3/21/10 The DO’s And DON’Ts Of Gold Storage

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

This is probably the most common question people ask me. It’s somewhat difficult to say what’s best for everyone, because have different ideas regarding security and each person has a different mix of silver and gold. However, I will give you the best of my thoughts on the matter.

There are two main threats you need to protect against; robbery or theft and government or political intervention. Let’s also assume we are addressing the protection of physical metals only, not including stock certificates, ETF’s or other paper gold or silver.

The biggest safeguard we need to address is protecting your metals against theft. Most importantly, you need to keep quiet about your ownership of metals and where you keep them. That seems rather obvious, but you would be amazed how often this rule is violated.

Another thing to watch out for is coin companies that offer to hold your gold for you in safety deposit boxes or elsewhere. Never buy from a coin company that does that. That defeats the whole purpose of owning gold. You want it there with you when an economic crisis arrives. In the midst of chaos, what are your chances of getting your gold if it is stored at a company half way across the country or the globe?

You should also avoid Safe Deposit Boxes in a bank. Most likely, during a crisis when you will want access to your gold or silver, the banks will be closed. They could be closed for a period of weeks or even months in the case of a national emergency. In addition, in the case of potential government confiscation, bank managers are allowed with a court order to open safe deposit boxes and remove any item so designated.

So, once you own gold and silver coins, where do you store them? Many clients store their metals in hidden safes behind false walls, cement them in basement walls, hide them under a three-season porch or tuck them away carefully in a crawl space. Basically, let your imagination be your guide. This is my favorite recommendation.

It sounds kind of crude, but I have many clients bury them. Here is a possible plan. First, get a 6” diameter PVC tube like the plumbers use and cut it in a 12” to 18” section. The amount of gold and silver you own will dictate the number of sections you need to cut. Next, get a couple of plastic drain ends like the plumbers use and some waterproof silicone. The gold coins come in plastic flips, so put as many gold coins as you can in a Ziploc bag and zip the bag shut. The Ziploc bag provides a double water protection. If you have silver coins, wrap them up in like manner. If you have a lot of silver, you will need more than one section of 6” PVC pipe. Once you have your coins in the pipe, then put some crumpled up newspaper in the pipe for packing and for water absorption, and seal the plastic drain ends in place with waterproof silicone. Now you are ready for the next stage, burying or hiding.

If you live in the country or on a farm, burying is relatively simple. If you have out buildings or a wooded area, just pick a spot that you can remember easily and is easily accessible. There is no specific rule about how deep to bury the pipe, but you want to make it shallow enough so it is easy to dig it up if you need to leave in a hurry, but deep enough to deter a quick in-and-out coin grabber. If you live in town and have a yard, then you need to pick a spot, preferably as far away from the house as possible, so it would be harder for a would-be robber to find it. If you live in an apartment, then the choices are more limited. I asked one very astute old gentleman who was living in an apartment where he stored his gold. Without hesitating he retorted, “My ceiling beams are sagging.” I had another customer hide his coins underneath an outside cement step. This hides the coins from metal detectors and even most infrared devices.

No special care is needed with gold – gold will not tarnish or corrode no matter how you store it. Gold is soft, and your Mint-fresh coins can be scratched or marred by rough handling. This won’t effect their gold value, of course, but bullion coins can lose some of their resale value if not kept in perfect Mint condition.

The next thing to do is to be sure to tell someone you can trust where you hid the coins, preferably the person who will be getting them when you pass on.
Another important step is to develop a ruse, a scheme to deter or fool a would-be robber. To do that, put a few dimes or half-dollars or silver dollars in a real secret place in your house. Meanwhile, 99.8% of your coins are somewhere else, out of harm’s way. That way, if someone comes to rob you, and if they threaten you with bodily harm, with great reluctance you can take them to that secret place and show them the silver coins, and you tell them, of course, that that’s all you have. At least that way they will be happy to get something of value, and they will probably leave in a hurry without harming you. Most people who come to rob you are in a hurry, and they don’t come with a shovel in one hand and a metal detector in the other. An alternative here is a method I use. I have my large, main safe in a hidden room, but I have a small second safe hidden in my office. I only keep enough in the small safe to satisfy the greediest of thieves.

A last alternative is to store your coins at a local independent third party security company. I do NOT mean self-storage here, but rather a company that specializes in securing valuable. It seems every large city has one – private companies like Brinks and there are many others are available at about the same price as banks charge for their safety deposit boxes. Make sure you can gain access at a minimum of normal business hours.

Regardless, the most important thing is owning your physical metal and keeping a significant amount near you at all times. Off shore storage companies are NOT recommended. If you ever need your gold or silver, you’ll be glad you have access to it quickly and can hold it in your cold, stiff hands!!

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Pennco Coins
This entry was posted in Buffalo, Bullion, Coin, Dollar, Eagle, Federal Reserve, Gold, Gold to Silver Ratio, Government, Investment, Maple, Mint, Palladium, Peso, Philharmonic, Platinum, Silver, Tax and tagged , , , , , , . Bookmark the permalink.

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