Safe deposit boxes at the bank are often considered the best way to store gold bullion bars or coins. They offer more security than home storage, they're cheap to rent, and you can store just about anything in them without having to declare the contents. It all sounds great. However, when it comes to storing large amounts of precious metals, a bank safe has several risks.
Gold and silver bullion storage insurance
We've all seen bank robbery movies where criminals tunnel into the vault to steal jewelry, gold and other valuables before vanishing into thin air.
In this type of situation, most people think that only the bank loses out, since the owners of the safe deposit boxes are insured... but this is not the case. Insurance terms can vary significantly from one bank to another, but as a general rule the contents of the safe deposit box are only partially insured, if at all. A bank does not require to know what is in a client's safe deposit box, so they do not insure the entire contents to the fullest extent.
Other risks of storing gold in a safe deposit box
Of course, bank robberies are rare, but the lack of insurance is not the only risk inherent in safe deposit boxes.
During the financial crises in Cyprus, Greece, and more recently in Lebanon, banks closed their doors to their clients for an indefinite period. Not only did they freeze bank accounts, but they also forbade access to the safe deposit boxes. This type of restriction prevents people from having a means of payment at hand to meet their needs, when access to traditional means of payment (cash, credit cards, etc.) is blocked. We could eventually see a similar scenario in France or elsewhere in Europe.
Banks seem to obey laws that apply only to them, and if they decide to block access to the vaults, there is nothing you can do about it. They may also close for other reasons, such as construction or vacations. Except that in the event of a crisis, you will need to have quick access to your precious metals.
People generally invest in gold for security, to protect themselves against risks. By storing your gold in a bank, you remain highly exposed to the banking and financial system.
Vault size and preservation of metals
The size of a bank vault is limited. It will be difficult to store a large quantity of metals, especially silver metal, which is much denser and bulkier than gold.
In addition, to avoid deterioration, some metals need to be kept away from sources of moisture and heat.
This is why it is much safer to store your bullion and coins through a company specialized in the safekeeping of precious metals, where the conditions of preservation are adapted and the storage capacity is practically unlimited, even if the cost is a little higher than that of a bank safe. Moreover, your investment will be insured against the worst scenarios.
FAQs
More Info. Safe deposit boxes at the bank are often considered the best way to store gold bullion bars or coins. They offer more security than home storage, they're cheap to rent, and you can store just about anything in them without having to declare the contents.
Why are you not supposed to keep money in a safe deposit box? ›
A safe deposit box is not a deposit account. It is storage space provided by the bank, so the contents, including cash, checks or other valuables, are not insured by FDIC deposit insurance if damaged or stolen. Also, financial institutions generally do not insure the contents of safe deposit boxes.
Is it safe to put gold in bank? ›
When it comes to Gold Bullion, where you store your investment really does matter. For some people, the primary choice for gold bullion storage is banks. However, financial events worldwide continue to prove that your gold isn't always safe in bank vaults.
Where is the safest place to store gold bullion? ›
High-level security: Banks are highly secure places. Storing your gold in a safety deposit box means that it'll be under strict security measures including thorough surveillance and controlled access. This provides peace of mind knowing that your assets are well-protected against theft, damage, and loss.
What are disadvantages to a safe deposit box? ›
Still, there are disadvantages to safe deposit boxes. Contents aren't protected by FDIC insurance and, while protected, aren't guaranteed disaster-proof. Your access depends on the bank's operating hours and is only available as long as you keep paying rent.
What happens to safety deposit boxes when a bank fails? ›
What if the bank has failed? If the bank recently failed, the FDIC or the bank that assumed the failed bank's business may have the account or safe deposit box contents. After a period of time, the FDIC or the bank must transfer unclaimed property to the state.
Do banks check what you put in a safety deposit box? ›
The safe deposit box is a storage space you rent from the bank. Its contents are kept private, and the bank doesn't know what you put in there.
Is it smart to put cash in a safety deposit box? ›
Cash: Not only is it not insured and you may need it right away in case of emergency, your money isn't earning interest in a safe deposit box. Some banks may not even allow cash in safe deposit boxes, depending on the terms and conditions.
Can gold bullion be confiscated? ›
Gold Confiscation in the Future…
Who knows? Of course it is possible; it has been done before and governments in times of stress simply change the laws. As you can see above, gold bullion was forced to be sold to the government in 1933.
Where do you keep gold in a bank? ›
The locker area in a bank is highly secure, and no one can enter it without prior permission. Therefore, keeping gold in bank lockers is a highly safe choice. But you won't earn any interest on gold kept in bank lockers. Instead, customers have to bear charges for keeping gold in bank lockers.
When you're investing in gold bars, do choose a reputable and secure storage facility. This could be a bank's safe deposit box, a private vault or a specialized storage service, all of which offer the type of security you need in order to keep your gold investment safe.
Is it wise to store gold in a safe deposit box? ›
Safe Deposit Box
For one thing, access to your precious metals is limited by the bank's hours. If the bank is closed, you're out of luck if you want to quickly grab some of your gold or silver. Another drawback: The bank doesn't insure precious metals that are stored in a safe deposit box. That's up to you.
Do banks actually store gold bars? ›
Most banks store gold in their subterranean vaults, although some keep their physical gold in foreign reserves.
Where do rich people store their gold? ›
Switzerland. Switzerland is often the first place people think of when you mention “offshore gold storage.” It's a classic for conservative investors focused on wealth preservation, who want a safe place to store their metals.
What items should not be stored in a safe deposit box? ›
Passports, medical directives, the only copies of wills, and powers of attorney, among other documents, are better kept in a secure spot, such as a fireproof home safe. You're better off keeping the following items out of your safe deposit box: Passports.
How to safely store gold at home? ›
Gold doesn't corrode or tarnish so it will stay bright forever. However, don't store gold with silver or with any tarnished metal – it can cause damage. In terms of storage, keeping your gold in airtight containers or capsules can help protect it.
Which of the following should not be kept in a safe deposit box? ›
Cash: Liquid Funds: Storing large amounts of cash in a safe deposit box is generally not advisable. Cash does not earn interest and can be more accessible in a bank account.
Is it legal to store gold at home? ›
It is not possible to store investments in gold or other precious metals included in an IRA at home. Investors can purchase and hold physical gold in a home safe, but the IRS prohibits this with IRA-purchased gold and other precious metals.
