There’s nothing like holding a gold coin in the palm of your hand. So it’s not surprising that many investors prefer to store precious metals at home or somewhere nearby.
But is it worth the trouble?
While I agree that having some precious metals stored safely at home may benefit you in the event of a major crisis paralyzing the financial system, that should amount only to a small portion of your holdings.
Let’s begin with the obvious reason.
During my nine years as partner and CEO of Casey Research, I can’t recount the number of clients whose precious metals stored at home were stolen. Even worse, in many cases, the burglars were family members who knew about the secret stash.
In a few rare occasions, my clients were forced to turn over all their precious holdings with a gun held to their head. Now, how many times have we had a crisis that would require immediate access to our physical gold? None.
Another reason is financial.
Investors who want to take their precious metals outside LBMA-approved vaulting facilities must understand that by doing that, they are breaking the chain of custody.
And once that happens, your precious metals generally lose some of their value. That’s because outside LBMA, you don’t have access to a competitive secondary market. Which means you’ll most likely resell your holdings at a lower price due to limited local demand.
Aside note: If you still want to take delivery, I recommend buying and storing the most recognizable and liquid sovereign coins.
But before you do that, read on.
Besides excellent long-term returns, most investors buy precious metals for two reasons.
First, precious metals are a critical asset class in every portfolio as they are not correlated to stocks and bonds. Second and most importantly, gold and silver is insurance against all sorts of social and financial crises.
If you are an American, you are living in one of the wealthiest and most stable countries in the world.
Trends like the polarization of our political debate, excess debt, rising cultural intolerance, and increasing interdependence of our too-big-to-fail financial organizations are worrying.
And unless our politicians start addressing these underlying issues—which is unlikely—our country will face many challenges in the future. The pent-up tension might eventually break out into civil unrest or possibly worse.
But due to its geographic location and powerful military, the US is likely to be safe from external invasion and be able to keep law and order in case of unrest.
The financial risks that I think will haunt our country in the coming years are a different story.
So first and foremost, I look at precious metals as a long-term investment and a time-tested crisis hedge for my portfolio. Plus, it’s the best insurance available against currency devaluation. These are the most pressing issues today.
For my precious metals investment to be useful in these scenarios, my primary concern must be liquidity, especially in times of crisis.
That’s why I store my precious metals in a world-class, LBMA-approved vault within the chain of custody. This option gives me access to the most liquid precious metals market in the world.
That means I’ll be able to sell my precious metals for the best price in the market at any time.
Plus, it’s much more practical and convenient than taking my stash of coins under the mattress to the local dealer. And if need be, I can get my precious metals delivered to me within a couple of days.
So why should I take all these risks when I can keep my precious metals investment safe, insured, and within the chain of custody?
In response to your common questions regarding our storage, let me explain that if you store with HAA, your metals are yours and yours only.
They can never be pledged and our world-class vaults (Brinks, Loomis & Malca-Amit) keep detailed records of individual owners’ holdings. Plus, your metals are always available for immediate delivery or sale.
Our records are fully reconciled daily and audited at the vault twice a year by independent auditor Bureau Veritas. Finally, they are fully insured for in-kind replacement by Lloyds of London.
I truly believe there’s no better way to store precious metals.
Olivier Garret, CEO
Hard Assets Alliance
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