If You Don't Hold It, You Don't Own It

There is no risk free way of owning precious metals (or any asset for that matter) and safe storage is the key factor when dealing with physical.

There’s risk holding precious metals in safe deposit boxes. 

There’s risk holding precious metals in unallocated form. 

And there’s also risk holding precious metals at home.

As I pointed out in a recent article (7 Ways To Keep Your Gold And Silver Safe), there are burglars willing to turn a house upside down if they think you have something of value: 

“A recent thread on Silver Stackers highlighted the care you need to take if deciding to store your precious metals at home, where during a break-in thieves had emptied potted plants, pulled out electrical sockets, removed picture frames, moved furniture and more.”

There have been four home burglaries reported by members of Silver Stackers in Brisbane over the last 18 months. They may not be related, but some of them had factors suggesting the individuals were targeted due to known ownership of precious metals. In one case a 500kg safe was broken into with heavy duty tools (cutting torch and jackhammer), equipment that a thief is unlikely to carry on them for a random burglary. Another case had the safe ‘pried open like a tin can’. Bleach was sometimes used at the crime scenes to cover their tracks, making any DNA and other incriminating evidence difficult to collect.

For some of these stackers it was a near complete loss of their life savings or investment.

It’s a horrible way to lose one’s life savings or even a portion of one’s asset portfolio (commiserations to those affected if you’re reading). You’d have to be the scum of the earth to do that to another person, but investors need to remember these cretins are out there and make sure they’re not an easy target. If you’re going to keep precious metals at home, make sure you take precautions when trading e.g. don’t arrange deliveries to or pickups from your home address, don’t transact in public where you might be easily followed home and be wary of providing any details that might be easily linked back to your home address (e.g. does searching for your full name or phone number produce an address in the White Pages or Google?).

Some individuals may ignore this risk because they believe their home and contents insurance policy will cover their losses, but most contents insurers have specific limits in place to reduce the payout for any bullion stolen. Some (Australian) insurer examples are below (my interpretation of their policy, check with the insurer for clarity and any changes over time):

AAMI (Limited to $500) - Uncut and unset gems, gold or silver nuggets, bullion and ingots (not jewellery). 

Allianz (Limited to $2000) – Item containing gold and/or silver. We will not pay more than $2,000 for any one item, pair, set or collection unless they are separately listed in the current schedule as specified contents items. 

CGU (Limited to $20,000) – Doesn’t mention bullion by name, but potentially falls under a ‘collection/set of contents items’ (which is limited to $20,000). 

QBE (Limited to $500) – Cash, bullion or negotiable securities. Up to 1% of the sum insured to a maximum $500. 

SGIC (Limited to $2500) – Collections – cards, stamps, uncirculated mint issue or proof coins or notes, ancient or rare coins or notes, sovereigns and bullions. 

YOUI (Doesn’t cover) – Contents exclude: unset gemstones, gold or silver bullion or coins, cash or other negotiable items. 

Some of these companies (or others not covered above) do offer the ability to increase the limits or list special items (incurring additional premium), however that also means you need to tell your insurer exactly what you keep at home.

If you’re not going to diversify your assets, at least make sure the location of those assets is diversified. If you don’t hold it, you don’t own it? If you do hold it (in one place), you may not hold it for long.

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