Best practices for storing physical gold safely: What investors need to know

Thanks to lingering (and rising) inflation, consumers have been turning to gold investments over the last few years. And with the factors that drive gold prices high now, interest has grown even more. But while buying the precious metal can be a great way to safeguard your wealth and diversify your portfolio in trying times, it’s not the same as other types of investments — particularly if you buy gold in its physical form.

In this scenario, you not only need to think of the pricing and potential returns you’d gain down the road but also how you’ll store your investment, too. 

Are you interested in buying gold for your portfolio this year? Below, we’ll detail the best practices for storing physical gold safely. 

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Best practices for storing physical gold safely

Physical gold has unique risks that other investments don’t come with. As Ben Nadelstein, head of content at Monetary Metals, explains, “Gold is a physical asset that can be lost, stolen, or damaged. Unlike stocks and bonds, which usually exist only in digital form, gold’s value is directly tied to its physical integrity. Without secure storage, investors risk losing a portion, or even all, of their investment.”

The primary risks for physical gold — at least gold stored at home — are theft and natural disasters, says Brett Elliott, marketing director at the American Precious Metals Exchange (APMEX). Or, if you’re storing your gold in a third-party facility, which can better protect it from theft and other events, there’s “contractual risk” to consider.

“It’s absolutely critical if you are storing with a third party that you vet them carefully and only work with a trustworthy company that is fully allocated, insured, and third-party audited,” Elliott says. “The Commodity Futures Trading Commission shuts down companies that are not reputable, but unfortunately, this only happens after the damage is done.”

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How to safely store your gold

Experts generally recommend storing your gold off-site at a secure facility designed for storing assets. For example, in Texas, there’s the Texas Bullion Depository, a state-run and -audited vault for precious metals storage.

“You should work with trusted depositories who are ideally independent of the banking system,” says Daniel Boston, founder of Preserve Gold. You should also make sure that the storage facility comes with an insurance policy — one that “is large enough to cover your precious metals in the case of unexpected loss.”

Also, be sure your gold is what Elliott calls “allocated” at the facility. This will protect you if the depository has issues and declares bankruptcy.

“If you own allocated gold, you own specific bars or coins in your name,” Elliott says. “It’s physically separate from other customer’s holdings. Unallocated gold means you do not own specific bars or coins; you have a claim on a shared gold account that the vault provider can lease or trade. In bankruptcy proceedings, you could be treated as (an) unsecured creditor and lose your gold.”

In addition to these options, you can also opt to store gold in a safety deposit box at a local bank or in a home safe. If you go the home storage route, though, “secrecy should be a priority,” Elliott says, “followed closely by strong locks.”

How much does it cost to store physical gold? 

The cost to store your gold depends on how you approach it, and in many cases, you’ll need to add in the cost of insurance, too. 

“If you store it yourself, there is, of course, no storage fee, but insurance then becomes your responsibility,” says Joe Cavatoni, senior market strategist at World Gold Council. With a safety deposit box, you’ll have insurance plus whatever box-rental fee the bank charges. 

If you’re storing it at an off-site depository, experts say you’ll typically pay between 0.33% to 0.5% of the gold’s value annually — but insurance is usually included. Make sure to look behind just the sticker price, though, Elliott advises.

“Perhaps the most important thing to consider is when you’re ready to liquidate your assets or take possession, what is the process?” Elliott says. “Some storage companies charge excessive fees, lock you into unfavorable sales terms, or refuse delivery without a minimum order. More important than saving money on the maintenance fee, make sure you understand the terms and conditions when you want to get out.”

Consider products that hold physical gold for you

If you don’t want to deal with the hassle or headache of storing physical gold, you can think about investing in products that hold physical gold for you — like gold IRAs or ETFs, for example. 

“With a gold-backed ETF, physical gold is kept safely in professional vaults on your behalf and is included in the costs at the time of purchase and sale,” Cavatoni says. Gold IRAs operate similarly. 

If you’re not sure how to best handle your gold investments, talk to an investing professional. They can provide personalized guidance to help you make the right decision for your budget and goals.