Disclosure: Our content does not constitute financial advice. Speak to your financial advisor. We may earn money from companies reviewed. Learn more
Last Updated on: 10th February 2023, 09:32 pm
When you set out to buy gold bullion, there are a number of considerations you need to take into account. It is more than just figuring out who to purchase the gold from, though that is a logical starting point. There are considerations such as storage and insurance, offshore storage versus domestic storage, and more to think about. In this article we will consider each of these important issues in turn.
What to Look Our For When Buying Gold Bullion
There are so many important things you need to contemplate when purchasing gold initially. It is much harder the first time as you do not know who to buy from and what to beware of in the process. It starts with buying from a reputable dealer. This may sound like it goes without saying, but many innocent would-be customers have been taken in by some of the bad apples in the bullion and coin dealer universe who saw the newbies coming from a proverbial mile away.
In fact the majority of bullion dealers on the Internet are reputable, but there are a couple of them, a very few, who many coin enthusiasts would not put in the honest category. This does not mean that they will steal your money and run to the Cayman Islands with it.
It simply means that they may selfishly steer you into rare or collectible coin products for which they can charge far higher commissions than they can on bullion products. “Let the buyer beware” is still good advice in this regard, thousands of years after the imperial Romans coined the phrase in Latin.
Start with these criteria to judge whether a dealer is shady or not:
- They should always have and post a physical address, phone number, and email address contact information and not simply a generic hot mail account address
- They should offer secure credit card payments with a lock in your browser showing that the payments made will be secured and encrypted
- Specific information on delivery procedures needs to be provided
- An unprofessional appearing or poorly put together website for a homepage and web store is a dire warning sign every time
We do not advise purchasing from these types of dealers, regardless of how appealing they may make their bullion gold products look online or in a catalog even.
Another thing you must be aware of is that your final price for the bullion coins or bars is often not the true final price. Very few dealers, legitimate or otherwise, will include the often-times considerable shipping and insurance costs in your subtotal. This can amount to another four to five percent on top of what you believed was your total order price too, so be aware and be careful when you are trying to stay within a tight budget.
Understanding Storage Issues
There are many logistics to storage that you may not ever have even dreamed of, but you must consider them too when you purchase gold. Unless you are going to store your gold in your basement safe in your home, you will need a storage location for it, and one that is both secure and accessible. There are many different factors you will want to consider with storage of your gold and other precious metals bullion. The most important ones are listed out as follows:
- Security & inventory management – this is more than just a secure vault, it also refers to the convenience of access if you want to take delivery of or pick up your treasure hoard. When their inventory management is cutting edged, this is easier to do
- Transportation infrastructure of storage locale – If your vaulting facility is located out in the middle of the Arizona desert, you had better make sure that they have a major airport conveniently located next to the facility. It is especially an issue if you opt for offshore gold storage in a country where the infrastructure may not be what you are used to in the leading first world countries of the U.S., Europe, Australia, New Zealand, Japan, Singapore, or South Korea
- Safe jurisdiction for storage – Not all countries are created equal when it comes to privately and securely storing your gold away from a grasping government and its schemes to seize valuable in times of financial and economic crises. The U.S. after all was the very first major country to confiscate its own citizens' gold
- Annual storage fees – Different precious metals storage vaults charge sometimes wildly differing premiums per year for storing your physically segregated gold bullion
- Taxes on storage fees – There can be taxes on the storage charges each year, depending on the policies of the jurisdiction in which you keep your bullion
- Additional delivery fees – If you opt to have your gold bullion delivered to your home, some vaults will charge a separate and often hefty fee for this convenience, or even if you simply want to swing by and pick it up in your car. It pays to ask upfront rather than be sorry later
- Import/export tariffs – Many developed countries (even including Switzerland and Germany as examples) charge fees to take your gold out of or get it into their country, and you should be aware of this before you choose them as your storage destination and then incur a devastating eight to twenty percent levy on your holdings
Offshore Gold Bullion Storage Safe Haven Jurisdictions
You do not have to keep your gold bullion in your home town bank safe deposit box. In fact, if you live in a country with a sordid history of gold confiscation like the United States, Australia, or Great Britain, it is in your own best interest not to hold it there where there is a historical precedent for political risk concerning gold ownership.
These countries below are excellent safe haven destinations for expatriating your gold (and also solid choices for expatriating yourself and your family should the need suddenly arise):
- Switzerland – still considered to be a gold standard for safe haven storage, though its reputation has taken a hit under the Obama administration which forced their hand to give up their 300 year old long banking secrecy tradition and the clients who hid behind it
- Liechtenstein – a little more under the radar than Switzerland though their principality neighbor, many people have transferred over their hidden assets to the smaller and lesser known next door nation state in the Alps
- Austria – this country boasts the world most prestigious secure precious metals vault Das Vault in Vienna, though it is a pricey option accordingly. You can store any sort of valuables or even stacks of bank notes here if you wish
- Hong Kong – the gold standard in Asian offshore gold storage thanks to their incomparable infrastructure, financial center, and huge amount of gold dealing and trading, this jurisdiction has taken a hit to its once sterling reputation of financial independence since China took over from the British and ended their entirely hands off Hong Kong policy
- Singapore – the rising star for offshore gold storage in Asia; the city-state principality offers three or four good choices for secure and jurisdiction-safe offshore gold storage, making it Asia's second leading offshore gold locale
- New Zealand – who does not like New Zealand? Their biggest appeal is their independent-thinking foreign policy, financial and economic independence, and sheer distance away from all of the many geopolitical problems of the world
- Cayman Islands – the best choice for offshore gold storage in the Western hemisphere, this British colony has no tariffs or taxes on precious metals purchases or storage
- Dubai, UAE – has rapidly grown into a major offshore gold storage center as the now-famous “city of gold.” A good deal more information on Dubai follows as it has become possibly the most recommended place to store gold for its many helpful attributes in this department
Dubai As A Leading Offshore Gold Storage Location
You could store your gold quite happily, successfully, and mostly anonymously at any of the eight excellent locales mentioned above, but Dubai has become the standout choice over the last half decade for a variety of reasons:
- A minimal risk of gold confiscation – The sordid history of the U.S., U.K., Australia, and other leading first- world countries with gold confiscation does not inspire confidence, and Dubai has never done this. Rather they are historically super friendly to gold and now handle over 20 percent of all the gold trading in the world
- Significant Tax Savings – The DMCC of Dubai is a tax-free trading zone that works with both foreigners and locals alike. This means there are no taxes on investments in precious metals period. We are talking about no duties or taxes for buying, owning, storing, selling, or even repatriating them abroad, with an added bonus of no inheritance or capital gains taxes on any investors either
- Leading anonymity – this is an increasingly rare commodity in today's post-Obama world. The precious metals you keep in their non-bank, allocated vault will not have to be reported to any major governments (even the U.S.) according to both the FBAR and the FATCA rules
- Protection from American or European Litigation – Gold stored offshore in Dubai is nearly impossible for a judge or even the U.S. Treasury to go after. Frivolous lawsuits are no longer a nightmare scenario for your physical assets kept here
- World leading secure storage facility – thanks to their “top five most secured and technologically advanced vaults in the world” status of their DMCC zone vault, controlled and administered by Brink's Global Security, you can rest easy that your gold will be as looked after as if it were personally stored by Ft. Knox
This helps to explain why Dubai in the United Arab Emirates is ultimately your best choice for offshore gold storage, even when measured up against such long time heavy weight darlings as Austria and Switzerland.