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Last Updated on: 16th September 2021, 06:58 pm
Think about the images your brain conjures up when it comes to finding popular storage locations for Gold IRA accounts. Most people come up with a few ideas. Storing it in your basement. Storing it on some exclusive island with fancy palm trees and beautiful white sand. Perhaps somewhere in the Swiss Alps in Switzerland, because you know Switzerland is known for having relaxed financial and banking policies. Maybe somewhere where online gambling reigns supreme like Gibraltar or the Cayman Islands. Maybe you could even become a citizen of Dubai, where there’s no income tax and your capital gains are all yours.
As much as the above ideas may sound far-fetched, some of them can actually be made real, and even though it definitely takes work to store gold IRA accounts outside of North America, it’s far more common than you probably think. There are also many legitimate reasons for wanting to do just that. To summarize it in a phrase, everything comes down to mitigating risk.
Ever hear a savvy investor talk about the importance of diversification? One of the reasons diversifying one’s assets is recommended is because storing assets in multiple locations means taking away decision-making power from one government or one central bank and making it more difficult for anybody or any institution to tell you that your gold or your assets aren’t yours anymore.
There are also options for storing gold locally that might work, but it depends on the level of risk tolerance of the investor. Many people don’t want to defend their own gold or be responsible for it.
Nevertheless let’s go through all the popular storage locations for Gold IRA accounts.
Table of Contents
Why Home Is Not the Best Storage Location for Gold IRAs
First things first. An Investment Retirement Account has to be registered with a government. Retirement accounts in almost any country are tax-sheltered, meaning investors can save inside an IRA, earn compound interest on their investment every year and potentially retire multimillionaires just based on an average annual return rate of 7 to 10% assuming that they make contributions every year.
Most people don’t do that but the magic of compound interest is real. Here’s the thing. Investors earning that interest have to be registered with the government. Anybody not willing to do that is severely limited in terms of their options for saving for retirement. Even deciding to put money into businesses or real estate or some other investment vehicle exposes people to potential tax and capital gains consequences on a yearly basis, which can really eat at retirement savings in the long run.
Storing gold at home is technically the safest option for taking care of gold, but anybody registering an account with the government might as well share the risk with a third-party. Libertarians worried about government control and the possibility of confiscation (which is very real during times of international crisis) need to find some other way to handle their gold.
Trusting a government just won’t work for them after all.
The Four Greatest Gold Investing Risks
As with any kind of investing, risk and reward go hand-in-hand. No matter what anyone tells you about how safe a particular investment is, there’s always going to be risk involved.
Here are the four kinds of risk that come along with investing in gold (or silver for that matter):
- Gold confiscation
- New government laws
- Administrative actions
- Currency inflation
The late 1920s and 1930s were a horrible time for the economics of the entire globe. Those times represent the lead up to the Great Depression and World War II, where Adolf Hitler’s Nazi regime through the entire world for a loop and devastated millions of people everywhere.
It was during the lead up to one of the world’s most devastating conflicts that governments began to take control of gold. It happened in America under Ronald Reagan. It also happened in Italy in 1935, in Great Britain in 1956 (yes, even after the war), and Australia in 1959 and even during WWII when the Germans stole money from Czechoslovakia.
There are three reasons a government can take all the way despite the fact that the average investor still believes they can hide it under their mattress. Firstly, governments make the rules. Secondly, they can change the rules at any time. Thirdly, they enforce the rules and can impose international sanctions as well.
However, storing gold internationally is the best way to make confiscation more difficult.
More on Currency Inflation
Can you imagine living in a country where one dollar today is worth 10 cents tomorrow? Believe it or not that’s actually happening all around the world. Especially in Greece and Venezuela. Inflation can kill entire societies and stun economic development faster than almost anything else. The funny thing is that it comes across us in a very subtle manner, particularly in the Western world. But in other parts of the world great governments are less stable, inflation is a massive problem that has people literally fleeing their home countries.
Drawbacks to Storing Gold Abroad
There is no perfect system when it comes to protecting oneself in the investing world. It’s all about knowing who you are, what your risk tolerances and what your future goals are. One of your future goals might be protecting your gold against all possible obstacles or unforeseeable circumstances. While storing gold internationally is the best option, it’s not without risk.
Here are a few of the clearly defined risks that you’re taking when you invest in gold outside of North America, or outside of wherever you’re a citizen for that matter:
It Likely Won’t Be Easy to Get Your Gold
Most people investing heavily in gold do so partly because they want to be protected in the event they have to go into survival mode. If all the gold you own is overseas, a kind of cancels out the idea of having access to it in an emergency situation.
Collecting Profits Takes Time
Even if the quickest way you can think of to get your hands on liquidity is to sell your foreign-held gold and turn it into cash, it’s still going to take time to get it out and back into your bank account. Having it for emergencies is nice but again, foreign gold isn’t the most liquid.
Watch Out for Foreign Policies and Laws
Governments can be really greedy during times of crisis. As a North American investor, it’s hard to wrap one’s head around what might happen on this side of the ocean. Things can get even more complicated when considering what can happen during a global crisis on the other side of the planet. Political unrest always has to be considered when investing. Investors never look at that favorably.
The Best Places to Store a Gold IRA
Storing gold at home comes with a significant amount of risk as we’ve touched on. There are three other options that might be better:
- Go with a traditional custodian who deals in traditional investments.
- Store your Gold IRA offshore.
- Invest in digital gold (Bitcoin) instead of physical gold.
Traditional Gold IRA Storage
Storing a gold IRA with a traditional investment or IRA company provides the safety and security of knowing your gold is stored right here at home. It doesn’t absolve you from being connected to the government which is the downside, but for the average investor that isn’t worried about doomsday, this is the best option.
Storing Your Gold IRA Offshore
When investors think about offshore investing, they usually come up with images of palm trees, a beach, and some secret hideaway for storing gold for wealthy North Americans. The truth is offshore just means anywhere that’s not home.
Austria is not an island, but the country’s national mint has been striking coins and gold for more than 800 years. The government doesn’t get involved with ownership. The downside of choosing Austria’s that it’s costly. Investing in gold confidentially and investing confidentially in general is getting tougher all around the world. People pay for the privilege of doing that.
Another option would be to invest in a Caribbean island like the Cayman Islands. It’s known as the fifth largest financial center on the planet. It’s a popular spot because it’s relatively close to North America and the weather is warm all year long.
Those interested in putting investing their gold on the continent of Asia can take a look at Singapore. Normally Hong Kong would be a great option to but due to the political unrest there it may not be a good time to invest in a gold IRA that stored in China at the moment. Singapore on the other hand provides a booming economy in a developed country and tons of respect for confidentiality.
Investing in a Bitcoin IRA
So Bitcoin isn’t actual gold, but in the digital world it’s called digital gold. Governments can regulate access to cryptocurrency exchanges, but nobody owns Bitcoin. Not a government and not a corporation. Several companies do offer the opportunity to invest in a Bitcoin IRA. There are many custodians to choose from.
Bitcoin is a high risk, high reward investment and ultimately investing in an IRA means it’s still registered with the government. However, it’s also possible to buy Bitcoin, store it on a hardware wallet that looks like a USB key and never tell anyone that you have it.
Now that you know the best ways to store gold, the best reasons to consider alternative options, and all the options you have for an IRA account, do what works for you. Remember to spread your risk financially and geographically.