IPM&CS Munich - Part III - The Storage Problem

Int. Precious Metals & Commodities Show Munich  -  PART III
Int. Edelmetall- & Rohstoffmesse München  - Teil3

 

 I did write a few lines on the traders in my last post. After you selected one of those traders and started to buy some precious metals, new questions arise:  how and where to store it?

 

Just think about yourself. Lets assume, you put 10 % of the assets you own into gold or silver. For the sake of the argument, lets say that is 20.000 EUR. All in Gold, that would be ~15 oz of gold. And in silver: 31 USD / oz at 1.29 EUR/USD >> so somewhat less then 850 oz  or below 30 kg.

 

You really want to store that in you flat / house? Well, I guess, this is doable. Its only 10 % of your worth - so if you loose it (to your maid, burglars, party guests stumbling over it) you still stay alive. May be you even want to have that amount at immediate access - just in case.

 

When the numbers rise, sooner or later you do not want to store that at home. So what next? You took physical delivery in first place, because you did not want any risk from counter-parties. So no ETF, funds, etc ... rather physical delivery.

 

Not wanting to store under your pillow, the bank vault is the next step. Its quite anonymous; you don't have to tell the bank what you store ... just make sure you do not store more than the insurance covers.
But what happens in worst case: will the vault be accessible in case of bank holidays? Just imagine: nobody can take money from his accounts. People line up. Now you step in. Maybe you get your coins and bars ... and then you want to exit and move through the angry crowd?
Or maybe you do not get your precious metals! As banks have been told to make the bank holiday a holiday for everybody! So all vaults may be frozen ....

What (mostly) Swiss companies offer here: Store in the Swiss mountains (some of them offer that literally).

Approach I: non-allocated storage in a customs-free zone (in Switzerland).
What you can do here is buy gold or silver in a lump-sum or over time. You will get some discount here, as the provider buys huge lots and not a coin here and there. And being in a customs-free zone, there is no VAT (on silver; gold is tax free anyways). 

On the upside: safe storage, not linked to a bank, out of the European Community, guaranteed take-back of you metalls.
One of the sales guys started to speak about a traceless transfer (no emails, no paper sent to your address) without me asking. Guess that is a standard question they get.

The cost: you pay an agio (0 to 5 %), storage fees per anno (1 - 2 %), and sell fees (1 - 2 %). 

 

Approach II: allocated storage at such companies.
I asked about that, and it looked like they are not really prepared for it. You can do it, fees will rise. But the minimum amount is rather high (1 CHF mn) - and the main problem they mention is the seperate storage rooms needed. 

 

Apporach III: vault from private companies.
Here you get storage in a vault - its no longer in a customs-free zone. But you can access it just as a vault at your local bank. So whatever you put in or out - it is your business. Still they offer you to buy and sell metals, as they have a link to a retailer. So you can call them or buy online, drive their, take the stuff from them and place it immediately into your vault. (You get 2 keys, can leave on with them or take both with you - and you will need both to open the vault.) 

And (mentioned without asking): after 3 years they accept paying for the vault in cash. Price: ~750 CHF per anno, but depending on the size. You can go up to storage places for 1 ton. 

All the concepts have so far been alien and new to me. To really get a picture, I guess it will be necessary to do some more research. One of the companies - Mida - will be presenting in the next weeks here near Munich. Guess I will take a look on how much attention they will get at that event.

 

... more to follow ...