4 gold storage myths debunked

While gold (GC=F) can be appealing during periods of economic uncertainty, it comes with some risk.

Over $1 billion of jewelry and precious metals is stolen each year, according to the FBI. And as gold prices increase, thieves have more of an incentive to steal it.

To protect your investment, it’s important to store your gold properly. Understanding some of the most common gold storage myths (and what you should do instead) will keep your gold safe.

Learn more: How to invest in gold in 4 steps

Physical gold offers some advantages. It’s tangible, durable, and if you store it at home, it’s free to store. But it can also be risky. Because gold is compact and portable, there’s a high risk of theft. Considering the sky-high price of gold right now, even the theft of a small part of your collection can lead to thousands of dollars in losses.

When it comes to storing gold, many investors rely on advice from loved ones or internet strangers. Unfortunately, some gold storage myths are pervasive (and risky!). These are some of the most common myths, and what you can do to store your gold properly.

The truth: 63% of all burglaries are in residential properties, costing billions in losses. 

Even if you have a safe, your gold may not be safe. Many home safes are easily opened, and smaller ones can be quickly picked up and removed from the home (giving the thief time to figure out how to open it later).

If you decide to store your gold at home, choose a safe that can be bolted to your floor. And keep the safe in an unexpected place; burglars tend to check the primary bedroom, closet, and home office first.

The truth: Coverage for gold can be very limited unless you purchase additional insurance. 

Although a homeowners insurance policy will typically cover some gold if it’s stolen, standard policies set strict coverage limits. Depending on your policy, the maximum coverage may be as little as $1,500, so you’ll need to add a floater or insurance endorsement to your policy to get adequate coverage. Or you can purchase a standalone policy for your precious metals.

The truth: Good records are necessary for tax reporting, insurance claims, or giving gold to family members. 

Because gold is a physical, tangible asset, people often think that they don’t need to keep good records. But if you don’t have the right paperwork, you can run into hiccups when it comes to reporting capital gains from selling gold, filing an insurance claim if gold is stolen, or leaving the gold to heirs.

When you buy gold, hold on to purchase receipts, keep track of serial numbers, and take photos of coins/bullion or note their condition.

Learn more; Gold has been on a run all year. Here’s how to avoid a tax hit.

The truth: You can store your gold in a secure location for as little as $50 per year. 

If the idea of storing your gold bars, bullions, or coins at home makes you nervous, storing them in another location is a good decision. There are two main options:

Safe deposit box: Safe deposit boxes are available through many banks or credit unions. The safe deposit boxes are located inside a vault, and you have to show your ID and have a key to access the box. A large safe-deposit box costs $70 to $100 per year.

Private storage vault: Some companies operate secure vault facilities. You can store gold bars, coins, and other precious metals in a secure location. The cost is usually 0.5% to 1.5% of the value of your gold holdings. If you have $10,000 in gold, your fee would be between $50 and $150 per year.

Owning physical gold can be a smart alternative investment, particularly during periods of economic uncertainty or volatility. However, owning physical gold requires some extra precautions to keep your investment safe.

Best practices include:

If storing gold at home, purchase a high-quality safe that’s bolted to the floor and can’t be easily lifted.

Avoid talking about your gold holdings or posting about it online.

Add an endorsement or insurance rider to your homeowners insurance policy to cover your gold.

If you store your gold in a safe deposit box or private vault, purchase a separate insurance policy.

For larger gold collections, store your gold in a large safe deposit box or professional storage vault.

While gold can be a useful part of a diversified investment portfolio, it shouldn’t make up the majority of your investments. In general, experts recommend investing no more than 15% of your money in gold.

In the U.S., there is no limit to how much physical gold you can store in your home. However, the more you keep in your house, the larger the risk of losing your investment due to theft.

Keeping small amounts of gold can be safe if you use a high-quality safe bolted to the floor of your home and take proper security precautions, like installing deadbolts and a home security system. For larger collections, you may benefit from using a separate safe deposit box at a local bank or a professional storage vault.