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OK, I Bought Some Gold - Now Where Do I Put It?
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(March 15, 2002) A lot of people are drawn to the idea of converting some of their representational wealth into physical, tangible money - that is, gold. Gold is compact, portable, and pretty, and having gold in your hand is a powerful thing. Most people store gold in a bank safe deposit box, but what are the other choices?
One of the joys of owning gold is actually holding it in your hand. Some would say that the major advantage of gold ownership is personal possession – with gold, you no longer run the perceived risks of having that part of your assets entrusted to a brokerage or financial institution for safe-keeping.

Which naturally leads us to the disadvantage of gold: having gold in your possession means that it’s your responsibility, and you have to figure out someplace secure to put it. Gold ownership is supposed to help you sleep at night, not keep you up worrying about the safety of your gold holding – so let’s explore a few ideas about safekeeping your treasure.

In ancient Rome, a wealthy person who had accumulated some gold or silver coins would likely have an area of safekeeping near the hearth of the house. Under the floor or hearth would be a small underground chamber where the coins would be stored. A large and prosperous household would always be inhabited, so the risk of loss by theft was virtually nil.

The idea of keeping one’s wealth close to home was a natural one in the times before banks. For thousands of years, gold has been buried for safekeeping. The practice continues today. One couple that has been clients of ours makes a yearly purchase of gold, returns home to their 160-acre spread, and takes their daughter with them to the place at which they make a yearly ritual of burying the gold.

Obviously, most of us do not have 160-acre spreads, but the idea of burying gold is, in many ways, as good as any other, if you have a yard to do it in. Buried gold cannot be found by a burglar, and indeed is not going to be found by anyone unless they have reason to look for it. Just don’t forget to tell a trusted someone where you put it!

Stashing gold inside your house has the advantage of keeping it close at hand, but is a bit riskier. The first thought most people have is to get a burglar-proof safe.

Don’t do it.

An above-ground safe, in our opinion, is simply an awful thing to have in your home. Some reasons we don’t like home safes:

1. A home safe is unsightly and takes up space.

2. If a safe is visible, think about the message that it sends. Human nature being what it is, anyone who sees a safe in your house is going to wonder: What’s in it? And it’s not your friends, relatives, or your plumber that you should worry about – it’s the friends of their friends who might get the wrong idea.

3. If a safe is hidden, a burglar will find it. If he can’t open it, he may come back later with some of his friends. That’s when things can really get ugly.

4. Remember, if your safe weighs less than your refrigerator, two guys with a handtruck can easily carry it away.

5. And no matter what it weighs, one punk with a pistol can make you open it.

6. In short, safes are ugly and attract a bad element.

But having said that about above-ground safes, let’s mention here the sunken floor safes that you can install in the floor of your closet or garage. These safes are generally small, but invisible as the door to them is actually below the level of your floor, often hidden under the carpet. And if detected, they are virtually impossible to open without actually having the time and tools to chip the safe out of where it’s buried, usually in concrete. You still have the problem #5 as mentioned above, but a lot less chance of detection with a floor safe.

In our opinion, simply hiding your gold up in the attic is actually better than a home safe of any type. A few pounds of gold can easily be stashed in the far corner of your attic, and there’s virtually no chance that any intruder in your home is going to go up there and search.

Upon hearing this suggestion, people often ask what happens if there’s a fire. That would of course be disastrous, but your gold bullion would survive. Once the ashes cooled down, you would find a melted lump of gold. The loss in having that lump re-refined would only be a few percentage points.

Of course, most people people do the most prudent thing and store their gold holding in a bank safe-deposit box. Costs are generally small for storage of gold, since gold doesn’t take up much space. But remember that the bank does not insure the contents of your box. You can, however, buy insurance on the contents of a safe-deposit box as a special rider on your homeowners’ insurance policy, for a very nominal fee.

On larger quantities of gold, it may be worth considering using a bonded precious metals storage facility such as the Delaware Depository or HSBC in New York. These depositories will receive your gold, store it in a secure facility, and they make it easy for you to sell or transport your gold by shipping it via armored car or registered US Mail to wherever you designate.

The larger the gold holding, the stronger are the advantages of a bonded storage facility. Although you may choose to keep a core holding of gold close to home, splitting it among self-storage and a depository may be the best idea. It simply becomes impractical to physically handle a holding of more than a few hundred ounces (for instance, 600 ounces of gold weighs over 40 pounds). It’s no small trick to receive a large amount of gold, put it away in secure storage, and then do all those steps in reverse when and if you wish to sell the gold. A depository handles all that for you, in a secure manner, without your having to take any personal risk in the handling of your gold.

There are also cost savings involved in a depository, in that you can buy and sell larger gold bars at a smaller price spread if the bars remain in depository storage. A depository can also make buying and selling gold bullion more convenient and less costly in that transportation costs are reduced or eliminated altogether.

There are a lot of different factors that will influence your decision about how to store your gold, and we hope we’ve raised some considerations that are helpful.

But we do admire the spirit of the fellow who vowed to cast his gold holdings into a solid bar, much too heavy for anyone to lift, and have it permanently and visibly installed right in the middle of his living room floor.

 

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