Once you have decided to purchase physical gold in either bars or bullion coins, there are several storage options, each with their pros and cons.
The options for storage fall into two categories: home storage and a storage facility.
Home storage is the simplest option. Gold stored in your home offers maximum accessibility compared with a storage facility, but it is much less secure. Installing an alarm system and buying a home safe are basic ways to improve the security. Additional ways include storing your gold in multiple home locations and away from easy view of a burglar. It also helps to be discrete about who knows about your gold purchases. The fewer who know, the less chance you have of having it stolen. And some owners are more comfortable owing a gun as an added safety measure.
A storage facility is a third party that holds the physical gold on behalf of the customer. The most basic service offered is renting storage in a vault. Entities offering this service range from financial institution like commercial and investment banks, non-financial storage facilities with some armored storage, private depositories and coin and bullion dealers.
Each storage facility has different security procedures. For example, there are some vaults where the customer has exclusive access though a key and the facility has no access to your gold. Vaults in large financial institutions are just the opposite, where only bank personnel has exclusive access. And there is your local bank’s safety deposit box, where you need both your key and the bank’s key to access its contents.
Additional services to consider are whether you want a vault that comes with guard services and transportation services and whether your gold can be held in allocated or unallocated form.
Allocated is where your gold is stored separate from all the other gold stored, while unallocated means that your gold is commingled with all the other gold stored. When you want to withdraw your gold from an allocated account, you will get the exact gold bars or coins that you deposited.
Financial institutions generally shun individual investors in favor of higher-volume institutional investors. However, if you have more than $250,000 worth of physical gold, you probably have an account with a financial institution and have access to their vault services.
The institution will likely have vaults in multiple locations in financial centers within the United States and internationally. Cities known for their bullion dealing and vault capacity are New York, London, Zurich and Hong Kong. This facilitates the logistics of buying and selling large quantities of physical gold and as a result, making your gold liquid is easier. These vaults are very secure and storage fees are generally reasonable. But unless you live in the city (or have multiple residences) where the vault is located, access to your gold is very limited.
Because of sales of large volumes of gold bullion coins in the last five years, there has been big growth in armored storage within a non-financial storage facility, private depositories and coin and bullion dealers offering their vaults for storage. If you live in a large city or near one, you can usually find one of these storage options. Because of your geographic proximity, you will have easier access to your gold, but at the potential risk of generally more modest security and more logistical challenges when you want to buy more gold or sell your gold.
Generally, a storage facility is generally more secure, but it does require some extra vigilance to make sure your gold is still there. That means having confidence in the chain of custody and the accounting and audit procedures.
Choosing the right gold storage option for you depends on your reasons for purchasing your gold and the volume of gold you are trying to store. If it is for long-term investment or large volume, a vault is a logical choice. If it is for emergencies and you own a small amount, and you want to have ready access to it, home storage makes sense. If it is for both reasons, split up the gold accordingly between storage facility and home storage.
The best option to store your gold is the one that gives you greatest peace of mind.
Categorised in: News