Gold bullion – how to physically buy and hold

The advantages of physical gold

We live in a day and age of ‘creative’ finance, ranging from derivatives to crypto currency, all of it intangible. Even old fashioned shares and paper cash don’t have inherent value, they depend on the system that created them, namely government. 

Intangibles don’t come anywhere near the sense of safety in actually owning physical assets. Amongst physical assets gold is certainly one of the more portable and liquid forms of physical asset. If you own physical gold you can actually physically see and touch what you own. This means that in an unstable economic environment, where every intangible form of value is at risk of being lost, gold is something you could still use to trade.

Imagine the internet crashed for a significant period of time in your region, or a government censorship programme blocked access to some of your key online assets. Gold is immune to this. Further, when compared to assets accessed online or represented in digital form, gold can’t be hacked, it can’t be accidentally deleted, it isn’t subject to identity fraud.

Holding physical gold

One of the difficulties in holding physical gold assets is the security aspect. You could store it at home, but you would need to invest in significant security including high-grade safes, locks and security systems. You would also need armed guards to transport the gold onsite, and rapid armed response in the event of a break in.

On top of that you would need fairly expensive insurance (approximately 2% of the gold’s value) given that you are storing the gold outside of a secure facility. However it remains an option.

A more cost effective option is holding gold in professional storage facilities. Some storage facilities will even segregate your gold, separating it from other gold holdings. These facilities usually have high grade safes (such as class 3 which can withstand 120 minutes of attack from a blow torch or tool). In addition they have specialised security guards, along with sophisticated alarms and monitoring systems.

A further advantage of such facilities, is that some of them have vaults in different countries. Further, if needed you could arrange a secure transfer across nations. Imagine the political situation in your country became unstable or you simply wanted to immigrate, this would potentially make the process simpler.  

Vault
Image by Reimund Bertrams

Certain facilities will even allow you to visit your deposit without supervision, allowing you private access to your reserves. This provides additional peace of mind and gives you a true sense of ownership.

What do such facilities cost? Well usually they are far cheaper than even the insurance on home storage options, never mind the costs of home security and safes. One example charges 1,5% of asset value per year, dropping each year after that.

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