There are three main methods of precious metal storage. Each has its benefits and liabilities. We are going to cover all of them as well as the importance of storage diversification and the value of a little creative thinking.
Banks Are Pretty Safe … Right?
A safe-deposit box inside your bank seems like it would be a secure place to store your bullion, rounds or coins. In decades past, it was a preferred method of securing one’s valuables. People would wait on a list for months or years for a box to become available. Today, approximately 45% of the nation’s boxes are unutilized. Some banks don’t even offer the service anymore.
Much of the younger generation does their banking online and thus don’t make frequent visits to their bank branch. This may contribute to the lack of appeal for safe-deposit boxes and the resultant drop in their utilization. The content of safe-deposit boxes is not insured against loss. The Federal Deposit Insurance Corporation (FDIC) protects the money that customers deposit into savings, checking and various other kinds of accounts at banks, credit unions and the like for up to $250,000 per depositor per account. However, FDIC does not cover the contents of safe-deposit boxes. This has always been the case. You can however purchase your own safe-deposit box insurance for about $25 annually for every $5,000 worth of coverage.
It’s long been true that if they obtain a judgment against you, the Internal Revenue Service can freeze your account, preventing your access to your safe deposit box.
Your access to your metals is limited by the bank’s hours of operation, so in an emergency, you may not be able to get your hands on your assets at the very moment you need to.
There is also a box rental, which may run about $300 per year.
A rumor had circulated online in 2013 that the Department of Homeland Security can access safe-deposit boxes without a warrant, but no credible evidence to support this was found.
Upside: Protection from fire and other harmful elements.
Downside: Limited access and yearly rental fees plus additional insurance costs.
Precious Metals Depository
A depository is a viable option for people who have a significant investment in metals—not only financially, but in the sense that it requires more space to store than their home can provide.
Depositories offer two choices of storage: communal and segregated. As the names imply, communal storage means that your metal will be stored in an area along with others’ metals. With segregated storage, your metal is stored in its own separate area.
Like safe-deposit boxes, depositories have annual fees. Communal storage generally costs about $1 for every $1,000 of value. Segregated storage is about twice that amount with minimum fees.
Similar to safe-deposit boxes, depositories don’t provide easy access. In many instances, the depository may be a considerable distance from your home and is liable to have the same hours and holiday schedule as your bank.
Lastly, as with safe-deposit boxes, depositories offer significant protection from fire and other adverse elements and have a high degree of internal and external security. You also get the benefit of routine inventory, reporting and documentation to ensure that your deposited metal is secure.
Upside: Maximum security, especially for people with a significant metal investment.
Downside: Fees, limited access.
Safe at Home
The biggest safety measure you can take when storing your metal in your home is to not discuss your investment with any but your most trusted friends and/or family. Prudence and concealment reduce the possibility of becoming a target.
You would be wise to carry over this idea of concealing to the way you store the metal. A shoe box in your closet or a parcel in the back of a drawer isn’t much of a strategy, if you’re concerned with complete concealment and security. A safe with a Class B or better security rating, bolted to the foundation, beneath the floorboards, under the sofa and a layer of carpet and padding is a pretty high level of concealment and security.
Some people have gone so far as to designate space inside the walls of their house (which may require bashing out a section of wall and then replacing it). The attic also provides some possibilities.
Underground, such as in a hole in the backyard, is also considered a viable option. The liability comes in having to answer to neighbors who inquire why you’re digging a hole. So, you may have to do it quietly, perhaps at night. Whenever you do it, make sure the hole is at least three feet deep. Ensure that the container is rustproof and water-resistant. Make sure to bury it in relation to a fixed landmark—something that’s not likely to disappear overnight or in a year or two.
Storing your investment at home also gives you far more latitude in how you store your investment. You can get quite creative and even stealthy. A “diversion safe” is something that looks like an everyday item but which is actually a vessel for valuables. For instance, a diversion safe that looks like a can of Coke, sitting in the fridge, is not going to arouse any suspicion (unless someone tries to drink it). You can convert some common objects into diversion safes or purchase such safe commercially. Google “diversion safes” to get some ideas.
Upside: Ready access to your valuables, no annual fees (though there might be the one-time investment in equipment and installation), and latitude.
Downside: Generally low security, meddling neighbors.
As with anything of value, it’s ideal to diversify where and how you save it. In the world of computer memory storage, there’s a backup method known as “3-2-1” which calls for keeping at least three copies of your data at any time; storing the copies on two different kinds of media; and keeping one copy offsite. It’s unlikely that all three copies will experience damage or loss at the same time. This method increases the odds of safety and data retention.
With your precious metals, you may want to do something similar to the 3-2-1 approach—diversify the number and type of locations where you store your investment, e.g., a safe at home, a safe-deposit box and underground or among several diversion safes as well as a concealed safe.
You’ve got a fair range of storage and security options among which to spread your investment but no matter which ones you choose, the best strategy is to keep your investment to yourself and the few people you trust most.