One of the biggest problems and expenses associated with the purchase of physical gold and silver, is storage. The problem with storing physical gold and silver isn’t only limited to space and accessibility, but also safety. Both our own safety, and the safety of our investment. So what are the priorities when selecting storage, and what alternatives do we have for storing our precious metals?
First things first, priorities. There is basically four things we need to take into account when selecting storage for our gold and silver and those are, in order of importance, personal safety, the safety of our investment, the cost of storage, and the accessibility to our investment.
Personal safety is a clear first priority. Just image someone storing their gold and silver in their own house, when burglars, trying to steal the gold and silver, break in in the middle of the night when the whole family is at home and sleeping. The burglars are caught red handed and in the commotion that follows, one or more members of the family gets hurt or worse. Needless to say, no amount of gold and sliver can compensate for such a hurtful experience.
Safety of the investment is a clear second priority, this is because low cost storage and accessibility to the gold and silver means nothing if the gold and silver isn’t safe. Lets say a gold investors chooses to store his gold in a precious metal dealers depository. He does this because it makes it easier for him to buy and sell gold, in other words his gold is more accessible to the market. The problem arises when suddenly the precious metal dealer goes bankrupt. The gold investor looses nearly all of his gold investment, except for a small amount covered buy his insurance. Market accessibility of our gold and silver means nothing, if we suddenly don’t have any gold and sliver to sell.
Storage cost is the third priority, because what is the point of having an investment stored somewhere safe and secure, if you can't make a profit on it. Storing our gold and silver in a fully insured remote depository is not feasible, if the cost of storage eats up the returns of our investment. Better to store the gold and silver in a bank box, or similar, where the gold and silver is just as safe, but a little less accessible, since you can only get to in during the banks opening hours.
The last priority is market accessibility. When we have found storage alternatives that provides sufficient safety for us and our family; our investment is stored in a location where the risk of loss due bankruptcy, fire, theft, flooding, earthquake, etc. is as minimal as imaginable; and the cost of storage is reasonable, we can start to sort out the options with the highest degree of accessibility.
The storage alternatives
Home storage
To store our Gold and Silver in a safe at home, provides excellent accessibility and low cost, but the personal security and the safety of your investment might not be as good as it should. There are several point that makes this alternative less attractive:
- Home security and surveillance is in most cases not strong enough to keep burglars away.
- There is a safety hazard involved in transportation of the gold and silver to and from the property.
- Since this in most cases are the residence of us and our family this provides a threat to loved ones.
Safe Deposit Box
Storage in safe deposit boxes is considered very safe. The security and safety of both our investment and loved ones are almost as high as it can get. The cost of renting a safe deposit box is in most cases higher than storing gold and sliver at home but often lower than storing it at a third remote depository, or vault. Another bonus is that the IRS seemingly permits self directed IRA owner to store their IRA gold and silver in safe deposit boxes. Some disadvantages with safe deposit boxes is:
- There is a safety hazard involved in transportation of the gold and sliver to and from the location of the safe deposit box.
- Some might claim that the investment is less safe from circumstances like government confiscation and bankruptcy.
- The market accessibility when storing gold and sliver in safe deposit boxes is quite poor compared to both third party depositories and home storage.
- The cost of a safe deposit box is mid range but in most cases higher than if you choose to store it at home.
Depository or Vault
This alternative is the one that by far provides the safest way for us and our family to buy, sell, and own gold and sliver, since we never even have to touch it. All transactions are done remote either by the means of phone, internett, faxes, etc. The market accessibility is supreme as well since there is no transaction delay like sending you gold and silver by mail, personal delivery, or waiting for the bank to open before you can withdraw you gold and sliver from the safe deposit box.
- Safety of our investment, seems to be the greatest concern for most investors of physical gold and silver. Government confiscation, bankruptcy, accounting errors, fires, etc. is are all arguments for this storage alternative being less attractive.
- Depositories and vault has some of the highest storage cost. Even though you save money on transportation cost, if you buy form an online precious metal dealer that uses the same depository, many consider the drawbacks of cost greater than the pros of accessibility and personal safety.
Today silver bars are so much more than just that, a silver bar. Mints still produce silver bars in the 100 oz and above category for industry and investment banks, but we can see an ever increasing supply of high premium collectors and private market silver bars. This of course is contrary to original idea of silver bars, which was to provide a low cost and easy to handle format for selling and shipping silver in large volumes. Silver products which was sold to prices far above spot was earlier reserved for collators artefacts, silver jewellery, and household silver items.
