Where to Hold Precious Metals

LesPhelps
By LesPhelps on Fri, Jan 4, 2013 - 8:05am

 

Currently, most of my bullion holdings are in ETFs.  However, I've started transitioning to physical holdings.

Recently, I've been adding bullion to a Self Directed IRA.  While it feels good to have physical possession of the assets, the downside of this approach has become clear.  First, the post office is involved.  When it comes time to sell assets, what shape will the post office be in?  Second, while deposit boxes have an excellent safety record, I do not believe assets in the boxes are insured.  Also, will they ever be vulnerable to the US government or other shady characters?

I'm curious about third party holding options like Bullion Vault or Hard Asset Alliance.  How safe are they compared to personal holdings?

How do you feel about the two methods of owning bullion?  What are the potential pitfalls of having a third party hold physical assets?

7 Comments

Mike K's picture
Mike K
Status: Member (Offline)
Joined: Dec 15 2012
Posts: 13
Difficult forum for this type of advice...

Hi Les,

There is a saying in the PM game "if you dont hold it, you dont own it" or something like that. The whole idea of PMs is to have something that isnt a promise to pay. ETFs are a promise to pay, even if you store at a third party location, they are giving you a promise that you will have access to it no matter what happens. One of the advantages of PMs is that they are durable metals that do not take up much space (Silver takes up a bit). They should be easy to possess out of sight and out of mind.

You may get plenty of advice from others about this or that third party option but most who have serious stashes of PMs are not going to bring up what I just did. Its too risky and invites potential trouble. So you are not going to get the full range of advice and tips that may be the better option.

Personally I am too young too have accumulated much in way of PMs and prefer to prioritise my investment in my lifeboat, tools and knowledge (permaculture courses). That said, if you are lucky enough to have a good stash, my recommendation is to store the bulk of it underground and dont tell anyone (there are books that tell you how to best store things underground). Keep some accessable for obvious reasons. Dont go on the internet like this and mention that you may have some! (DoH!).

Oh, and dont expect many to pipe up and tell you how they store theirs etc for obvious reasons.

If you do decide to go third party, spread the risk, not all at some location and keep some handy. Also be ready to move before the masses to retrieve if things go south. Personally I would even test how quickly you could pull it if required by turning up and doing so every now and then. Read about MF Global and how they robbed their clients of their allocated holdings! Also check out the reports of Govt raids on safety deposit boxes with mainstream media telling everyone they belonged to criminals (maybe they did, maybe they didnt?).

Good luck, nice problem to have! Oh, and def take it out of ETFs!!!

Mike K

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 728
Thanks Mike

I understand completely what you are talking about.  Within a Self Directed IRA, neither home storage or a hole in the ground are approved by the IRS.  Until I withdraw the money from the IRA, I have three options that I am aware of, a safety deposit box, a third party storage facility, or an ETF.  

The two options I am trying to decide between for a portion of my IRA is safety deposit box vs third party storage.  Silver certainly plays a part in this question.  There is only so much of it you can store in a large safety deposit box.

I think both options have their specific issues.  Perhaps no one can predict which option will, in the long run, turn out to be the most reliable.  Never the less, I thought I'd try to get some ideas on the subject.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
LesPhelps wrote: I understand
LesPhelps wrote:

I understand completely what you are talking about.  Within a Self Directed IRA, neither home storage or a hole in the ground are approved by the IRS.  Until I withdraw the money from the IRA, I have three options that I am aware of, a safety deposit box, a third party storage facility, or an ETF.  

The two options I am trying to decide between for a portion of my IRA is safety deposit box vs third party storage.  Silver certainly plays a part in this question.  There is only so much of it you can store in a large safety deposit box.

I think both options have their specific issues.  Perhaps no one can predict which option will, in the long run, turn out to be the most reliable.  Never the less, I thought I'd try to get some ideas on the subject.

Check the friendly archives.  I've written extensively on these subjects in the past.  And an ETF is not bullion nor a precious metal holding.  Read your prospectus.

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 728
EFTs

I didn't ask about EFTs.  Your post did not address the question and was not constructive.  But then, you knew that when you left it.

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 728
Got it

I found what I was looking for on the web.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
LesPhelps wrote: I didn't ask
LesPhelps wrote:

I didn't ask about EFTs.  Your post did not address the question and was not constructive.  But then, you knew that when you left it.

I didn't write about EFTs.  I wrote about ETFs.  My guess is that anyone who has invested in the longer term in an ETF allegedly holding precious metals has not read the prospectus or does not understand the prospectus.  Similarly, if you'd check the archives, you'd understand specifically the high risks inherent in a safe deposit box and historical manifestations of that risk.  I'd explain alternatives to what you are considering but your attitude is off-putting.   

nick707's picture
nick707
Status: Member (Offline)
Joined: Jan 3 2013
Posts: 4
Storage

Get a safe that's weight exceeds 500lbs, bolt it to the floor and have a security system installed, and use it!

A kimber 45 cal with a fair amount of knowledge as to how it operates, a box of Hornaday hollow points and you should be good to go.

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