So, what do you do after you buy 100 gold or 1,000 silver coins? More to the point, where do you store them?
This latter question is perhaps the most important you can ask — whether you’re a new precious metal investor or a seasoned veteran.
Why? Because your investment’s long-term security — and growth — depends on storing it in a safe place and being able to access it when you want to “cash” it in.
Yes, it seems so elementary, doesn’t it, dear Watson?
But what good is your nest egg if it’s not there when it hatches, i.e., when you want or need to cash some of it in?
By Dave Allen for Discount Gold & Silver
So, what do you do after you buy 100 gold or 1,000 silver coins? More to the point, where do you store them?
This latter question is perhaps the most important you can ask — whether you’re a new precious metal investor or a seasoned veteran.
Why? Because your investment’s long-term security — and growth — depends on storing it in a safe place and being able to access it when you want to “cash” it in.
Yes, it seems so elementary, doesn’t it, dear Watson?
But what good is your nest egg if it’s not there when it hatches, i.e., when you want or need to cash some of it in?
DGSCoins CEO Melody Cedarstrom got into a spirited discussion about this very topic with a client this week.
The client — new to our firm — bought several thousand dollars’ worth of gold and silver coins and wanted it all sent to her home, where she intended to store it all.
Melody asked the client why she wanted to store the coins at home, to which she replied, “Because I’ll always know where they are.”
GoodIdea or Not?
Well, unless you happen to live in a place called Fort Knox, it’s almost never advisable to store your gold and silver at home — even if you keep it in a fireproof safe that’s guarded by armed Ninjas.
But don’t take it from me. Here’s Scot Millen, Director of Investments at Brightworks Wealth Management:
“Holding physical gold at home is risky even though it feels safe. Gold at home can be misplaced or stolen. Even safe deposit boxes have been robbed or destroyed in disasters.
There’s a good reason why gold isn’t allowed to be stored at home under the government’s strict rules of a self-directed IRA.
According to IRS regulations, gold can only be purchased for an IRA if it’s in the physical possession of a qualified bank or an IRS-approved nonbank trustee.
Vince Villamena, managing partner at Global Expat Advisors, warns, “If you were to store IRA gold in your home, it would be considered an IRA distribution and taxable if it was a traditional IRA.”
Let’s take it one step further.
Even if you have an insurance company that’s agreed to insure the full replacement value of your gold and silver coins, storing them at home is asking for trouble.
Among other time-consuming, bureaucratic duties, you’ll have to prove how many coins you had at the time of their loss (hope you take accurate — and date-stamped — photos).
(By the way, if you do have such an insurance company, please let me know their name; they’d be a first!)
You shouldn’t store your coins with the dealer you bought it from either. Most retailers just don’t have the storage and security capacity to keep your gold and silver safe and secure.
Go for a Third-Party Depository
Instead, contact an independent depository that only stores gold and silver and other physical assets for a living (ideally, they shouldn’t sell gold and silver, just store it).
The whole idea is that once your gold and silver goes into a depository, it doesn’t come out until you want it to.
Paying for vault storage is the most common method of storing your coins, because it offers the most security.
It’s also virtually hassle-free — once you fill out the initial paperwork and ship your coins to the storage company, your coins will be out of sight, out of mind.
In other words, peace of mind. You’ll be able to focus on other important priorities — like family or a work project — without having to worry about your gold, safe and security system.
Types of Storage
Depositories usually offer a few different kinds of storage. The most secure way to have your metals stored is in a Segregated Account.
In a segregated account, your gold is stored separately so that when you make a withdrawal, you’ll receive the exact coins or bars that you deposited. Segregated storage is usually more expensive.
With an Unsegregated or Unallocated Account, the depository holds bars or coins of the same age and type together.
So, if you store, say, 100 one-oz. 2021 American Gold Eagles, you'll get 100 2008 American Gold Eagles back — but it won't necessarily be the same ones you put in.
Insurance and Legal Protection
Physical security and separation aren’t the only considerations when choosing a depository. Their ability to protect your assets from financial risk is also important.
Most depositories are insured, but some carry as much as $1 billion in insurance. Either way, you should ask what they’re covered for.
In addition, the legal structure of how the depository holds your assets is critical.
When a depository doesn't take ownership of your coins legally, your assets are protected from any claims that could be levied against them by someone who launches a legal action against the depository.
Fees
As a rule, you will be charged an annual storage fee that is tied to the value or quantity of gold that you store.
You can also expect to pay more at most depositories for segregated storage or for other services.
Remember, too, that you will also pay to have your gold shipped to and from the depository by mail, overnight carrier or armored vehicle.
Approved Depositories
These days, there are 7 IRS-approved depositories that are permitted to store gold and silver bullion as well as platinum, palladium and rhodium. In alphabetical order, they are:
Brinks
CNT Depository
Delaware Depository Service Company
HSBC Bank USA
JPMorgan Chase Bank, N.A.
Regal Assets
ScotiaMocatta Depository
The only real potential issue with the depository storage method is accessibility.
That is, compared to storing at home, you won’t have immediate access to your gold and silver; you’ll have to wait a day or more after you contact the storage facility to receive it.
But that’s ok, because you don’t want to have immediate access to your coins; you want it stored for the long haul, right?
In short, do yourself and your family a favor by not storing your gold and silver coins at home or with the company you bought them from.
Instead, like you’ve invested for the long run with your precious metal purchase, store your assets for the long run, too.
Keep your gold and silver safe and secure with a third-party depository company that has an excellent and proven reputation with reasonable fees.
That will maximize the likelihood you’ll get all of your gold and silver back when you need or want to cash some of it in.