The past decade has seen tremendous growth in private safe deposit box services, some specifically catering to physical precious metal investors, as well as the emergence of bailment services such as Goldmoney, BullionVault and Gold Republic. Which should you use for your physical precious metal investment strategy? The short answer is, both.
We compared the one-year costs of storing various quantities of gold and silver coins and bars under both approaches and came to the following conclusions:
- Silver in quantity is bulky and risky to store and transport. For cost and convenience, serious quantities of silver are best kept in bailment. At present BullionVault has the best rates for storing large quantities of silver;
- If you already own physical coins or bars, stashing them in a safe deposit box probably makes more sense. The bailment companies discussed here are not set up to take your existing metals;
- For 100oz or more in gold coins or small bars a safety deposit box is an attractive option. A lot of gold can be stored cheaply in a fairly compact safe deposit box than at any of the three online bailment services we looked at.
See here for the full analysis.
Safe deposit box
All of these are located in precious metal friendly countries with a good variety of local dealers who will buy and sell precious metal metals with low/no taxes or legal restrictions. For more options check out safe deposit boxes.
Bailment describes a legal relationship where physical possession of personal property is transferred from one person (the ‘bailor’) to another person (the ‘bailee’) for safekeeping. Under bailment, legal ownership never transfers as the bailee is merely safeguarding the property for a fee.
BullionVault, Euro Pacific, EverBank, Gold Republic, Goldmoney, and the Hard Asset Alliance have brought the concept of precious metal bailment into the Internet age. At PRECIOUSMETALTAX.com we call these ‘online bailment’ services as distinct from traditional full-service bailment.
The table below compares the one-year bailment storage costs at the most popular providers. While keeping in mind this looks at storage costs only, clearly Goldmoney and BullionVault are the most competitive. Having said that we recommend taking close look at the overall package offered by each company, as there are material differences in other costs, features and fine print. (For example, the costs and rules around taking physical delivery of your metals can vary significantly.)
** based on US$1,140 gold and US$15.18 silver as of September 18 2015
As always, the devil lies in the details so check out here for a more detailed comparison. See Safe Deposit Box v Bailment for a side-by-side review of the pros and cons of each. Also see our Storage section for more info on do-it-yourself approaches, fake safes, and ‘midnight gardening’ etc.