Throughout History, there have been many instances of gold confiscation. Some of us may recall president Roosevelt’s Executive Order 6102 in 1933, « forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States », or have certainly heard about it. The United States confiscated all of its citizens’ gold. In Australia, a part of the Banking Act of 1959 allowed the government to seize its citizens’ gold in exchange for currency « where the Governor-General is satisfied that it is expedient to do so, for the protection of the currency or of the public credit of the Commonwealth ». Although fears of outright confiscation may be somewhat overblown today, there are still many risks involved in the storage of precious metals. Should they be stored in a bank vault? Or better yet in a home vault? Or should one choose a storage specialist? And should it be stored out of one’s country of origin? And why?
Storage in a bank vault
The advantage would be to have one’s gold stored safely and have access to it. However, there are some risks that your gold may be used by the bank to serve as collateral for their loans and you might have some difficulties in actually taking possession of it, should you decide to do so.
It is common practice for banks to use their clients’ deposits as collateral for other « operations » and, if their survival is at stake, they will not hesitate to pledge your gold. In fact, recently, there have been documented cases where wealthy clients who wished to move their gold to a private vault were denied their gold by their bank and were offered cash settlements. We would strongly advise to store gold outside the banking system in all cases.
Storage in a home vault
While a home vault provides you with the satisfaction of having direct access to your precious metals at all times, there are risks, the most obvious being the risk of theft, and building a secure vault or buying a strong safe can be quite expensive. Also, except in the case of recognised gold coins, having one’s gold out of the traditional circuit, i.e. recognised participants in the physical market such as bullion banks or secure storage specialists, could engender some difficulties in selling it on the market, since an eventual buyer would want to be assured of getting « the real thing » that hasn’t been tampered with.
Storage with specialists
Storage with a renowned company gives you peace of mind. As long as you are guaranteed access to your gold stock at all times, are given a certificate of ownership with the serial numbers of your bars/ingots, and have your holdings insured, this is clearly the best option available. Some online dealers have a strong relationship or partnership with a reputable secure storage company, and some don’t.
The best solution !
In conclusion, there are several options available to invest in gold and other precious metals. Most of the reputable online dealers will sell at a fair price, since the competition is ferocious. But we cannot stress enough the need to have one’s precious metals stored offshore, which is your best guarantee against any risk of confiscation. In the five dealers reviewed, some can arrange storage in an IRA-approved depository, but only one offers storage offshore and, for that reason, we consider Goldbroker.com to be the best and safest solution for investing in gold.