I have heard many shows recently discuss the potential liability issues of various vaults, such as, whether or not there is actually the correct amount of precious metals in those vaults.
There have been precious metal storage facilities, precious metal dealers, or fund management companies on many internet shows discussing the concepts surrounding the recent worries of vault facilities not having the items or the precious metal program not securing the assets they are representing to their clients.
A few shows discuss what unallocated and allocated storage represent. Being an expert in the vaulting business and running a successful gold and silver storage program and physical bullion fund, I wanted to clarify some of the misinformation that is going around the internet. Many financial advisors and dealers may also not be aware of the actual differences between the various forms of storage. This is evident when many internet programs assume allocated storage is the most secure form of storage. This is not the case.
There are some big misconceptions with allocated storage programs and the companies that offer or sell them.
For private storage accounts, the most secure way for clients to have items stored is by fully segregated storage. Again, fully segregated storage not allocated storage. There is a huge difference and individuals or institutions need to understand this. If a client wants an actual investment in precious metals that can be viewed anytime, delivered at any moment, and is the exact same bar/coin delivered out as initially bought or brought into the facility, then fully segregated storage is the only option.
Allocated Storage is a much different concept. To easily explain this, let me provide the definition between segregate and allocate.
allocate – 1. To set apart for a special purpose; designate: allocate a room to be used for storage.
segregate – To separate or isolate from others or from a main body or group.
Another big myth that is routinely talked about and completely misrepresented is the idea that one must keep his metals in a LBMA or Comex approved vault. The main reasons given is that the charges for assay or transportation are so expensive it will eat into the principal of the coins or bars. In reality, the cost of an assay is only about $150 per lot of metal. Another excuse used by these organizations is that once the gold or silver leaves the LBMA or Comex vaults the metal is outside the “chain of integrity” and hurts the metal’s value. There is no question if bars or coins are .9999 fine gold or .999 fine silver and held in a private facility, they are identical in value to metal stored at a LBMA or Comex vault. The real question an investor should ask is, “Do I trust the facility holding my metal?”
If the storage account is not labeled “fully segregated”, the client looking for potential delivery should have great concern.
Looking for a secure way to buy physical gold and silver?
GoldMoney company offers you 6 months of FREE storage if you sign-up and buy physical metals via www.goldreference.org. Simply choose “GoldReference.org” from the dropdown list, or manually write goldreference, when you open a Holding at GoldMoney. See also our page How To Buy Gold & Silver Online.