What is Segregated Gold?
Many investors choose precious metals as an effective way of safeguarding their wealth. These metals are stored safely outside the banking system.
But are your metals truly segregated? Recently, several shows discussed the confusion regarding allocated and segregated storage in precious metals programs. Let’s take a look at what this means for investors like yourself.
What is segregated storage?
Storage solutions vary when it comes to gold and silver investments, depending on your personal investing style and why precious metals were purchased initially.
Segregated storage is a type of depository or company storage that keeps your physical precious metals separate from those held by other customers at that depository or company. Unlike with commingled storage, which combines precious metals together as they enter, segregated storage ensures that when you withdraw them back it always matches up exactly with how many bullion pieces have been deposited when withdrawing them back out again.
Long-term investors who lack the time or inclination to keep various coins and bars on hand all at once may benefit from purchasing precious metals this way; additionally, this reduces your risk of theft or robbery since these precious metals would no longer be lying around the home or office.
What are the benefits of segregated storage?
Many precious metal investors also collect individual coins or bars, so their pieces need to be stored separately from general vault stock in what’s known as allocated storage.
Allocated storage can be much less costly than segregated, since it doesn’t require special handling of each bar and coin inventory from the beginning. Unfortunately, however, it doesn’t offer you the security that your numismatic items won’t be substituted with another bullion item when taking delivery of them.
Unallocated storage has the advantage of being less costly than alternative forms of custody such as duty-free warehouse bonded vault or open bonded warehouse in Switzerland, where sales tax does not apply to white precious metal sales. It may be suitable for investors who do not plan on taking physical delivery of their gold and silver in the immediate future.
What are the disadvantages of segregated storage?
Segregated storage offers the most secure option for those planning to take delivery of their metals at some point (perhaps due to systemic risk, devaluation of currencies or political uncertainties), with individually numbered box seals and serial numbers on gold bars that ensure they receive exactly what was deposited (i.e. 10 Gold Eagle coins instead of generic equivalent).
Unallocated storage, however, lacks individual vault space for each client and therefore their physical gold investment may be mixed together with that of other investors’ metals in one large pool. Should your bank become insolvent or be subject to claims by third parties against it, your precious metals would become exposed since they belong to its assets rather than being owned solely by you as their owner. Furthermore, this approach requires additional labor as well as increased storage fees which ultimately pass down through customer fees; wise investors often opt for segregated storage.
Why should I choose segregated storage?
As opposed to allocated storage, which mixes your gold with that of other investors, segregated storage provides you with its own dedicated vault space – meaning when auditing, taking delivery or selling precious metals you will get exactly the same physical material back.
As the global economy struggles with weak economic development, high unemployment and devaluation of fiat currencies, more people have turned their interest to physical precious metal investments. Survivalists and preppers in particular are driving demand for gold and silver as a hedge against systemic risk and financial collapse. With such growing interest comes increased search for safe storage options for their precious metals investments; not all options offer equal security though some may charge excessive fees or become unavailable during bank holidays or bankruptcy filing. Fully segregated storage is the optimal way to protect physical precious metal investments.
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