If You Invest in Precious Metals, Where Do You Keep Them?
Updated: Oct 1
Here are some options; your choice depends on your goals.
In the 1930s and ’40s, a very rich, somewhat eccentric man named Lavere Redfield bought bags of 1,000 silver dollars each and dumped them into a coal chute to the basement of his fieldstone home in Reno, Nev.
He stored his money there because he didn’t trust banks or the government. (Yes, he later served time in jail for income tax evasion.)
He kept a low profile, wearing jeans and flannel shirts and driving an old pickup truck. But he also was a high roller at the town’s casinos, which then were paying out winnings in silver dollars. A 1939 burglary at his home was the largest in U.S. history at the time.
Investors do have other storage options. All of them have positives and negatives in security and accessibility. Which you choose probably will be influenced mainly by the reasons you are investing in precious metals, on a sliding scale between taking advantage of rising prices, hedging against inflation, and securing wealth against catastrophic collapses of currencies and governments.
The main options are:
Somewhere at home.
A bank safe deposit box. (Check the bank's rules concerning what it permits for storage.)
A company that specializes in storing precious metals.
Home safes or hiding places
Investors in precious metals still have the option of storing gold, silver and other metals in their homes, burying them in their back yards or placing them in home safes or hiding places. But insuring these bars or coins might be costly or impossible and, like Redfield’s silver dollars, if they are stolen, they are just … gone.
Burying or otherwise hiding precious metals can be a problem because of storage conditions and trouble finding them again when you or an heir want them. But assuming the treasure isn’t lost, it is immediately available.
Safe deposit boxes
Bank safe deposit boxes are inexpensive to rent, ranging in a recent report from $50 a year for the basic 3-inch-high, five-inch-wide and 24-inch-deep example, to $100 a year for one that is 5 by 5 by 24 inches, to $200 for one 10 by 10 by 24 inches.
Safe deposit boxes are built into a walk-in-closet-size vault inside a bank and so are physically very secure. The person who rents the box has one of the two keys necessary to open it, the bank has the other.
Their contents are not, however, insured and any losses will not be reimbursed by the bank or the Federal Deposit Insurance Corp. Separate personal property insurance coverage, however, can be purchased in the appropriate amounts.
The boxes are not big money-makers for banks, so finding one to rent might be difficult in your area. If a bank or branch closes, the contents of its safe deposit boxes usually are available the next business day.
Items placed in safe deposit boxes are available only during bank office hours, and an appointment might be necessary. So the boxes rate low for accessibility.
Additionally, you should check the rules at your bank concerning what items, and their value, are permitted to be kept in its safe deposit boxes.
Companies that store precious metals
A variety of companies exist that receive, store and deliver gold, silver and platinum, among other precious metals. Many of these exist outside the U.S., providing diversification, certain tax benefits, and protection from possible government interference or even confiscation.
Some of these companies, whether in the U.S., Dubai, the Cayman Islands, Switzerland or Singapore, are affiliated with precious metal dealers, making purchase and storage seamless.
Fees range from 0.333 percent to 1.25 percent, largely depending on the value of the assets held, according to a recent report.
While many of these companies store your physical assets separately from everyone else’s and do regular audits, some only promise to deliver the same amount of the metal to you on withdrawal. Depending on where the depository or vault is located, it might take time and expense to ship these very heavy, valuable items to you.
These companies can, on the other hand, sell your physical assets for you, turning them into dollars at the current price, perhaps 24 hours a day. But this would be like looking at numbers on a computer screen, numbers some believe could just go “poof” and disappear one day. For those who want to invest in precious metals as a safer alternative to fiat currency, this would be a drawback.
Further, keeping your metals at a depository seems to fly in the face of one of the main reasons to own precious metals: Having immediate access to your property, without having to rely on the stability of a company or government, when you decide it's time to take possession.
Thoughts about what to buy
All other things (like price appreciation) being equal, gold and platinum take up less space for the same value than silver. Gold is a metal historically used as a medium of exchange. It can be bought in bar form which, however, might be more difficult to use quickly — it might even have to go to a refinery to determine its purity before it could be sold or used to buy something.
Coins, however, are small, easy to handle and are made at a guaranteed purity and weight if they were struck by government mints. They also are made to be difficult to counterfeit, with more security features being added.
In the end . . .
Whether you go the Lavere Redfield route (and we don’t recommend it) or buy, sell and hold precious metals in accounts like commodities such as pork bellies depends entirely on your goal for investing in an asset other than the stock market.
Investors have options and can always choose to use a variety of ways to store their treasure, with some easily accessible and some more secure. Don't assume that companies with fancy TV commercials and familiar faces are the best choice to purchase or store your bullion — some (not all) are more "marketing companies" than actual precious metals dealers and their ultimate goal often is to sell you high-margin items after making an initial low-margin sale. Most have commissioned salespeople and, unless you prohibit it, they will call frequently trying to sell you some hot item of the day. Obtain all credentials in advance remembering that even the worst dealers will provide you with several. Ask lots of questions and get multiple opinions before purchasing from any company, especially when it is a long distance transaction.
It is important, whatever your goal, to work with an Accredited Precious Metals Dealer such as Pegasus Coin and Jewelry. These dealers are vetted and are subject to binding arbitration to hold them accountable.