FAQs on Precious Metal Investing and bullion storage

If you’re new to precious metals and bullion storage then you’ll probably have a lot of questions. This is an easy industry to get involved in, but there are still some things that you need to know before you take the plunge.

What is bullion storage?

Bullion storage is an industry that was built on the need to provide safe and secure storage options. Investments in precious metals are increasing, and whilst this used to be an industry that only rich businessmen, governments and large companies got involves with, these days it is an investment opportunity that everyone wants a piece of. It is not always viable to store precious metals at home, not when insurance is expensive and when a simple burglar could see you lose everything you have ever worked for.

Bullion storage facilities were created to solve this issue. These companies have highly secure vaults where all of the previous metals are kept and monitored at all times.

Are they really safer than keeping precious metals at home?

Of course. It goes without saying that a shoebox or a mattress is no match for a vault of solid steel, with all of the latest security methods in place and a team of people whose job it is to make sure no one gets in.

But don’t these vaults get robbed a lot?

You have probably heard stories of big heists where secure vaults have been broken into. These are very rare, and when they happen anywhere over the world, they usually make global news. The ones committing the heist use high-tech methods and even if they escape, they rarely stay free for long.

Although such thefts do happen, it in no way means that keeping your stack at home is easier. Think how rare these heists are around the world and then think how many burglaries happen in your town or even on your street on a yearly basis. There are 21.7 burglaries per 100,000 people in Singapore, and there are 7 times more than this in countries like the United Stares. The rates for such high-profile heists, on the other hand, are very low.

Also, even if the worse does happen, with many storage companies you will be insured.

Will my storage company provide insurance?

Insurance is standard in the bullion storage industry. Insuring large amounts of precious metals can be expensive, so you may wonder why these fees aren’t passed onto you as a customer. The truth is that because the vaults used are so secure, insurance companies are more than happy to secure them and tend not to charge much money. These means that us, and companies like us, can offer cheap storage options that are safe, secure and insured against all outcomes.

How much can I store?

Any respectable bullion storage company will take a varied amount of precious metals, often beginning at just a few ounces and going all of the way up to thousands of ounces. There may be some insurance issues below or above that and you will have to check with the individual company. You should also bear in mind that storing very small amounts will not be economically viable. Most investors seek storage options when they have at least $10,000 worth of precious metals.

What are the benefits for bullion storage?

The main benefit is security, which we have already discussed above. Other benefits include the lack of VAT, which many European investors need to pay, and the ease of not needing to receive the precious metals. You can also save on postage and packing, as the metals will not need to be shipped to your home immediately.

What is a “Spot Price?”

This is simply the market value for a given precious metal. If gold is $1,000 an ounce and you pay $1,001 for a 1 ounce coin, then you have paid $1 “over spot” for that coin.

How should I store my precious metals?

The best way to store your stack is to consult an official storage company. They will take your precious metals and hold them in a safe and secure vault. They will keep it much safer than you ever could and will also insure it for you. Never keep large amounts of precious metals in your home, because one burglary could see everything that you have worked hard for go up in smoke.

Which is better, gold or silver?

This is not an easy question to answer. Many investors choose to invest in both, selecting a ratio (such as $100 of gold for every $50 of silver) based on their own research of the markets and their estimations on how things will develop in the future. Research is important and it needs to be your own. Everyone has different opinions on which is better, so you need to form your own. Never dismiss one of these completely, even if you prefer gold much more than silver (or vice versa) there is always room for a 90/10 split on your investments. As the saying goes, never put all of your eggs into one basket.

Are bullion coins legal tender?

Of course, but they often have a precious metal content that is significantly higher than their face value.

Do I need to pay tax on my profits from investments?

In many countries, yes. You need to declare any profits made from buying and selling precious metals. The same goes for all forms of investment.

Why are there so many bullion dealers in Singapore?

This is a multi-cultural country, and a rich one at that. There are a lot of successful businessmen and women, a lot of spare income flying around. Precious metals are often seen as the investment choice of entrepreneurs and those who make their money in business, so bullion dealers will also find a market here. Singapore also has a long history of International trade, experienced in shipping to all four corners of the globe.

Do I pay VAT on precious metals?

Some countries require VAT to be paid on silver, but gold is mostly exempt. If your government requires you to pay VAT on gold or silver, then the best way to get around this is to purchase overseas and then store overseas. As the investment never becomes your physical property, you don’t have to pay VAT on it, yet you can still claim the proud ownership of a stack of investment-grade gold or silver.

Will my metals tarnish or rust?

Gold is a very resilient metal. It will not tarnish or rust. 24-Karat gold is very soft though and if you have a stack of gold at home it is best that you keep them in air-tight seals, and in a cool, dark place. Silver is more problematic. It can tarnish and develop some discoloration issues. However, if this is stored in a similar manner, and if high quality silver is bought to begin with (some issues, such as “milk spotting”, are caused by the finish that some Mints apply to coins) then you should be okay.

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