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Once you have decided to invest in gold you will have to think of how you are going to store it. You may want to store your precious metals at home, or you may be thinking of using a third-party storage facility. Whether your are considering buying gold bars or gold coins they will always need a safe place for storage.
Gold investors have three factors of consideration that will determine their storage needs:
- How much money you want to spend
- The level of security you require
- The ease of access you need
Here are the things you need to know before you decide where to keep your gold.
Safe At Home
Home storage has the convenience of keeping your valuable items close at hand. You will be able to access your gold at any time. Whereas banks and storage facilities have opening hours, and in the scenario of a catastrophic event will probably not be accessible either.
If you are investing in gold as a last resort asset, then keeping it in an offsite storage facility might not be the best option. However, simply keeping it at home, regardless of how well it seems hidden, may be a bit too risky.
Secure home storage is best achieved with the use of a safe. Safes are not considered 100% risk-free, but the better the safe the less likely the chances of a burglar successfully breaching it. Several safe companies build quality safes for gold storage. A sample list of US companies that offer gold safes include:
Safest Way to Store Gold at Home
When choosing where your safe will go, remember it will need a solid floor. The floor must be level to avoid extra stress on the hinges and lock. Then the safe also needs to be bolted to the ground. Securing the safe to the ground complicates a burglar’s life in a big way.
Check the fire rating of the safe you may consider buying. Fire could damage your holdings if the safe hasn’t been tested. Most safe companies give their own fire rating, but they should be transparent about the process and the results.
After the initial cost of the safe, your storage costs are zero. Depending on the size of your gold holdings the safe may take up more space than you feel convenient. However, when choosing how big your safe should be, think of all the items you will store in it, then get one size bigger.
You may only start with a small amount of gold, but as the years pass by you may gradually build up your holdings. Buying a small enough safe to just fit your current gold holdings may seem a way to save a few dollars. However, in the long run, it may prove more expensive when you need to upgrade to a bigger safe.
- Gold is easily accessible every day of the year
- Zero ongoing storage costs after the initial cost of the safe
- Independent of any institution or facility
- Items stored in a safe are not always covered by insurance
- Gold stored at home is ineligible for IRA inclusion
- Fire and floods could cause damage or loss of your holdings
- Keeping large amounts of gold in your home may increase attention from burglars
Some gold investors may not feel completely comfortable keeping large amounts of precious metals at home. The perception is that they may potentially increase their chances of becoming targets for theft or burglary.
Turning to a bank relieves the investor of the responsibility of watching over their gold investment 24/7. Banks generally offer a very high level of security, internal and external. Bank-level security can help investors remain confident about the security of their assets.
Safety deposit boxes come in a variety of sizes and are reserved for private customers. They also come at a cost, which can range from $200 to $500 yearly. In exchange for this fee, you get a level of security which is almost a guarantee that your gold will remain safe at all times.
If you don’t mind having your gold stored with that of other people you can also store your precious metal in a vault. This type of facility has an even higher level of security than a deposit box. However, they are usually only available in large cities and have high minimums to open a storage account.
Possibly the biggest drawback to bank storage is the fact you can only access your gold when the bank is open. You will be subject to bank opening hours, which is when you are most likely working. And you won’t have access to your assets on federal holidays either.
You may not be able to access your gold in an extreme financial crisis which is exactly when you may want to do that.
- Deferred responsibility for the security of your gold
- High level of security
- Only you can access the deposit box
- Limited access to business hours only
- Ongoing expenses
- Bank does not insure the contents of the box
Bullion Depositories are private companies that operate storage facilities for gold and other precious metals. Two of the largest of these companies in the US are Delaware Depository and Brinks Global Services.
Brinks has various storage facilities in locations across the nation such as Boston, Chicago, Los Angeles, and New York. Delaware Depository is the country's largest storage operator for IRAs and is adding another storage facility in Nevada in February 2022.
There are two options for your gold storage account, segregated and non-segregated. Neither of these types of accounts appears on the balance sheet. Off balance sheet is important in the case of the depository failing. Creditors won't be able to get your gold.
In a segregated storage account, your gold is individually packed and kept separate from the gold of other investors. So, you will get the same bullion bar you sent to storage when you go to claim your gold back. It is also the most expensive option.
With a non-segregated account, your bullion will be stored with that of other investors. This option is cheaper as it allows for the depository to benefit from economies of scale. Bulking the same bullion together makes it cheaper for the company to store large quantities in vaults.
If you are going to invest in gold through an IRA, the custodian of your account will have to organize storage with a depository. You won’t be able to hold gold through an IRA at your home.
- Highest level of security – it’s all they do
- All assets independently insured and audited
- Can store any amount of bullion
- Storage fees can be higher than other options
- Locations may be distant and require travel for inspection
- Fees and delays withdrawing your assets
This option is available when you are not investing through investment or retirement accounts. For example, investing in gold through an IRA will mean you are obligated to hold your gold in a depository with a U.S. location.
Why would you want to store your gold outside US territory? The answer is simple, country risk. The risk is that the country you live in may confiscate all your gold bullion. In fact, the U.S., the U.K., and Australia are among the few nations of the developed world that have ever done that.
In 1933 Franklin D. Roosevelt signed executive order 6102. At the stroke of a pen, all gold bullion holdings were to be turned over to the government. Although some items such as jewelry or dentist inventories were exempt from confiscation.
On the other hand, gold confiscation for some countries is absolutely out of the question. Several countries have a strong track record and facilitate offshore gold storage. You can check out a list of the top 5 of these countries here.
Things to Look Out For
- Stability – This is possibly the most important factor. Choosing a country that does not have strong political and economic stability is not a good selection for storing your physical gold holdings. A country that is struggling fiscally or economically has a higher likelihood of confiscation.
- Security – The second most important concern is safety and security in terms of crime. I'm talking about a country with a high crime rate or the risk of crime sprees. Where gold storage locations could be potentially looted, does not make for a safe storage destination.
- Infrastructure – Refers to the storage facility and transportation facilities. Things like international airports, and secure roads for ease of access. This is the infrastructure that companies like Brinks will use to safely transport your gold.
- Legal Issues – This feature is less tangible but equally important. A strong local government that is also highly respected in international politics is a must. A country of this type is unlikely to buckle under the pressure afforded by a foreign government to seize your assets.
- Privacy – You don’t want your home government to be aware of the gold you have hoarded off to a foreign country. Privacy laws should be in place that guarantees your rights of ownership and privacy. These laws should prescribe jail time if violated by the country's residents or citizens.
These are the 4 safest options for gold storage. We started with the cheapest option to maintain and lastly mentioned the safest. Ultimately it depends greatly on your needs, which may be dictated by various factors mentioned above.
Remember if you are going to invest in gold through an IRA you will have to coordinate with your custodian for storage. You can learn more about setting up a precious metals IRA in our downloadable guide.