How to store gold
There are basically four different options for storing gold:
- Private storage of gold, e.g., at home
- Storage of gold in safe deposit boxes
- Storage of gold in professional vaults
- Storage of gold in secret locations
We will not consider the last option, i.e. storing gold in secret locations such as burying it on fields or hiding it in mountain caves, since such a storage poses significant risks and is complex to implement.
Comparison of options to store gold
In order to choose the most appropriate way to store gold, private investors should take into account the following criteria:
- The ease of use/ implementation
- Fungibility, i.e. how simple can gold be bought or sold
- Costs for buying, selling and storing gold – including insurance
Private storage of gold at home requires a good safe and an insurance policy. In case of private storage, investors have to buy and sell gold on their own and also need to arrange safe transport by themselves. In case of choosing a provider of safe deposit boxes, private investors do not need to acquire a vault on their own since the infrastructure will be managed by the provider of the safe deposit boxes. But private investors regularly have to care for insurance coverage and also have to organize purchasing and selling gold as well as transporting it on their own.
In case of professionally vaulted gold, providers of vaulted gold regularly cover purchase and sale of gold, logistics as well as insurance coverage. The gold is stored in high-security vaults.
| Storage options physical gold | Private storage | Safe deposit box | Vaulted gold |
| Description |
Storage at home, e.g. in a safe |
Safe deposit box at a bank |
Storage in an accredited vault |
| Direct, legal ownership of gold |
✔ |
✔ |
✔ |
| Ease of use |
low |
low |
high |
| Fungibility, i.e. ease of buying/ selling |
low |
low |
very high |
| Costs of buying/ selling gold |
medium – high |
medium – high |
low – medium |
| Costs of storage |
high (secure safe required) |
medium |
low |
| Costs of insurance |
medium |
medium |
low |
For many private investors, vaulted gold can be the most attractive option to store gold. Vaulted gold means professionally stored physical gold. An investor of vaulted gold acquires outright ownership of gold, a potential default of the provider or custodian does not affect his gold holdings.
Many providers of vaulted gold buy 400 ounce standard gold bars (as defined by the London Bullion Market Association), which are used in the professional gold markets. Standard gold bars are traded at very low margins, a cost advantage that providers of vaulted gold hand on to their clients.
In contrast to privately stored gold bullion, vaulted gold can normally be sold quickly and easily if required, as there is no need for the potential buyer to inspect the gold before the purchase. Upon request, most providers of vaulted gold offer delivery of gold to clients.