Investors who own only a limited quantity of metal simply can store it at home hidden and in secret. For larger quantities, the services of private storage facilities should be sought. Wise precious metals investors only should consider an allocated and segregated storage solution that presents the following characteristics:
Established in a stable jurisdiction known for efficient commercial law and property rights enforcement.
Offered by a reputable provider, preferably being part of a reputable group of companies and with the directors clearly identified and accountable.
Full insurance coverage up to the replacement value of the metal, at no additional cost.
Documentation clearly evidencing the title in the property by the investor. This is usually accomplished with a sale invoice by the company. In the case of storage being provided by the company, this is sometimes complemented by a warehouse receipt and a certificate of ownership. These two documents have little legal value, but reinforce the fact that the ownership lies with the investor.
A storage agreement that clearly limits what the supplier can do with the investor’s metal and outlines his role as a mere service provider.
Documentation and statements setting forth the exact weight, manufacturer, fineness, and bar number of your property. Failure to do this by the provider means that you are involved in an unallocated storage scheme.
Regular audits by independent third-party auditors.
Competitive storage and administrative fees. Such fees should never exceed 1% of the value of the metal per annum and should be closer to half a percent (including insurance).
Ability to sell your holdings back to the supplier in a convenient and fast way.
Ability to pick up your bullion at the storage facility with minimum notice to the provider (72 hours maximum)
Investors can structure the geographical distribution of their precious metals assets in the following way:
Small quantities of bullion can be held at home so that they are available in case of emergency.
Larger quantities can be held in private storage in the investor’s country of residence so that it can be reached within a few hours’ drive should the emergency persist.
The rest of the allocation should be held overseas in allocated, segregated, and insured storage located in stable jurisdictions.
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