Where is Your Gold? All the Facts on Gold Depositories

As gold’s appeal as a safe haven asset climbs amid global unrest and economic uncertainty, investors are increasingly looking at ways to put skin in the game. 

A popular way to get involved in the precious metals sector is by buying shares of companies or exchange-traded funds. But for those who prefer hard assets, physical gold may be the way to go.

For those that opt to own physical gold, keeping it safe is of paramount importance. However, stacking gold bars in your family room or stuffing a wall safe full of gold coins may not be the best way to safeguard your assets, especially in times of turmoil.

Despite being one of the oldest currency metals, there are only three ways to store gold: keep it at home, use a bank’s safe deposit box or pay a third party storage firm, also known as a gold depository.

Storing at home is self explanatory. Using a bank’s safe deposit box system will require renting a box from your bank and placing your gold in its vault. Depending on the bank, you may be able to walk in and instantly access your box during business hours, while other banks may require you book an appointment in advance.

Choosing a third party gold storage company is similar to a bank’s vault with a few important differences.

To find out more about this option, the Investing News Network (INN) spoke with Terry Hanlon, president of Dillon Gage Metals, a Texas-based company specializing in the trading and technology of precious metals and diamonds. Dillon Gage also operates the International Depository Services Group (IDS), a privately owned subsidiary.

IDS offers precious metals depository services in Texas, Delaware and Ontario, making it one of the largest providers in North America.

INN: What is the process of getting gold/precious metals and storing them? 

Terry Hanlon: The process is extremely simple and quick with IDS. The first step is for prospective clients to complete and submit an account application, which can be found online at IDSofDelaware.com. Once the account paperwork has been received, the account is generally opened within 24 hours and the client may then ship precious metal bars and coins into the account as well as certified coins. There is a form on the website that may be used to notify IDS to expect the metal(s). All shipments should be sent with insurance coverage to protect the sender.

INN: Why should people opt to store their gold in a depository? 

TH: Simply put, precious metals depositories are the safest and most secure way to store precious metals. IDS’ highest priorities include security and protection of clients’ assets, integrity and confidentiality of clients’ information and a personalized and tailored approach to storage and reporting.

INN: How quickly can a client’s gold/precious metals be accessed? 

TH: All precious metals stored at the three depositories of IDS may be made ready for withdrawal or transfer within 24 hours of receipt by written notice from the client or an authorized representative of the client.

INN: How much does it cost to store a gold bar in a depository? 

TH: Most depositories have competitive storage and service fees. For individual investors, IDS charges between 0.5 and 1.25 percent of the value per year.

INN: Why is a depository safer than self storage or a safety deposit box? 

TH: At first thought, storing at home or in a safe deposit box may seem like a pretty good idea. While a bank might seem like a safe place, think about why banks are in business — they are in the business of lending, not storing. Many banks expressly prohibit the storage of coins and cash in safe deposit boxes. Additionally, a bank’s security is only as secure as its employees. Safe deposit boxes are not FDIC insured; you have to provide your own insurance, which can be very expensive.

And finally, suppose you had US$50,000 in silver. You can hold US$50,000 of gold in one hand, but it would take six or more large shoe boxes to hold the same amount of silver. Consider the weight — at today’s price, US$50,000 in gold is about 2.5 pounds, while US$50,000 in silver is about 200 pounds. Not a good plan.

INN: How does one ensure their gold is really there? 

TH: While clients are able to visit the depository and review their holdings, this is often not feasible due to logistics. Therefore, to ensure their gold is really there, investors should always ensure their precious metals are held with a reliable company, know whether their investments are being held “on” or “off” the company’s balance sheet, request their assets are segregated and titled in their name, know whether they are insured by a special “all-risk” policy underwritten by a reputable and credit-worthy insurance provider and inquire how often the depository conducts regular audits.

INN: With geopolitical uncertainty growing, have you experienced increased interest in your storage service? 

TH: Demand for precious metals storage has increased in recent years. In just 10 years, IDS has grown from one depository to three: two US locations in Delaware and Texas and its third location in Ontario, Canada. Precious metals investors are realizing that there is no safer place to store their precious metals investments than in a specialized precious metals depository with highly secure, UL-rated Class III vaults.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.