Just as important as deciding the type and source of bullion that suits your situation best, is the decision regarding “Where Can I Store Gold Bullion?”. Gold bars are one of humankind’s most definitive forms of currency, they are private, liquid, portable, and will last forever. If kept secure, they will protect your investment portfolio from the shock of market crises, to which ‘paper gold’ or electronic gold are vulnerable.
There are three main options for storing your physical gold, either in bar or coin form; in a safe deposit box, in allocated storage, or in a home safe. Which of these methods you decide to select and whether you choose to insure your bullion or not will depend largely on the value of your collection, its physical size, and the percentage of your net worth or investment portfolio that it represents.
Safe Deposit Box
A safe deposit box, often incorrectly referred to as a safety deposit box, is a small safe that is kept within a larger safe or vault, usually at a bank. Its contents are known only to the person who rents the box, and that person plus a bank official are the only people who keep keys to the box – both keys need to be used to open the box. The bank does not insure the contents of the safe deposit boxes within its vault – that is up to the individual to obtain from a private insurer – but the fact that they are kept in a small safe within a larger safe increases the security of the contents.
Should the bank fail the contents of the safe deposit boxes are not viewed as the bank’s property and are legally protected from seizure.
Drawbacks to storing gold bullion in a safe deposit box are that it is not available at short notice or outside of banking hours, should you need to access it in an emergency, there are monthly storage fees, and also that fewer banks are offering a safe deposit box service.
Allocated gold is stored in a professional bullion vault under a custody or safekeeping agreement. This is considered the safest method of storing gold bullion, but as with a bank safe deposit box, the gold is not immediately accessible. Although there is a storage fee for allocated gold, it is a very small amount, generally between 0.1% and 0.2% per annum including insurance.
Unlike unallocated gold which is owned by the service provider, allocated gold is and remains the property of the investor. The investor can require the gold to be physically delivered, or can sell the gold through the agency of the storage facility management company.
Home safes are available in the form of floor safes, wall safes, concealed safes and disguised safes. Whatever type of safe is used, it is essential that its location is kept secret from everyone – family members, friends, employees – except one trusted person who has the information necessary to access the contents of your safe in the event that anything happens to you.
The gold will be immediately accessible to you, but the responsibility will be on you to ensure that it remains secure.
If you wish to insure the gold bullion that you keep in your home safe, your insurance company will probably require that it is formally assessed before they will cover it, and that it will increase your household insurance premium.