Gold Storage
This report covers the following topics relating to gold bullion:
- storage options
- storage jurisdiction
- retrieval & sale
Storage Options
The options for gold storage are:
- private safe
- safety deposit box
- specialised vault
To understand where storage comes in the gold buying decision making process, check out our full walkthrough on how to buy gold.
Private Safe
A private safe on your own property may be suitable for small amounts, but insurance will be relatively expensive and you may not want to tell anyone (including the insurance company and / or safe fitters) about your gold for personal security reasons.
Safety Deposit Box
A safety deposit box at a bank is within the financial system and therefore not a logical choice for someone looking to protect themselves from failure of the financial system. A private safety deposit box not linked to a bank is a better option. Compared to a private safe, insurance is likely to be cheaper and there are no personal security issues, but the location of safety deposit boxes is usually visible to burglars.
Specialised Vault
Specialised vaults are owned and run by businesses that specialise in storing precious metals very securely. The storage costs and insurance costs are relatively low because of economies of scale.
Gold stored in a specialised vault can be:
- unallocated / pooled
- allocated
- segregated
The core difference between these gold storage options lies in legal ownership, how the metal is physically stored, and your exposure to the dealer’s financial risk.
Unallocated / Pooled Gold Storage
- Definition: You own a financial claim or general share to a specific weight or value of gold, rather than owning individual physical items.
- Storage: The gold is commingled in a general mass or working inventory held by the institution.
- Ownership & Risk: The gold sits on the institution’s balance sheet. If the dealer or vault goes bankrupt, you become an unsecured creditor and may lose your investment.
- Cost & Liquidity: Typically cheaper or free of storage fees, and offers high liquidity for fast trading.
Allocated Gold Storage
- Definition: You hold direct legal title to specific, identifiable gold bars or coins.
- Storage: The metal is stored in a vault in your name and kept off the custodian’s balance sheet, meaning it cannot be lent out or used to cover company debts.
- Ownership & Risk: Safe from dealer insolvency, but the exact individual items returned to you may match the weight, purity, and type (e.g., ten specific 1 oz gold bars) without tracking the exact serial numbers of the original bars.
- Cost & Liquidity: Moderately higher storage and insurance fees than unallocated options.
Segregated Gold Storage
- Definition: The gold standard of physical custody where your exact items are isolated entirely from everyone else’s holdings.
- Storage: Your specific bars or coins (tracked by exact serial numbers) are placed in a dedicated, sealed container or bin in the vault with your unique account tag.
- Ownership & Risk: Complete legal bailment protection; you are guaranteed to receive the exact same physical items back that you deposited down to the individual serial number.
- Cost & Liquidity: Carries the highest storage and insurance fees because of the specialized handling and individual space required.
Storage Jurisdiction
Many governments are heavily indebted and under pressure to service this debt through taxation. It is much easier for governments to tax assets located in their own jurisdiction. Hence you may want to store your gold outside of the jurisdiction of your own government where the local government is less indebted. It also makes sense to consider the jurisdiction of the business that owns the storage facility.
Retrieval & Sale
When choosing a storage option, it is worth considering how you can retrieve or sell your gold in the future, especially if it is stored outside of your jurisdiction. You should check that your gold can be delivered to you and / or bought back from you and the associated costs.