If you own precious metals in physical form, you need to store them securely. But where?
The best strategy is to keep your metals in several secure locations. Ideally, at least one of these locations should be outside the country you live in.
Safety Deposit Boxes or Private Vaults
Safety deposit boxes and private vaults are good choices for physical security, but both have their drawbacks. Theft from safety deposit boxes is rare, but it does occur, and it’s unlikely your insurance—or the bank’s—will cover your loss. Private vaults are often more secure—and client records less accessible to investigators.
To keep your name off your holdings, form a limited liability company and hold the box in its name. You’ll still need to identify yourself when you rent the box, but the owner of record will be your LLC, not you. This precaution also insures tax authorities won’t seal the box at your death pending a probate proceeding.
However, in a full-blown financial emergency, banks and private vaults may be closed. You may not have access to your metals, at least temporarily. If you live in the United States, the government has assigned itself the authority to confiscate "any financial instrument" in a national emergency. Since gold and silver are money, they wouldn’t be exempt from a future confiscation order. (I’m NOT predicting this will happen—but it’s the law.)
Hiding Metals at Home
If you just have a few coins or bars, keep them in a hidden place at home. There are many possibilities: behind baseboards, paneling or walls; in a large houseplant; or even a hollowed out toothpaste tube. Use your imagination! If you have a large home, you may be able to create a secret room or compartment that’s revealed when you pull a hidden lever or pull a book from a bookshelf.
Concealing metals throughout your home has potential drawbacks. A hot fire can melt gold and silver. A thief with a metal detector may be able to find your hiding places, unless you’ve created fake stashes of nails, screws or other metallic objects.
A secure fireproof safe protects against both fire and theft. Install the safe in concrete in the floor, in a location that’s easily accessible, but not obvious. The top should be flush with the floor. Cover it with a rug or, even better, a false floor with a hidden hinge door built into it.
Hiding Metals Outdoors
The best way to hide metals outdoors is to bury them at least three feet underground on your own property. If you have a big backyard, you can bury the metals there. This doesn’t work if you have an immaculate lawn, unless you’re willing to completely reseed it. Otherwise, it will be obvious where you’ve dug the holes.
Use PVC piping to construct your own waterproof storage containers or purchase "Midnight Gardener"-type containers.
Put scrap metal or something else metallic on top of your stash. If anyone with a metal detector comes along, he will find the scrap metal, and hopefully, not dig deeper.
If you own substantial acreage, or have a really big yard, you can bury decoy caches. Bury scrap metal 18 inches or so under the yard at random intervals. Only the most persistent searcher will persevere after a few false alarms.
I don’t recommend burying metals on someone else’s property or on government-owned property (e.g., a national forest). If someone finds it, you probably have no legal claim to it.
If you need to leave your country in a hurry, offshore metals holdings could help you start a new life. An overseas metals cache may also be more difficult for your country’s government to confiscate.
If you own property in another country, you can store metals there the same way as in your permanent home. Theft may be a bigger threat abroad than at home, especially if your overseas property is in a less affluent country.
You can also keep precious metals in an offshore bank vault, offshore safe deposit box, or offshore private vault. If your holdings are large enough, you can use all three.
Your government may require you to report your offshore metals holdings. U.S. persons must annually report offshore "bank, securities, or other financial accounts" with an aggregate value exceeding US$10,000 to the U.S. Treasury.
To keep your name off your holdings, form an offshore company (e.g., offshore LLC) and hold the box in its name. The owner of record is the LLC, not you. Again, you may need to disclose an ownership interest in an offshore entity to your government. This is definitely the case for U.S. persons.
What’s the best way to hold precious metals? There are no perfect solutions, but many possibilities. If you believe that precious metals are a possible way to protect yourself in a global financial crisis, you’ll want to store your metals in several different places, in at least two different countries.
By Mark Nestmann
Copyright © 2009 by Mark Nestmann