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WHERE AM I SUPPOSED TO STORE ALL THIS GOLD & SILVER? - Part - 1
(How to store with confidence - Part 1)
This is the first of a two part article written over 15 years ago by Larry LaBorde that is still every bit as valuable now (if not more) than it was then. I have updated it a little, but it is very much still my father’s writing. I would like to thank Silver Trading Company silvertrading.net for sponsoring our efforts. - Christopher LaBorde
As a metals broker I get a lot of questions about storage of silver bars, rounds and other forms of metals that investors buy. Here’s my philosophy.
Store outside the financial system
This means holding no Exchange Traded Funds (ETFs). Even though they are ever so easy, you should exercise caution. Read the prospectus and zoom in on the custody section---if you can stay awake long enough to read it.
It might surprise you to learn that storing outside the financial system also means avoiding bank safe deposit box storage. Safe deposit boxes are the worst of both worlds: They are not insured by the bank, yet they are subject to banking regulations.
Storing metals outside the financial system also entails holding no commodities contracts held by financial firms like MF Global. (MF global went bankrupt and stole everybody’s funds through hypothecation)
Take possession if at all possible (Foreign countries sometimes have restrictions)
Sure, your metals can be stolen, so just like with anything else, you must take appropriate precautions, including locating a suitable storage option.
If for some reason you feel uncomfortable storing all of your metals yourself, look for a non-bank, segregated, insured storage facility (a vault or other depository (A “depository” is a vault that is pooled storage, not segregated)), preferably one that is insured against loss. It will cost a bit more than a private deposit box facility, but you will be insured against theft.
KEY - Also make sure that your metal is in “segregated” storage as opposed to “pooled” storage. You want to make sure that your exact metal will be returned to you when you are ready. Visit the depository to see exactly what is involved in depositing metals and more importantly, what is involved in withdrawing those same metals.
Discuss different withdrawal scenarios and make sure that you are comfortable with all answers given for how you will get your metals back to you.
Just how much room will you need?
A box of 500 one-ounce Silver Eagles is about the size of a large shoe box, or about 9” x 15” and 6” tall. A box is worth about $14,500 as of this morning (July 14, 2023). So if you want to store $100,000 in silver you will need a space about the size of seven (7) large shoe boxes.
Large 100 ounce silver bars are a bit more compact and stack much more easily in a smaller space, approximately half of the space of the eagles.
90% silver is a bit more bulky and doesn’t stack well at all in bulk bags. A $1,000 dollar “face” bag is worth around $18,000 dollars, weighs approximately 40lb and is about ¾ of the Silver Eagles 500 “large shoe box”.
Gold, on the other hand, is much more portable than silver and is easily stored. Just 49 one-ounce gold coins hold a value of a bit over $100,000 and do not take up much room at all. They could easily fit inside the cardboard tube from a roll of paper towels.
$100,000 of silver (7 - 500-coin boxes of Silver Eagles) weighs about 237 pounds.
The same $100,000 of gold (49 one-ounce coins) weighs a right at 3.33 lbs. A million dollars in gold would only weigh 33.3 lbs or so and could be easily carried off by one person without much effort.
A million dollars worth of silver weighs 2,37
0 pounds and would require quite a bit of effort---and a truck---to carry it all away.
In my next post, I’ll look at some practical considerations for those of you who want to take delivery of your metals and keep them in your home, on your person or in secure facilities.
Larry LaBorde - 2012
(Updated with July 14, 2023 spot prices)
I would like to thank Silver Trading Company (silvertrading.net) for sponsoring our efforts.