January 14, 2011

Options for Storing Precious Metals

Investors can use home safes, safe-deposit boxes or professional storage facilities.

Your client has purchased 50 one-ounce gold coins but isn’t sure how to store them securely. Fortunately, Steve Emerick with precious-metals broker Asset Strategies International, Inc. in Rockville, Md., has a few pointers.

Home Safes

It makes sense to keep some precious metals at home for immediate access during emergencies, Emerick says, but there are significant drawbacks when larger quantities are involved.

Fifty coins would be worth almost $70,000 at today’s prices. Plus, they’re small and easily moved.

Finally, one Gold Eagle looks like every other Gold Eagle, so the coins would be untraceable if stolen.

Those conditions create a security risk if the wrong person should learn about the coins’ presence in the home. Also, many homeowners’ policies limit coverage for coins so the client probably will need supplemental insurance.

Safe-Deposit Boxes

Fifty coins would fit easily into even some of the smaller safe-deposit boxes. The vault is secure, box rental fees are usually low and occasionally banks waive the fee.

There are drawbacks with safe-deposit boxes, though, Emerick notes. There’s a risk of theft if the client drives the coins to and from the bank.

Also, the box is accessible only during the bank’s business hours, which might not always coincide with the client’s needs.

As with a home safe, the client will need to secure insurance for the coins.

Professional Storage Facilities

Emerick says that several companies, such as Diamond State Depository, Delaware Depository, Global Gold in Zurich and Brinks, among others, specialize in the storage of precious metals.

These are highly secured facilities that include insurance as part of the fees paid, says Emerick.

Unlike banks, however, some of these facilities do not allow visitors, while others impose multiple conditions before allowing a customer on-site.

“These are more difficult to access than even a bank,” said Emerick in a phone interview. “With most of these depositories and professional facilities you can’t even go there without making an appointment at least 24 hours in advance and sending your photo I.D.”

Asset Strategies International stores its metals with Diamond State Depository in New Castle, Del.

Emerick reports that the fees are modest for investors using the facility: accounts under $100,000 pay 75 basis points annually (prorated for the days the facility is used) for the company’s standard storage option or a minimum $50 per year.

Clients of Asset Strategies International who store their gold with Diamond State Depository also avoid paying shipping fees and are able to liquidate their holdings more rapidly, according to Emerick.

“I think a lot of it comes to do you ever really believe that you’re going to take delivery of the metals you’re buying?” Emerick said.

“That makes a big difference as far as where you’re having it stored because you want easy access. To have your metals shipped, even though most storage facilities or programs will ship anywhere in the world, obviously it becomes more expensive to ship your coins from Zurich or Australia to the United States than it would from Delaware,” he concluded.

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