Choices For Storing Gold, Depending On Your Fears
March 4, 2009 – 6:30 amI’ve mentioned this before, but in case you missed it please note that I’m not a gold bug. I don’t own any gold (unless there are some mining stocks or commodities in the mutual funds that I own, and I don’t believe there are). And I’m not telling you to buy gold.
In my opinion gold is still more of a crisis investment than anything else for most people. I’m sure some have made fortunes in gold, just like some have made fortunes selling Avon and speculating on oil drilling rigs. That doesn’t make it a good idea necessarily for me.
With that being said, I find it interesting that there are several choices when it comes to how to hold and store your gold. For an investment that is primarily crisis driven (in my opinion), there are a lot of ways to freak yourself out when it comes to the risks associated with having gold. Here are a few choices and the associated risks:
- If you own gold ETF’s, you don’t really own gold. You own a piece a paper that hopefully, in a perfect world, represents the value of gold IF the markets are open and IF there are buyers when you are a seller. Therefore since you don’t really own gold I can’t tell you where to store it. Storing paper that has value tied to gold, however, is probably best kept at a discount brokerage firm.
- If you own gold bars or coins
- You can store it in a safe deposit box in a bank, but the bank could be closed. Or the bank branch could close and transfer your boxes’ contents to another location (I read of one story where a box was “misplaced” for months).
- You can pay for segregated storage. This is the high-end choice typically. You own the gold. You can typically take delivery and/or have it mailed to you (insured of course). Your gold is separated from others’ gold so there’s little chance of a mix up.
- You could use allocated vault storage. This is just a small step down from segregated storage. Your gold is stored in a vault with other peoples’ gold, and the vault guarantees that there are ounces allocated to you. Like segregated storage, however, it could take several days to have the gold shipped to you. Then you’d have to chip off a few small pieces from a gold bar in order to pay for the Domino’s pizza you ordered.
- You could store your gold out of the country. This might help if the government confiscates gold again. In 1933 FDR signed an executive order that confiscated gold (except rare coins).
- You could install a safe in your home. But what about thieves, looters, fire, etc? I doubt your homeowners insurance covers gold. Mine didn’t even cover my wife’s inexpensive wedding rings…they required a separate policy.
- You could bury it in the back yard. Just watch out for the sprinkler system lines. It also seems like there’s a parable about this in the Bible….
Did I miss any other good choices?
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