The 6 Ways to Own Gold and Silver – Owning and Storing Physical Precious Metals in Depositories

February 3, 2010 10:47 pm Published by
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By John Fisher

Few individuals would argue that the safest way to make sure you have good title to physical precious metals is to buy the actual coins and bars.  A bank may be able to provide more secure storage than metals held in your physical possession.

Using a safe deposit box may be prudent for  a portion of your holdings.  If you keep a portion in a safe deposit box and part held personally, you spread your risk that any one event could lead to a complete loss of your holdings.

Although safe deposit boxes may provide better protection against burglary, they are not without their own set of risks:

  • Contents of a safe deposit box are typically not covered by the bank – you will need to obtain your own insurance coverage
  • Valuables stored in a safe deposit box are potentially much less private
  • Access to your box may be restricted by the government, or worse, opened under the guise of suspected money laundering, for national security reasons or other justifications
  • There have been bank “holidays” in the past and there certainly could be again in the future
  • Bank employees are now required by law to report “suspicious” behavior
  • California (and more states to come) has become very aggressive in confiscating the contents of boxes deemed “inactive”

If you do choose to use a bank, you may consider utilizing more than one, preferably located in different geographic locations.

A very viable alternative to banks are private bullion storage facilities.  Referred to as “warehouses”, they in no way resemble what we would picture as a warehouse.  These are privately owned facilities, highly secure, very low-profile and operated with very tight controls.

Located principally in Delaware (in the US) and throughout Europe, Latin America, Asia and Australia, these facilities are designed to hold your physical metals on your behalf.  Most often, your holding is held in allocated (segregated) accounts, assayed if necessary, and recorded on a warehouse receipt which is furnished to you.  The facility will hold your inventory indefinitely, or help you buy and sell.  Storage fees run approximately .5 to 1% annually.

You need to choose carefully which facility you employ, as you are relinquishing physical control of your tangible assets.  Unlike a safe deposit box, you are not able to physically inspect your holdings unless you are willing to travel to the warehouse location.