A savvy gold investor must first understand their storage options when looking for a safe place to store a cache of the precious metal. Ever since the Great Depression, the public at large has better understood the virtually timeless wealth that gold investing brings – particularly as a hedge against inflation. This has translated into an increase in the number of people opting for gold IRA accounts for post-retirement funds, as well as a general increase in gold trading the past few decades.
To this end, the brick-and-mortar options for storing your gold are laid out below, as well as the option that ultimately saves you the most money – without compromising the security of your investment.
Segregated Gold – What Does it Entail?
This is a kind of storage that involves securing a private storage area for your gold, which entails separation at all times from the precious metal stores of other investors. It is essentially a glorified lock-box with a special identification number; you can visit it to view the gold that is precisely yours because it cannot be traded or replaced as part of normal bank or vault operations. The title is unchanging, effectively.
Allocated Gold Storage
Allocated gold, on the other hand, does not receive a proprietary storage space. Although the same amount of gold you release for allocated storage always belongs to you, the physical gold is combined with the gold of other investors. The amount of gold you place into allocated storage is always the amount you get back when you want it; it just is combined with other investors’ holdings the meantime.
Why Does the Difference Matter?
If you’re into gold investing, then chances are you’re a long-term investor. Traders who choose allocated gold do not need to rush to the bank vault every weekend to view their stores of precious metals, and can benefit from the reduction in fees associated with this commingled form of storage. Both segregated and allocated storage are eminently safe, but the fees associated with segregated storage are necessarily higher because of the private storage aspect.
Furthermore, the Federal Deposit and Insurance Commission (FDIC) won’t insure any sum greater than $250,000 in the normal bank, whereas bullion vaults can be insured for up to $50 million – leaving people with even a moderate amount of gold little choice but to securely store it in a vault.
The Value of Allocated Gold to the Gold Investor
Frankly, as a savvy investor, gold is a hedge against inflation – the best one available, in fact. Allocated storage delivers the best of both worlds, without charging the extra fees that segregated storage demands. The individual vaults and extra labor inevitably increases the storage fees for the segregated option – all of which are of course passed down to the investor.
Make no mistake: the gold in an allocated storage vault belongs unequivocally to you, just as in the segregated option. You simply pay less with the allocated version, for the same level of security.