Secure Vaulting for Gold Investments
Arranging Storage for Investment Gold Bars and coins
Is Gold Storage Secure?
As you’d expect this all depends on where you’re storing your gold! Obviously a vault designated as Ultra-Secure is going to offer better protection from theft than a small local bank’s safety deposit box, which will typically be more secure than a low-cost safe in your home.
If you opt for storing your metals in anything other than a locking and well secured box, such as hiding gold in your home or buried in your garden you can be at a significant risk of having your metals stolen if even one single person outside of your immediate family knows you own gold.
For any gold investor you need to balance the dollar value of a complete loss with the probability of theft, practicality and inconvenience of location and speed of access in an emergency.
You need to consider adequate insurance and to try to eliminate third-party risk such as the bank you’re storing with going bankrupt and seizing your banked assets, or a low-cost vaulting company stealing from or defrauding you. It happens.
When you have the balance right then your gold storage is secure enough for you. Whether that’s secure enough for the next person is another matter, but as with anything security is relative.
Gold Bullion Storage: Your Options
Whilst a minority of preppers like to store precious metals in hidden caches out of sight and beyond the knowledge of banks, government and institutions, the five most common storage methods for investors are:
#1: Non-Bank Specialist Vaults
Bullion vaulting facilities offer a specialist and high secure storage service, storing your metals in segregated (held fully separately from other investors metals) or pooled (different investor’s metals are mixed within the vault) vaults.
Specialist vaults typically offer the most secure vaulting at low prices due to vast economies of scale. They are also well insured, usually by top-tier insurers and hold your metals fully separated from corporate assets, further de-risking your investment in the event of the vaulting company going bankrupt.
Some specialist vaults are also designated as being able to hold gold bullion assets within an IRA.
#2: Non-Bank Mixed Vaults
Mixed vaults hold various high value assets, such as gold, diamonds, cash and artwork.
They can offer similar levels of security and insurance to specialist bullion vaults but have a more generalist user base, and tend to run at a higher cost to bullion vaults.
#3: Bank Vaults
Larger banks offer a vaulting service which can include bullion storage. Since the banking crisis of 2007/08 and changes to global banking laws, these vaults are no longer considered as secure as they once were – not from external theft, but from internal appropriation.
A bank is now legally entitled to use deposited funds as their own in the event of a bank crisis (a “bail in” as opposed to the government “bail-outs” of 07-07), with only small sums of depositors monies ring-fenced and protected by law.
Before storing large sums of cash or precious metals in a bank confirm what the situation would be in the event of a bank crash and even then be very wary.
#4: Safety Deposit Boxes
Either bank or non-bank, safety deposit boxes are good for smaller values of gold bullion and for convenience if the facility is near at hand.
As with bank vaults, for bank boxes it pays to check the situation in the event of a banking crisis. For non bank boxes, check for third-party risk – ie does the box company take temporary ownership of the assets vaulted with them and if so what would happen if they were to go bankrupt.
#5: Home Storage
A favorite storage method in the US where bank and governmental privacy is a concern and the legality of gun ownership along with gold and guns being common bedfellows makes many thieves think twice.
Home storage is top choice for small to mid-sized investors working under the mantra “if you can’t hold it, it’s not yours”.
It’s critical that your home storage of gold is not a widely known fact and for any value above 5-figures you make absolutely certain your safe is professionally installed, adequately insured and preferably well hidden.
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What Are Storage Risks of Investing in Gold?
Gold theft is center stage when it comes to storage risks. Although theft most commonly refers to criminals, with investment gold it can also include banks legally appropriating your funds during a banking crisis and government confiscation (though very unlikely) in a national catastrophe.
Whether it’s a sketchy vaulting company, an unhappy employee, or any flavor of criminal there are few assets that can be vanished with the same ease as gold.
Because gold is such a highly concentrated form of wealth, it’s not too difficult for one person to carry $1m away. As for $1500, $15,000 or even $150,000 it’s like carrying small change.
Once stolen, gold becomes untraceable – either due to gold bullion coins being commonplace or because gold can be easily melted down and sold as scrap to any number of willing buyers.
The best vaults combat the risk of theft by ensuring all staff are carefully vetted with tougher background checks than the military – and foot traffic in and out is subject to multiple layers of testing from metal detectors to z-ray machines set to sniff out the smallest quantities of gold. Many ultra-secure vaults require a complete change of clothing before staff can enter the facility, wearing pocketless overalls and shoes that never leave the inner secure zone to ensure staff are not tempted to share the wealth.
As for external thieves – at the big vaults, compound security is so tight that unknown faces have no chance of getting even close to the building’s entrance, let alone a vault door.
Plus, for those one in a billion chances where any loss actually takes place – there’s bullet-proof insurance.
So although secure specialist vaulting complete with full like-for-like insurance can be had for a tiny fraction of an investment’s total value – there are those who take a more liberal approach to security…
Home-storage investors tend to take an “it’ll never happen to me” approach – and yet every month we hear tales of home-vaulted gold being stolen by family, friends and acquaintances over and above the work of opportunist or professional thieves.
Yes you can buy great – if costly – home safes, and get your metals insured but if word gets out that you own gold you could find yourself out of gold and your insurance refusing your claim sooner than you can say “rob me please”.
As we cover in the next section, if you own gold at home – don’t tell a soul.
On the flip side of the coin, another major risk is over-secrecy.
There are probably billions in dollars of unclaimed gold sitting in vaults across the globe because privacy conscious investors didn’t tell anyone about their gold. After becoming incapacitated or in the event of death the gold will remain vaulted – especially where gold vaulting fees are covered by the value of the metal. Secretly hidden gold or buried gold is worse, with no paper trail and nobody to notify.
And if your estate doesn’t know about your gold it’s not going to be passed onto your children and loved ones.
Finally a storage risk of more concern to home-storage investors than customers of professional vaults is that of natural disaster and fire.
Whereas vaults will carry insurance for all possible threats, some events such as fire and natural disasters like earthquakes and tornadoes can be harder to adequately insure against for homeowners.
Gold and silver have low melting points in relation to other metals and home fires can burn sufficiently hot to turn your precious metals into a hideous mess of charred wood, soil and gravel, all covered with a golden sheen. Even if the scrap is not scavenged by the demolition crew, getting the gold back into it’s original form is both time consuming and expensive.
And tornadoes or hurricanes that can pick up cars think nothing of scattering your bullion across the county.
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Home Storage of Gold Vs Professional Vaulting
Our recommended choice is always going to be ultra-secure specialist non-bank vaulting as we believe it offers the best security and lowest risk at the fairest price.
Unless your home comes with armed guards, multiple perimeter fences, state-of-the art technology, thick specially reinforced concrete walls and blast-proof vault doors it’s unlikely you’ll be able to match a specialist gold vaulting facility for it’s security.
The only real downside to professional gold storage facilities is proximity. If you’re not lucky enough to live close to one, you’re going to be at least a long drive or two-day delivery away from your metals.
This is normally an inconvenience worth living with for the gain in security – however if in a time of extreme national crisis – the type of crisis many gold buyers are considering to be on the horizon – you are separated from your gold then that inconvenience rapidly becomes a crisis of it’s own.
This is a key reason why some investors opt for home storage, or as is most common a mixture of home-storage and secure gold vaulting.
Mixed Home / Vault Storage
Keeping some of your gold investment close at hand could always be considered a good idea even if it’s security is notably lower.
Much as investors like to keep some gold investments for long-term (typically larger bars with low premiums) and some smaller bars and coins for shorter term liquidity, storage can be considered in the same way: long-term secure with allowance for short-term emergencies.
How much you’d plan on keeping at home would reflect your beliefs about either how bad a coming crash could be or your need for emergency liquidity.
For example from a $100,000 total investment in gold and silver bullion, an investor may opt to keep $20,000 or 20% at home. In terms of storage space $10,000 may only entail 5 one ounce coins and in terms of value most good quality home safes are insured for at least this sum. A good small metal safe can be secured to your home’s structure and further protected by being hidden inside an item of built-in furniture.
Your $80,000 would remain in ultra-secure vaulting whilst your emergency $20k would see you through most eventualities.
Having the full $100k in a home vault would require a far larger more expensive safe, professional fitting and would be much more difficult to obscure. It would also up your personal risk considerably as a determined thief who somehow knows you have it at home, is more likely to resort to bodily harm for one hundred thousand dollars than for the price of a budget Honda.
How likely are criminals to know you have gold in a home vault? Much more likely than you’d imagine.
When you buy gold for home delivery or locally in a coin store you’re creating a paper trail and a circle of third parties who know you have gold at home. Form a low-paid shop clerk to a disgruntled postal worker, word-of-mouth can spread the circle of those in the the know rapidly.
If you ever post pictures, comments or stories about gold investments on social media then you need to consider that circle of knowledge has massively expanded.
The fact is, it’s become remarkably easy to trace people’s home addresses from social media accounts either through deduction and sleuthing or by a simple hack and if you’re even slightly vocal in your liking bullion you become an obvious target.
Your children or other half can inadvertently let slip you own gold bullion whether as a passing comment or a playground boast but word spreads quickly, especially when it’s something so exciting or gossip-worthy as bars of gold and pirate treasure!
When word gets out – and it usually does – how certain are you that this rapidly spreading knowledge won’t come into earshot of someone with less honorable intentions.
And if your insurers get wind of the fact that you may know the thief, you can kiss your claim goodbye.
But finally remember this: no matter how well secured your home vault or how fiendishly clever your hiding place, a determined criminal and the threat of violence to you or your loved ones can open any door.
Private Gold Vaulting or Bank Vaulting?
Given that we recommend professional vaulting over home-storage for all but the smallest sums, the next choice is to use a private vault (non-bank) or a bank vault.
Banking laws have been changed over the past several years to help dismantle your privacy – both in the name of anti-terrorism and to help the IRS crack down on tax avoidance. We’ve also seen the introduction of new “bail-in” legislation – laws which will see your bank-held assets being legally taken by your bank to pay it’s liabilities in the event of a new banking crisis.
Have the banks mended their ways since the last time they needed money and took billions in dollars from the federal government? Are you happy with all of your holdings, investments and transactions being reported to the powers that be?
Depending on your answers and beliefs, you’re either going to find bank vaulting to be an unacceptable risk, a worrying leak in your rights to privacy – or a perfectly adequate way to store your valuable metals.
With banking law out of the way, the next decision is based on physical security and insurance.
Is Bank Vaulting Sufficiently Secure AND Insured?
Banks hold a lot of cash and valuables, both on behalf of their customers and to partially cover credit and debt accounts where physical cash may be needed.
As such most banks have a secure vault or at least a good-sized safe and they may have a number of safe deposit boxes. These facilities are typically watched over by cameras, security guards and of course the bank staff and tellers.
Although the chances of theft are low, US banks do get robbed and the FBI statistics for 2018 state there were 3,023 separate bank robberies in the year – with 76 specifically focused on bank vaults and safe deposit boxes.
Your bank-vaulted gold is usually adequately insured, but with banking crime rising year on year it pays to double check your bank’s policy and watch out for deductions and escape clauses designed to minimize the bank’s losses and their insurance premium costs at your expense.
On the other hand specialist private gold storage facilities are built from the ground up with the protection of physical bullion being their sole purpose.
Going For Ultra-Secure
Blast-proof, bomb-proof bunkers, sometimes several floors below ground and protected behind multiple layers of armed personnel, impenetrable physical barriers and high-tech security these vaults are designed to keep national, corporate and generational wealth free from all risks.
The very best of these specialist vaults are considered safe enough to be used as a gold depository by the IRS. This means they must pass key tests to allow them to store the gold held within tax-advantaged gold IRA plans.
Despite these much higher levels of security, storage for gold in one of these facilities is broadly comparable and often at a lower cost than bank vaulting – thanks to the economy of scale the bullion vaults operate at and lower insurance rates due to special deals with tier-one insurers.
In the same way as we see there being little real choice between home storage and vault storage, when it comes to bank vaulting vs non-bank vaulting specialists the choice is obvious. Bank vaulting does not come with sufficient safety from theft (institutional and otherwise) to match private vaults – not to mention the degradation in privacy you get with a bank – and with both being available at more or less the same annual cost or fees, we have to swing towards private.
What gives private vaults that final nudge, is that professional gold investment companies will often have deals with their favored vaults where qualifying clients pay zero vaulting fees – making the decision a true no-brainer.
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Is Gold Vaulting Segregated?
Most gold vaults offer clients a choice of segregated or non-segregated (allocated / pooled) storage with segregated carrying a higher annual fee than allocated.
With segregated storage, an individual client’s specific bars or coins are placed into sealed containers or stored on a specific shelf or area of the vault used only for that client. There is no possibility of a segregated client’s bar being mistaken as another client’s bar, or coins swapped with another client’s.
In short a segregated vaulting client will get the exact same gold bullion bars and coins out of the vault they put in.
With allocated or pooled storage, different client’s metals are mixed within the vault. It could be that all 1oz bars are placed in one location and all 10oz bars in another with coins being held by mint, type, weight or purity.
Because there is a little less work involved for the vault staff – vaulting costs are somewhat lower than for fully segregated storage.
What this means for clients is they can be sure they’ll be able to withdraw the same weight and purity of gold as they placed in storage – but not necessarily the exact same bars or coins.
After all, as a bullion investor and not a collector it shouldn’t matter what the details of your holding are, rather the total weight. If it IS important to you for whatever reason that you get the precise coins and bars you vaulted back – say if you believe your choice of coins could out-perform the basic price of gold – then fully segregated is the only choice.
Is Gold Vaulting Insured?
Yes. Professionally vaulted gold, whether it be at a bank or at specialist gold bullion storage facilities is always insured.
Whether it’s adequately insured in your mind, will depend on the specific policies the gold vaulting service uses – so it pays to always check insurance details both for any deductions or excesses, how the total sum insured tracks the price of gold and what the insurance covers, from fire, to theft and to acts of God, war or terrorism.
You’re much more likely to find insurance issues with bank vaulting, and non-bank safe deposit services, than with specialist bullion vaults.
The insurance policies of specialist gold vaults and storage depositories will typically be underwritten by equally specialist risk underwriters operating through top-tier market movers in the international insurance market, such as Lloyds of London.
The best policies commonly cover “all risk” with the specific metals being covered against physical loss, damage or disappearance. It should be noted that policies tend to max out at $50million for any single loss at a single location so if you have sums vaulted greater than this, it’s essential to spread your risk across more than one facility.
In much the same way as good investors spread risks by diversifying assets and hedging, any large vault holding should be split both geographically and in terms of the company vaulting the metals to further de-risk against natural and geopolitical events, to bypass insurance limitations – and issues (no matter how unlikely) with the individual vaulting companies themselves.
It’s better to be safe than sorry.
What Makes a Good Gold Storage Facility?
A good gold storage facility reduces the risks of investing in gold, provides a straightforward and transparent service, responding to your requirements and needs quickly and efficiently – and all at a cost-effective price.
Risk reduction is taken care of through:
- Physical security – the vaulting structure, and it’s defenses against theft, from bomb-proof concrete to state-of-the-art surveillance all help keep your metal where it should be. Most ultra-secure vaults could shrug off a small war and one bullion vault has famously withstood a nuclear bomb blast!
- Personnel security – carefully vetted staff, both on-site from armed guards, to security-focussed vault technicians and offsite monitoring staff watch for suspicious activity. By studying camera feeds, alarm trips and hunting out digital vulnerabilities that hackers could use to access key systems, staff remain ahead of any threats. Well trained office personnel can even spot when a customer is under duress, such as if they are removing gold from their vault under threat – and so help contact the authorities to avoid a crime.
- Geographical security – the vault being distanced from known danger points such as earthquake or tornado zones, outside of high crime states and within close proximity to law enforcement teams helps eliminate obvious risks.
- Insurance – having adequate specialist insurance is essential in the unlikely case any aspects of the site’s security fails. Insurance should fully track values and allow for a like-for-like replacement with zero personal losses in the event of a claim.
A straightforward and transparent service is helped by:
- clear storage fees and pricing – with no complex small-print or unexpected extras which push fees up higher than anticipated.
- well trained staff who are able to answer any questions, either from direct customers or service intermediaries. When it comes to your investments, the only answers you get should be straight answers.
- transparency should not be at the expense of your privacy, with minimal sharing of personal and investment information unless required to do so by law. Your gold is a highly private investment and one you don’t want to share with more than you need to.
Responsiveness and efficiency indicators include:
- Responsive out of hours email response or an extended hours telephone service – the global gold markets run 24-7 and there may be occasions when you or your advisors need to make a move quickly.
- respectful friendly and knowledgeable customer services staff able to handle any request both with private customers or as part of a gold IRA in working with your custodian. After all transfer delays can cost you money in a rapidly moving market.
- efficient processes safeguarded against errors and omissions. When a good vault says they’ll do something they do it, with full traceability from your request to the completed task.
When you’re vaulting your bullion investments it’s essential that you only deal with the best vaults in the marketplace – this is no time to cut costs or reduce service expectations at the expense of increasing risk.
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How to Vault Gold in an IRA?
All gold held in an IRA must be vaulted – by law – in an approved bullion vault or storage depository.
Despite the claims of home storage IRA companies, the IRS is clear that in order to take advantage of the tax-advantaged benefits a gold IRA brings, you are obliged to hold the metals in an approved facility, risking fines or worse by taking any other, non-explicitly stated storage route.
Home storage is out.
Thankfully, the gold storage facilities and storage depositories used by most Gold IRA providers and all professional gold investment companies are top-level secure vaults more than meeting government requirements and utilizing the best insurance policies in the market.
The actual process of vaulting gold in an IRA is as simple as filling a few forms and if required opening a new self-directed IRA account – should your existing retirement account not be able to hold physical gold.
When you fund your IRA, having worked with your gold investment advisor to select the choice of metals best suited to your circumstances – the vaulting part of the process is automatic.
As soon as your metals are paid for they are delivered direct to the approved facility and held in a segregated or allocated account depending on your choice. Sometimes you’ll have a choice of vaulting location where a dealer works with several depositories and custodians – and in many cases you won’t even need to pay vaulting fees as many gold companies waive first-year fees for new customers or over a certain dollar amount.
This is why gold IRA accounts are so popular: If you’re planning on vaulting your gold investments anyway, why wouldn’t you wish to get some financial help in the way of tax breaks at the same time?
We cover the full benefits of a gold IRA here, but even looking at the most obvious benefits; the tax breaks, the free vaulting and enjoying a fully hands-off done-for-you service – it’s plain to see why millions of Americans are taking advantage of these accounts.
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About Tim Schmidt
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He's also a published author, and his views on investing have been featured in USA Today, Tech Times, The Huffington Post, Nasdaq, and many more.
