Americans Weigh Gold Storage Options as They Load Up on Physical Precious Metals

Gold and silver are on the minds of many Americans nowadays. While some savers have seen fit to always keep a portion of their money in physical precious metals, many others historically have avoided metals altogether in favor of more traditional assets rooted in financial markets.

However, the onset of the historic COVID-19 pandemic and associated economic fallout – including the highest unemployment rate since the Great Depression – has prompted a large number of citizens to rethink incorporating gold and/or silver among their base of assets. A New York Times article last July reported on survey results indicating one in six Americans had invested in gold and that about half of all Americans were seriously considering a purchase of the yellow metal.

But as more people look to purchase gold and silver, they’re having to make important decisions about an aspect of metals ownership typically viewed as an afterthought: where to store their shiny treasure.

At first glance, it may not seem to be a terribly weighty decision. But it can be. For example, some buyers who plan all along to store their gold and silver at home can find there are some challenges to safely keeping their metals at the homestead. Bank safe deposit boxes are popular storage options, as well, but those aren’t nearly as secure as many people assume. And if you’re planning to purchase your metals through an individual retirement account (IRA), there are strict rules governing the manner in which IRA-bought gold and silver may be stored.

So there’s a little more to the metals-storage decision than might appear at first glance. And whether you’re thinking about buying metals for the first time or you are a seasoned metals owner already, it’s a good idea to be clear on the pros and cons associated with the most popular storage options so that you can be sure your preferred storage method is best-suited for your own particular situation.

Texas Metals Depository Sees 300% Jump in Business Since Onset of Pandemic

In early March, San Antonio CBS television affiliate station KENS 5 hit the airwaves with an item about the storage of precious metals in a nearby underground storage facility. The provocative headline: “Millions of dollars’ worth of precious metal hidden in secret vault in rural Texas town.”

The story centered on the Texas Precious Metals Depository, an underground vault just east of San Antonio where up to $5 billion of physical precious metals can be socked away. Open for business since 2018, the depository has seen business jump 300% since the pandemic hit, according to chief operating office Tarek Saab.

It hardly seems a coincidence that there’s been a surge in metals finding a home at the depository at the same time the pandemic and civil unrest have enveloped the nation. Part of the uptick likely is attributable to the simple fact that more people are buying metals and choosing offsite storage. However, some metals owners who previously stashed their booty at home apparently have been second-guessing that decision and now are moving their metals to the underground facility.

One man to whom KENS 5 spoke said he started buying physical precious metals in the wake of the 2000 dot-com crash and 2008 financial crisis. He decided to move his metals to the depository as civil unrest bubbled over last summer.

“I just got worried that maybe someone would find out I had it or someone broke in and might cause harm,” said the man, who asked to remain anonymous for the story. “You know, harm my family or myself. I just didn’t want that present.”

This gentleman’s concerns about storing precious metals at home are not unfounded. Many metals owners choose home storage because they prefer the greater access to – and control over – their gold and silver. But storing metals at home or even at a bank safe deposit box is not without some risk that many never consider.

Home and Bank Safe Deposit Box Storage May Not Be as Secure as You Think

Perhaps the biggest worry for people who keep metals at their residence is the risk of loss or theft. If you do decide to store your metals at home, you’ll want to be sure to update your homeowners insurance coverage appropriately. The standard coverage limits for precious metals are usually around $1,000 or less. Assuming you own more than that, you’ll want to get with your agent about buying an add-on floater policy that ensures you’re covered up to the full value of your metals.

But being protected against the financial loss of your gold and silver doesn’t lower the much more ominous risk of being robbed. In a November 2017 Forbes article, Olivier Garret, former CEO of the Hard Assets Alliance, wrote that he had a number of clients whose metals were stolen. In many instances, the robbers turned out to be family members. Some clients even reported having their metals taken at gunpoint. 

You might think you can trust fully your closest family members. And maybe you can. But remember that you cannot control what they say to others. Innocent, inadvertent slips of the tongue can end up causing real problems for even the most conscientious home-storage metals owners.           

As an alternative, many who decide against storing metals at home turn to safe deposit boxes located at nearby banks. To some, it seems like a good way to split the difference between keeping metals on their property and storing them at a facility such as the Texas Precious Metals Depository. But bank safe deposit boxes are not necessarily great solutions, either.

A 2019 New York Times article highlighted what is perhaps the biggest shortcoming of bank safe deposit boxes: There are no laws that protect the contents of those boxes in the same way that Federal Deposit Insurance Corporation (FDIC) insurance protects actual bank accounts. Yes, bank safe deposit boxes are located inside banks. But as the Times article points out, the boxes occupy a “legal gray zone within the highly regulated banking industry,” one in which there exists no rules that “require banks to compensate customers if their property is stolen or destroyed.”    

Another potential problem associated with storing metals in a bank safe deposit box has to do with the obvious fact that the box is, well, at a bank. One of the benefits of owning physical metals is that they ideally live outside of – and away from – the banking system. But that bit of protection effectively could be nullified if your metals are in a bank safe deposit box when that financial institution is closed temporarily or worse, permanently, in a financial crisis. If that happens, it may not matter that your box contents are separate from the bank’s assets. The practical reality could be that your gold and silver remain inaccessible to you nonetheless.

Still, if you ultimately decide that storing your metals in a bank safe deposit box is the way you want to go, I encourage you to at least purchase insurance coverage that protects the value of the box’s contents. Talk with your insurance agent about adding an appropriate rider to your homeowners policy. That way, you at least will be protected if the box is mishandled or somehow compromised by bank staff.

For Many, a Dedicated Precious Metals Depository Could Be Best Overall Storage Option

Do the risks associated with home and safe deposit box storage mean that storing metals at a dedicated precious metals depository – such as the Texas Precious Metals Depository – is the best option?

Savers will have to answer that for themselves. Someone for whom having immediate access to their metals is of paramount importance might be unwilling to store them anywhere but at home, despite the risks of loss or theft. But for others, precious metals depositories can be excellent choices. They are highly secure facilities with a variety of robust protections that include state-of-the-art physical security measures, a variety of stringent internal inventory controls and protocols, and comprehensive all-risk insurance coverage from such noted insurers as Lloyd’s of London.

There’s something else. If a retirement saver purchases gold and silver through an IRA, a depository is the only IRS-compliant location at which those metals can be stored. The IRS has very strict prohibitions against what’s known as “self-dealing” with IRA assets, which refers to IRA owners beneficially accessing those assets while they’re supposed to be in custody and out of reach. Keeping IRA metals at a qualified metals depository is the best way to ensure savers don’t run afoul of potentially punitive IRS rules regarding the handling of IRA assets.

In the end, you’ll want to do your own research and due diligence on the subject of where to keep your metals. But whether you’re considering a purchase for the first time or have owned gold and silver for many years, contemplating the best place for you to store your precious metals is never going to be a wasted effort. It is, in fact, one of the most important decisions you’ll make as a precious metals owner.