Owning gold, silver, or other precious metals, is a risk. This is nothing new …
The pharaohs of Egypt went to extraordinary lengths to make sure that the treasures that they took with them into the afterlife underworld were safeguarded and as secure as possible. Over the years these efforts have often proved to be fruitless – in many cases tomb robbers have beaten the archaeologists and explorers – often by centuries.
At the time of the Spanish Conquistadors, pirates would regularly intercept galleons to steal the treasures that they were carrying from the Americas. Sometimes, the whole might of the Spanish naval armada could not prevent such piracy from happening.
In more recent times, the image of the gang of bank robbers tunnelling underground from a building next to a bank, or across the street, to rob a vault, has become the de facto image of modern theft.
In the last year for which figures are available, 2010, the FBI estimated that jewellery and precious metals to the value of $1.6 billion were stolen. This was an increase from 2005 of 51%. The new figures are due soon. Of this stolen property, the amount of gold, silver, and other precious metals recovered was less than 5%.
It is clear from this that storage at home is a risky business. Obviously, many people want to keep their precious metals within their sphere of operation – so keeping them at home or at a place of business is an option that they prefer.
For people that insist on this as their method of storage there are lots of options available including ground burial, decoy safes, home safes and concealed storage areas. The key here, is discretion. If you keep gold, silver, or other precious metals (even cash) at home – make it a point to tell no one. Every single person that you tell, or knows of your holding, is a risk. The secret to keeping your assets safe is, as far as possible, eliminating that risk.
As with any investment, the principle of diversification comes in handy here. Do not keep all of your precious metals in a single hiding place. Just as you would have different asset classes to invest in, you should have several locations within your home where you can keep your metals. This way, if one is found, the chances are that the thief will think that this is the only location and be happy with what they have stolen.
Split the metals evenly between each location – in other words, do not put all of your silver in one location, and all of your gold in another – mix the locations with both metals.
Be clever – be “safe” …
One of the cleverest ways to preempt the theft of all of your assets is to have an “obvious” safe. This safe would be securely bolted or fixed within a wall, and clearly visible to any visitors to your house. In this you would keep your normal, everyday cash, and a small quantity of precious metal – perhaps in coin form. In this way, people will believe that this is your only secure location, and if you are robbed, this will be the safe they will go for.
Your main store of precious metals, cash, and other assets would be split between several other safes, in secret locations both inside and outside the house. Refrigerators, the space behind furnaces, under floorboards, behind toilet cisterns, attics – the list is endless – just keep it to yourself!
In addition, there are many clever new ways to secrete money and metals available commercially. These include “books” which are really small safes or cash boxes, that can sit unobtrusively on a bookshelf amongst real books. There are shaving cream cans, shampoo bottles, cereal boxes, and all kinds of other disguised storage places. One of the cleverest that we have seen is using children’s stuffed toys laid out in a spare bedroom as if a child is using it. With some imagination and ingenuity any bottle, can, canister, or box, can be adapted.
For longer term hiding places, none is more traditional than burial! If you don’t have a handy desert island – somewhere in the garden is a very good place. Choose somewhere that is not used too often and make sure you are not overlooked when preparing the place. Ensure that it is a location that could be described – near a long-term landmark or place that is sure to be there, undisturbed, for a long time.
Make sure that the hole is is well away from utilities such as telephone cables, water mains pipes, or electricity supplies which may be dug up on service calls or in emergencies. Find a suitable waterproof, airtight container – or several if you are looking to store a large quantity of metals. Again, as with the safes above, do not bury everything in the same location.
Make sure that you keep a record of each place – and either tell a trusted friend of the cache or lodge a formal, sealed, note of what you have done with a lawyer – to be disclosed to those you want to know of the location, in the event of your premature death, or mental incapacity.
Not everyone is comfortable having valuables around the house. One of the most popular ways of keeping precious metals, jewellery, art and other high-value items is to rent a safe-deposit box.
These are more secure than keeping your metals at home. They are usually located in the vaults of banks or registered secure facilities.
It is because of the “visibility” of the entity providing the service that there are several drawbacks to using facilities like these.
One of these, is that these facilities can only be used during the opening hours of the host. As these are usually banks, the hours can be quite restrictive, and it is entirely possible that they could be closed over holiday periods.
Another major drawback, is that of privacy. Both the private and retail banks have large staffing levels, with high turnover. It is impossible to know who has access to your personal details – even access to your deposit box …
In addition to this, the Patriot Act and FINCen mean that records are kept of all bank customers, regardless of the type of business that they conducting with the bank.
The biggest worry of all though, is the fact that government agencies – such as the IRS, Homeland Security, and others – can seize the contents of safe-deposit boxes in the course of investigations and inquiries. It is far rarer, but still a real threat, that in certain circumstances, even private creditors can claim access to safe-deposit boxes.
For these reasons, it is not even possible to insure the contents of a safe-deposit box. Lots of people think that their metal (indeed anything in the box) is covered by FDIC insurance or the bank’s own insurance – It is not. Even you were able to find a company willing to take on the risk – it is yet another layer of private information lodged with an outside company.
Bespoke secure bullion storage facilities
This type of solution would be our chosen way of storing your precious metals.
Whether you are holding precious metals “privately,” for your own use as a sole owner, or as part of an IRA or 401(k) rollover plan via a third-party custodian, these facilities are open to you.
Within these precious metal repositories there are various ways of keeping the bullion.
One way, is that known as segregated vault storage. Here, your gold is fully audited and counted on arrival at the vault. This is done by a qualified expert and on video. The metals are signed for and rechecked and countersigned – they are then placed in a container which is sealed. This container is labelled with your account number, your name, together with details of your holding, and then secured within the vault in an allocated place.
Access to the vault is closely guarded, obviously, and the only people who will get near your precious metals (aside yourself) are your third party custodians – and then only until you reach the age where you can release the metal as part of your pension.
If you are keeping your metal in segregated storage outside of an IRA, the only person who will have access to it is you.
Because of the high levels of security that are necessary, together with the costs of insurance, rental of space at gold bullion depositories is relatively high. Some facilities charge a flat fee – others charge a percentage of the value of the holding. A valuation is performed each year in order to adjust the percentage.
The second type of storage available within a gold depository, is known as allocated vault storage – sometimes called co-mingled storage. Here, any gold and silver that you have bought is held in bulk. There is no specifically allocated metal with your name on it. You simply buy an amount at a price and this is held for you in the vault. You need never draw the metal out. When you want to cash in your investment the metal is simply sold and you collect the money that it is worth at the time. The metal itself remains within the vault.
It is possible for you to withdraw the physical metal instead, but this will be part of the pool and not kept privately on your behalf.
For these reasons, this method of storage is cheaper than the segregated vault storage option.
Until recently the type of gold bullion depositories which were considered secure enough to hold the type of bullion that was approved for IRA usage were concentrated out towards the East Coast and New York. A new facility was approved in Texas earlier this year, and an offshore facility is available in the Toronto area of Canada.
In order to qualify as an approved repository for bullion, any facility must comply with COMEX and LBMA rules and regulations as a minimum.
Certainly, for large holdings of the type associated with IRA funds, storage in a bullion depository facility makes sense.
From an insurance viewpoint alone, the depository company is taking the lion’s share of the risk. Because it is responsible for all of the bullion in its protection it can negotiate far better rates than an individual applying for the same cover. Most bullion depository is will insure for things like natural disasters and large-scale heists, which would be exemptions to most private insurance cover.
Because of the spread of risk, the fact that all the bullion is kept in one place – making security that much easier – and as it makes the administration easier – bullion depositories charge on an annual basis between 50 to 80 basis points for their storage charges; and this would include insurance. For IRA programs the charges are often even lower.
As an example, a $100,000 holding of precious metals which are not held in IRA would cost $500-$800, annually, in storage fees. When compared with the management charges for stocks and bonds, this is very reasonable.
As part of our ongoing service to clients, through our associates at Noble Gold, we can assist in finding vaultage for your gold, silver, and other precious metals, at the best rates available.
Through them, we have a choice of three depositories, all run by IDS (International Depository Services) a fully registered and approved group of facilities based in North America.
The main depository is in Delaware – this one has been in existence for a long time and will be familiar to anybody who has invested in precious metals in any form – it was the only one available for public use for many years. Many other depositories in the New York area were available only for bank or federal use.
The Delaware depository has recently been augmented with the opening of a brand-new facility in Dallas, Texas. This gold repository is the only one of its kind available in the south, and is currently exclusive to IRA clients of Noble Gold.
For those wishing to keep their money “offshore” the third IDS facility available through us is based in Toronto in Canada.
If you want to keep your precious metals discreetly and safely – read this to learn how to choose the best gold company that has multiple storage options..