How to store gold

How to store gold

There are basically four different options for storing gold:

  1. Private storage of gold, e.g., at home
  2. Storage of gold in safe deposit boxes
  3. Storage of gold in professional vaults
  4. 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.

Further information