The Benefits of Segregated Gold Storage
Individuals frequently buy coins and bars with specific numismatic value to diversify their portfolio. Many investors become emotionally attached to specific bullion, unwilling to see it mixed up with or replaced.
Segregated gold gives you your own box of bars that can easily be located if needed thanks to serial numbers printed on their certificate or confirmation of ownership document. This makes for quick retrieval in case of emergencies.
Precious metal investments are held by many investors for long-term value and safety purposes. Therefore, segregated storage facilities must be in place.
When depositing and withdrawing gold, its exact replica should come back out again – unfortunately, many dealers use unallocated storage.
Storage with this option involves mixing your gold with that of other clients’ metals in an indeterminate mix without regard to mintage, size, weight or purity of bars or coins deposited by you. Bankruptcies such as those experienced by MF Global and Lehman Brothers demonstrate how this could lead to lost bullion.
As part of segregated storage, your individual bar or coin is isolated from others and marked easily for easy identification. Should a vaulting company go bankrupt in the unlikely event that their precious metals would otherwise become collateral to settle debts; in such an instance, their ownership always comes first.
Gold’s legacy as an investment is built upon its strategic qualities; providing risk mitigation, portfolio stability and long-term consistency. Unfortunately, traditional routes to owning physical bullion don’t lend themselves to fulfilling this role in today’s financial environment.
This can be traced to how they are stored; unallocated storage mingles a client’s metal with that of others, making it harder for them to identify and distinguish their specific bars.
Segregated storage allows clients to easily differentiate their metal from that of their provider, making it simple for them to identify and distinguish the bars belonging to each client in case of bankruptcy, insolvency or other events. Vaults, boxes and even specific areas within facilities can help clients to do this while some providers use advanced identification techniques like high-definition photographs of bar surfaces and chemical signatures to help facilitate traceability.
Gold bullion is an invaluable investment, so it makes sense for individuals to secure their assets separate from those of others. But this type of storage offers much more than simply peace of mind.
Allocated storage involves placing your precious metals in a vault or box where they remain physically separate from other clients’ assets, giving clients confidence that when redeeming for cash they will receive exactly the same coins or bars that were initially deposited.
Non-segregated storage offered by banks commingles your precious metals with those belonging to other customers in one pooled vault or storage area, providing convenience but also carrying risk in times of financial stress or instability; distinguishing which metals belong to whom may become difficult. Furthermore, taxes associated with unallocated bullion storage tend to be higher.
segregated and allocated storage enables your gold bars to remain distinct from those belonging to other customers, enabling easy inspection of each bar – easily identified by box seal and serial number – so that redemption or delivery in its currency can occur at short notice or with zero counter-party risk, providing benefits similar to GLD such as liquid two-way markets and annual audited inventories.
However, such increased security does come at a price. Due to requiring special storage spaces for segregated solutions, segregated and allocated solutions will typically cost more than their non-segregated alternatives – this is particularly the case with coins having significant individual value or those involved with complex legal matters that require segregated storage solutions for peace of mind purposes. Still, such level of protection makes sense for anyone looking to diversify their portfolio with physical precious metals.
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