories, these facilities typically maintain a variety of stringent internal controls and protocols. Inventories are constantly audited and all computer data is subject to daily backup.
On top of that, all customer assets stored at such depositories are further protected by comprehensive, all-risks insurance policies from such well-known and highly-rated insurers as Lloyd’s of London.
There’s something else: If you expect to buy your gold and silver inside of an individual retirement account (IRA), a precious metals depository is the only fully IRS-compliant location at which you can store your gold and silver. The IRS strictly prohibits self-dealing with IRA assets, and is therefore very particular about the manner in which physical IRA assets such as precious metals are stored. Storing the metals in your gold and silver IRA at a depository qualified to store IRA assets is the best way to ensure the integrity of your IRA and eliminate the risk of engaging in a prohibited transaction. Many precious metals dealers won’t even work with you in purchasing gold and silver for your IRA if it’s not your intention to store the metals at a qualified depository.
Robust Expectations for Precious Metals Could Intensify Storage Needs
Some experts are projecting that both gold and silver will reach new all-time price highs in 2021. Given this, it’s reasonable to expect that consumer interest in owning precious metals could keep growing. If that happens, prospective metals owners will have to give serious thought to where and how they plan to store their assets.
It makes sense, at first blush, to think you’ll want to keep them at home. After all, home storage of metals provides you with the most genuine form of ownership. However, in part for reasons I outlined earlier, home storage can be a less-than-ideal solution. So can storage in a bank safe deposit box.
Even a highly secureprecious metals depository that exists outside of the banking system isn’t necessarily a perfect solution. The storage facility could be distant from your location and you can gain access to your metals only during the depository’s normal business hours. But as with most things in life, there’s no such thing as a perfect solution. That said, of the most common and viable storage options available, I view depository storage as the best option,on balance – particularly if you plan to own your gold and silver inside of an IRA.