As a metals broker I am always asked about storage. I have rather strong feelings about this topic and I always advise people the following:
- Always store outside of the financial system. This means no ETF’s (Even though they are easy you should exercise caution & read the prospectus and zoom in on the custody section – if you can stay awake long enough to read it). Also this means no bank safe deposit box storage. Safe deposit boxes are the worst of both worlds. They ARE NOT insured by the bank but yet they are subject to banking regulations. It also means no commodities contracts held by financial firms like MF Global. (Jon Corzine seemed like such a nice fellow before he got into trouble betting house money and hypothecated private accounts to cover his losses.)
- Take possession if at all possible. Sure it can be stolen, so just like anything else you must take precautions. You are an adult after all.
- If for some reason you feel uncomfortable storing yourself or storing all of your metals yourself then look for a non-bank storage facility. Preferably a storage facility or vaulting service that is insured against loss. This will cost a bit more than a private deposit box facility but you will be insured against theft. Also make sure that your metal is in “segregated” storage as opposed to “pooled” storage. You want to make sure that your exact metal will be returned to you whenever you are ready. Visit the depository and see exactly what is involved to deposit metals and more importantly; what is involved to withdraw those same metals.
Let’s talk about taking possession first. Just how much room will you need?
A box of 500 – 1oz silver eagles is about the size of a big shoe box or about 9” x 15” – 6” tall. A box is worth about $17,000 more or less. So if you want to store $100,000 in silver you will need a space about the size of 6 large shoeboxes. Large 100oz silver bars are a bit more compact and stack much easier in a smaller space. 90% silver is a bit more bulky and doesn’t stack well at all in bulk bags. Gold on the other hand is much more portable. Just 60 – 1oz gold coins are a bit over $100,000 USD and do not take up much room at all. They could easily fit inside the cardboard tube of a roll of paper towels.
That same $100,000 of silver (or 6 – 500 coin boxes of silver eagles) will weigh about 206 pounds. The same $100,000 of gold (60 – 1oz coins) will weigh a little over 4 pounds. A million dollars in gold would only weigh 40 pounds or so and could be easily carried off by one person without much effort. A million dollars in silver would weigh 2,060 and would require quite a bit of effort and a truck to carry it all away.
So where to put all this? For centuries people have worried about how to store their wealth. Ask someone who lived through the great depression about hiding wealth. If you can find someone in their nineties that can remember they will tell you that most people didn’t trust banks and hid their money around the house. The last 3 or so generations have always trusted the banking system and have never given much thought to holding their wealth. Over the course of history it is more common than you may think to store your own wealth.
Just visit any old European city, affluent sections of central or south America or even the French Quarter in New Orleans or old Charleston and you will start to notice something about the architecture. Most of the homes are built like a fortress. They have very nice interior courtyards but also have walled fronts with heavy doors and heavy shutters on the street windows. In some locations it was common to set beer bottles in mortar along the top of the masonry outer wall and then break off the tops (sort of a cheap home-made razor wire). During normal times the heavy main door to the courtyard and heavy window shutters were open and things looked fairly normal but at night or in times of trouble these places could lock up fairly secure. The modern suburban home is much harder to defend and usually depends on a security system to notify the local police. While the modern home in the US is not as secure as some there is certainly no reason you cannot keep some of your wealth at home if you so chose.
