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So you finally purchased physical gold, silver, platinum, or palladium products as investments. From there, your next step is likely to be choosing a precious metal storage option.
Precious metal investments are unique in that you, as an investor, are responsible for physically storing your investment. Selecting an unsafe storage method could make your investment vulnerable to theft, deterioration, fire, or misplacement, potentially sending thousands of dollars down the drain.
Investors choose to store their precious metals through a wide range of methods, as we will discuss below. Consider your options carefully to determine the method that will best suit your needs and protect your investment.
Precious Metals Storage Options
The following are the most common precious metal storage options.
Home Storage
You spent a lot of money on your precious metal investment, so wanting to store it close by makes sense. Many investors opt to store their gold, platinum, or silver at home. You may store your metals at home in the following ways:
- In a standard safe
- In a floor safe
- Using selective storage — that is, hiding it in an unexpected place
Home storage may be convenient, but it isn’t necessarily the safest storage option. Think about whether you’re willing to sacrifice the security of your investment for closeness.
Pros:
- You maintain control over your investment.
- You have easy access to your precious metals when you decide to sell them.
- You can check on your metals at any time.
- You can maintain your metals yourself (i.e., cleaning and polishing them).
Cons:
- Home storage is not as secure as a storage facility.
- Your metals will be vulnerable to theft, fire, flood, and other risks in your home.
- You risk misplacing your metals if you store them in a hidden location.
- Your home may not have the right temperature and humidity conditions to protect your metals.
Safe Deposit Boxes
Safe deposit boxes, sometimes called safety deposit boxes, are bank storage options that can secure your gold and silver in a monitored location.
You can rent a safe deposit box for a minimal annual fee, typically ranging between $30 and $100. Your bank or credit union will give you your own key for the box and keep a key on-site; you’ll need both keys to access your box.
Pros:
- You can store your precious metals locally.
- Your precious metals will be safe inside a locked vault.
- You can access your gold or silver quickly when you’re ready to sell.
Cons
- Banks do not insure safety deposit boxes.
- If you lose the key, you may need to jump through a few hoops to access your box.
- You can’t keep a very close eye on your metals.
Private Vaults
If you don’t mind paying a little extra to store your precious metals, consider private vault storage. Private vaults are like storage units, but they use extremely tight security measures to keep customers’ valuables safe.
You can find a wide range of private vault storage options across the U.S., and chances are, there is a private vault within a few hours from where you live. Private vault storage will cost you anywhere from $30 to $100 per month, depending on the size of the vault. Some facilities offer discounts when you pay for a year in full.
Pros:
- You’ll have the utmost confidence that your precious metals are safe.
- Depending on the location of the facility, you can easily drive to check on your metals whenever you want to.
- Your metals will be fully insured in the case of theft or a natural disaster.
Cons:
- Vault storage is more expensive than home storage or a safe deposit box.
- Private vaults aren’t very common, so you may need to drive a few hours to get to one.
Third-Party Storage
When you buy your precious metals through an investment firm like Oxford Gold Group, you’ll have the option to store your investment in a third-party depository. For example, we partner with the Delaware Depository Service Company and Brinks Global Services to store our clients’ precious metal investments.
Using a third-party depository gives you a hands-off approach to investing. You can buy your precious metals and ship them to a safe, reliable depository without having them in your physical possession.
Pros:
- Your gold distributor can ship your precious metals directly to the storage facility.
- Your precious metals will be secure in a temperature-controlled, monitored facility.
- Most depositories insure their inventory against natural disasters and theft.
Cons:
- You won’t have physical possession of your precious metals.
- The depository your investment firm partners with may be across the country, giving you limited access to your metals.
- You may need to wait a few days or weeks to take possession of your metals when you decide to sell them.
Factors Affecting Precious Metal Storage
Before you settle on a precious metal storage method, understand the various factors impacting storage.
Environmental Factors
To best protect your precious metals, you’ll want to store them in a cool, dry place. While gold isn’t susceptible to moisture, silver can tarnish in humid locations. Storing precious metals in a damp location for many years could lower their value when you decide to sell them.
Security Factors
You may think that your home has a very low risk of theft — but that’s what most victims of theft think, too. Storing your precious metals at home makes them vulnerable to burglary. And depending on how much gold and silver you own, their value may exceed your insurance coverage limits.
Private vaults and third-party storage facilities take extra measures to secure their inventory. They typically place security cameras throughout their facilities and station guards 24/7 to ward off trespassers. Still, theft does occasionally occur in these facilities, so you’ll want to choose one with extensive insurance coverage.
Regulatory Factors
If you’re investing in precious metals through an IRA, the IRS prevents you from storing them at home — you’ll need to use a secure facility instead. Also, make sure the depository option you choose allows for the storage of precious metals.
Tips for Storing Precious Metals
Review these pro tips to help you store your precious metals confidently.
Cleaning and Preparing Precious Metals for Storage
If you’re transporting your precious metals to a storage facility, make sure to prepare and handle them carefully. You typically don’t need to clean precious metals with soap and water; doing so could actually damage them. To adequately prepare your precious metals for transport, follow these tips:
- Wear lint-free cotton gloves when handling your precious metals.
- Never store different types of precious metals together.
- Only handle your precious metals over a soft surface in case you drop them.
- Hold coins, rounds, and bars by the edges only.
Choosing the Right Storage Options Based on Your Needs
You don’t need to choose the storage route your friends or fellow investors have chosen. Instead, think about the best option for your specific needs. Consider factors like:
- Your desired cost of storage
- The level of control you want over your investment
- How quickly you intend to sell your metals
Maintaining Proper Documentation and Records
Once you receive the precious metals documentation from your investment firm, scan a copy onto your phone or computer and store the original copy in a safe location.
Should You Get Insurance for Your Precious Metals?
You may want to add your precious metals to an insurance policy if you’re storing them at home.
Tips for Choosing an Insurance Policy
To find the right policy, you’ll likely want to keep the following in mind:
- Review your homeowner’s insurance policy’s coverage limits; most only insure precious metals up to $5,000.
- Consider a floater policy, which covers any kind of loss at home and has higher limits.
- Look for an insurance company that specializes in precious metal insurance.
Common Mistakes to Avoid
Are you new to the world of precious metals investing? Avoid these mistakes that could put your investment at risk:
- Storing all your investments in one place: If you have an extensive precious metals collection, avoid storing all your metals in the same facility or vault. Distribute them across several locations to improve their security.
- Failing to secure your storage location: If you’re storing your metals at home, be sure to lock the safe every time you check on them.
- Ignoring environmental factors: Consider all possible environmental conditions that could affect your precious metals, such as humidity, heat, dampness, and cold temperatures.
What Are the Tax Implications of Storing Precious Metals?
Precious metals are subject to capital gains taxes when you hold them for longer than one year. You’ll owe taxes when you choose to sell your metals.
Should You Consider Offshore Storage?
Some gold and silver investors opt to store their metals in offshore facilities. Singapore, Hong Kong, London, and Zurich are common locations for offshore precious metal storage.
What Are the Pros and Cons of Offshore Storage?
Using offshore storage allows you to separate your investments across multiple locations and keeps your precious metals away from the U.S. government. That said, you won’t be able to monitor your investments very closely, and securely shipping your metals overseas can be costly.
Discover more about precious metals investments by reaching out to Oxford Gold Group. Take a look at our gold products, ask us about gold IRAs, and more. Contact us today to speak to a professional and learn more about how you can secure your future with precious metal investing.
