Safe deposit boxes are on the rise around the world. In 2019, there were more than 25 million safe deposit boxes in the United States alone . In the midst of their rising popularity, it's worth learning more about safe deposit boxes and whether they're the right option for storing your gold.
What Is a Gold Safe Deposit Box, and Who Uses Them?
A safe deposit box is a secure container designed for safely securing valuables, including gold. People rent safe deposit boxes for as long as they need them rather than purchasing them outright.
Collectors and investors are the two of the most common groups who store gold in a safe deposit box. While they have different motivations for buying gold, both groups use safe deposit boxes to keep their gold secure.
Gold safe deposit boxes can hold most items of value though. They are a popular place for storing important papers, antiques and other keepsakes. Anyone concerned about theft, loss or damage to valuable items might use a safe deposit box.
Where Can They be Found?
Various businesses have safe deposit boxes including:
- Credit unions
- Companies selling gold and other investment capital
- Private vaults
These businesses keep safe deposit boxes in secure vaults on their premises.
How Do They Keep Gold Safe?
Safe deposit boxes offer several layers of protection that help them keep gold safe:
- Most boxes are made from durable, element-resistant metal, which minimizes the risk of damage from fire, heat and water.
- They're locked, typically with two unique locks, so you need both keys to open a single safe deposit box. Typically, the rental company keeps one while the owner keeps the other.
- They're often stored in secure vaults, and in most cases, you're required to present your key and proof of your identity. This measure makes sure people cannot access a safe deposit box by stealing the key.
Are There Different Types?
Most facilities have a single type of safe deposit box available in different sizes to suit people with different collections. A small safe deposit box may measure around 3 by 5 inches. A large safe deposit box could be 10 by 15 inches or even more. Some companies also offer two separate types of safe deposit box:
- Class I: Class I boxes are meant for less-expensive or less-valueable items ” such as silver ”because they often come with less liability protection. Companies store their class I boxes in standard vaults. In addition, Class I boxes are often larger than class II boxes and hold a higher total weight.
- Class II: These boxes sit within a special vault inside the standard vault for an extra layer of protection, which makes them best suited for very valuable items, including gold and platinum.
What Are the Pros and Cons of Storing Gold in a Safe Deposit Box?
Storing your gold in a safe deposit box has several advantages over storing it at home. These benefits include:
- Security: The double security measures of most safe deposit box providers protect your gold from theft and loss better than storing it at home.
- Protection from natural disasters: While securely locked away in a safe deposit box, your gold is also better protected from fire and flood.
- Privacy: While your safe deposit box is outside your home, you do not tell the rental company what is inside it. They also do not have a copy of your unique key. This helps you keep your privacy at all times.
- Ability to keep gold in a bank: Can you deposit gold into a bank? No, but you can store gold in a safe deposit box inside a bank. For people who trust banks with their finances, this is an ideal solution.
- Easy estate handling: When you use a safe deposit box, your loved ones know where your gold and other precious items are when you pass or become incapacitated.
However, there are also some potential drawbacks to safe deposit boxes worth mentioning. These include:
- Ongoing costs: While the annual costs are relatively low, they could become substantial over the life of your investment.
- Limited capacities: All safe deposit boxes have a limited size. Even if you choose the largest safe deposit boxes available, you could easily fill it with a growing gold collection.
- Potential for misplacing keys: While you don't need to worry about losing your gold, you may misplace your keys.
- Limited access: While there are some 24/7 safety deposit box providers, in most cases, you can only access your safety deposit box during regular business hours. This arrangement may be inconvenient for people who work full-time. You may also lose access if the Internal Revenue Service or a civil litigation suit freezes your assets.
- Limited privacy: While your privacy is generally assured, law enforcement officers can obtain court orders to search your safe deposit box if they feel it contains illegal goods.
- Limited protection from the elements: While safety deposit boxes and the vaults they're stored in are heat-, fire- and water-resistant, most are not fireproof or waterproof. That means that while safe deposit boxes reduce the risk to your items, they do not eliminate it entirely.
- No insurance in some cases: There are no U.S. laws governing safe deposit boxes. This means users often have no right to compensation if their gold and other precious stored items are stolen or damaged. While some companies offer liability coverage with their safe deposit boxes, this isn't always the case.
- Potential for theft: While most companies providing safe deposit boxes take your security seriously, theft can occur. As the rental provider keeps no inventory of your safe deposit box's contents, it can be difficult to prove what you have if anything goes missing.
There are many benefits to storing gold in a safe deposit box but also a few potential negatives worth considering. Do your research carefully to decide whether a safe deposit box is the best choice for your gold collection.
1. Bloomberg. World's Rich Are Rattled and Seeking Old-Fashioned Security, https://www.bloomberg.com/news/articles/2019-11-20/world-s-rich-are-rattled-and-looking-for-old-fashioned-security?srnd=premium. Accessed September 23, 2020.
Created 2/16/2021 1:24:39 AM