While gold (GC=F) can be attractive during periods of economic uncertainty, it carries some risk.
According to the FBI, more than $1 billion worth of jewelry and precious metals are stolen each year. And as gold prices rise, thieves have more incentive to steal it.
To protect your investment, it is important to store your gold properly. Understanding some of the most common myths about storing gold (and what you should do instead) will keep your gold safe.
More information: How to invest in gold in 4 steps
Physical gold offers some advantages. It’s tangible, durable, and if you keep it at home, it’s free. But it can also be risky. As gold is compact and portable, there is a high risk of theft. Considering the sky-high price of gold right now, even the theft of even a small part of your collection can result in losses of thousands of dollars.
When it comes to storing gold, many investors rely on advice from loved ones or strangers on the Internet. Unfortunately, some myths about storing gold are widespread (and risky!). Here are some of the most common myths and what you can do to store your gold properly.
The truth: 63% of all burglaries occur on residential properties, costing billions in losses.
Even if you have a safe, your gold may not be safe. Many home safes are easy to open, and smaller ones can be quickly picked up and removed from the house (giving the thief time to figure out how to open them later).
If you decide to store your gold at home, choose a safe that can be bolted to the floor. And keep the safe in an unexpected place; Thieves tend to check the master bedroom, closet, and home office first.
The truth: Gold coverage can be very limited unless you purchase additional insurance.
Although a homeowners insurance policy will typically cover some gold in the event of theft, standard policies set strict coverage limits. Depending on your policy, the maximum coverage may be as little as $1,500, so you will need to add a floater or insurance endorsement to your policy to get adequate coverage. Or you can purchase a separate policy for your precious metals.
The truth: You need good records to file taxes, claim insurance, or give gold to family members.
Since gold is a physical, tangible asset, people often think that good record keeping is not necessary. But if you don’t have the proper documentation, you may have trouble reporting capital gains from the sale of gold, filing an insurance claim if the gold is stolen, or leaving the gold to heirs.
When purchasing gold, keep purchase receipts, keep track of serial numbers, and take photographs of the coins/bars or observe their condition.
Learn more; Gold has been on a roll all year. Here’s how to avoid a tax hit.
The truth: You can store your gold in a safe place for as little as $50 a year.
If the thought of storing gold bars, bars or coins at home makes you nervous, storing them somewhere else is a good decision. There are two main options:
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Safety box: Safe deposit boxes are available through many banks or credit unions. The safe deposit boxes are located inside a vault, and you must show your ID and have a key to access the box. A large safe deposit box costs between $70 and $100 a year.
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Private Storage Vault: Some companies operate secure vault facilities. You can store gold bars, coins and other precious metals in a safe place. The cost is usually 0.5% to 1.5% of the value of your gold holdings. If you have $10,000 in gold, your fee would be between $50 and $150 per year.
Owning physical gold can be a smart alternative investment, especially during periods of economic uncertainty or volatility. However, owning physical gold requires some extra precautions to keep your investment safe.
Best practices include:
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If you store gold at home, purchase a high-quality safe that is bolted to the floor and cannot be easily lifted.
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Avoid talking about your gold holdings or posting them online.
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Add an endorsement or insurance clause to your homeowner’s insurance policy to cover your gold.
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If you keep your gold in a safe deposit box or private vault, purchase a separate insurance policy.
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For larger gold collections, store your gold in a large safe deposit box or professional storage vault.
While gold can be a useful part of a diversified investment portfolio, it should not make up the majority of your investments. In general, experts recommend investing no more than 15% of your money in gold.
In the US, there is no limit on the amount of physical gold you can store in your home. However, the more you store in your home, the greater the risk of losing your investment to theft.
Storing small amounts of gold can be safe if you use a high-quality safe bolted to the floor of your home and take proper security precautions, such as installing deadbolts and a home security system. For larger collections, you may benefit from using a separate safe deposit box at a local bank or a professional storage vault.