Is gold easy to store safely?

Gold has been regarded as the king of all precious metals since the very earliest times. As Investopedia explains: Gold is ‘a symbol of wealth and power … rare and difficult to extract … durable and non-corrosive … and highly coveted’. For investors in gold bullion, one of the greatest attractions of this almost indestructible yellow metal is surely its phenomenal value density. Commenting on this very feature, the London Bullion Market Association (LBMA) – where the spot price of physical gold is set every day – say: “Gold is renowned for its high density … almost double that of silver.”

Just for reference: in layman’s terms, one kilogram bar of pure gold is about the size of a large smartphone – and today worth around 85,000 to 88,000 GBP.

For the above reasons and more, the world’s major economies still keep a store of gold as a practical means of trade and exchange should international currency systems should ever fail. In other words, they believe gold is the ultimate safe haven for asset wealth – and countless institutions and private investors seem to share this view.

Secure gold storage

In one sense, a precious metal of such high value density, should really be quite easy to store because it takes up so little space. Yet all investors must remember gold’s universal appeal makes gold storage an extremely high-risk undertaking, which must thus be approached with great care and diligence.

There are basically three storage options: home storage, a safe deposit box, and safekeeping in a secure vault with a specialist provider. So let’s briefly consider these in turn:

Home storage

Hiding your investment gold around the home, or burying it in the garden, must be the riskiest storage strategy of all. Thieves know every trick in the book, from hiding gold in plant pots to stashing your gold holding at the back of your freezer. And those considering burying treasure in the back garden must bear in mind just how effective today’s hi-tech metal detectors can be.

In addition to the above: Keeping your investment hoard a secret is certainly the safest option. But what if you were to lose mental capacity and forget all about your gold cache? And what if someone spots you hiding your gold away, or guesses your secret? And what if you wish to bequeath your gold to someone else?

While a home safe is more secure, your insurers will only cover gold held inside a (very expensive) professional installation, which would not be viable, or affordable, for most. And you would also have to trust those installation technicians not to reveal your secret!

A safe deposit box

This option represents a considerable security upgrade to the above, especially if you enlist the services of a specialist provider. While a bank safe deposit has been the time-honoured, go-to solution, more and more banks are now closing down their safe deposits, or restricting access to a handful of high-value customers.

Meanwhile, a well-chosen bank-independent precious-metal storage provider can offer state-of-the-art security, absolute discretion, convenient access arrangements and much more.

Specialist storage in a dedicated vault

Storing your gold in a high-security vault with an experienced specialist precious-metal storage provider is the most secure option of all. Furthermore, there are no limits on the amount of gold you may store. But investors must ensure their gold is held in allocated & segregated storage. This means each holding is individually stored, and properly labelled and catalogued to readily prove, preserve and trace the legitimate ownership of the goods. This is the only way to guarantee your original gold holding is returned intact at the end of your storage contract.

By contrast, gold held in collective custody – a much cheaper option – is kept in a communal pool. So the original owner can only expect to receive gold of comparable type and value – there is no guarantee you will ever receive back the physical gold you first deposited.

Most countries have specialist storage providers, but even this is not entirely without risk. So investors should carefully note the sheer volume of international institutions and private individuals who opt for gold storage in Switzerland. This is an ultra-smart choice for two important reasons:

1) Switzerland’s long-established reputation for political and economic stability makes it an attractive location for those seeking storage facilities in a low-risk environment.

2) Switzerland’s reputation for discretion and privacy in business dealings is highly valued. But most of all, the Swiss are known for their absolute, uncompromising support for individual property rights. So, in our turbulent modern world, gold stored in Switzerland is effectively beyond the clutches of any hard-pressed national government who, in a crisis, may be sorely tempted to confiscate the precious metal assets of private individuals to swell the public purse.