What Is a Precious Metals Depository? Precious Metals Depositories Explained

If you’re an investor in precious metals, or even if you’ve ever considered investing in precious metals, you might be curious to learn how people are safely storing their physical gold or silver. A precious metals depository can be a beneficial resource for owners of precious metals. Let’s take a look at what a precious…

If you’re an investor in precious metals, or even if you’ve ever considered investing in precious metals, you might be curious to learn how people are safely storing their physical gold or silver. A precious metals depository can be a beneficial resource for owners of precious metals. Let’s take a look at what a precious metals depository is and some of the reasons you might want to use one.

What Is a Precious Metals Depository?

A precious metals depository is a storage facility designed specifically to house physical precious metals like gold, silver, platinum, and palladium safely. Individuals use precious metals depositories to safely store their precious metals without running the risk of keeping them at home, as depositories have robust security measures in place to safeguard these types of assets.

For individuals looking to protect their gold investment or other precious metals within an IRA, the IRS requires precious metals to be placed in an IRS-approved depository. An IRS-approved precious metals depository must adhere to strict guidelines set forth by the IRS that ensure the account holder’s assets are stored correctly and protected. However, individuals with precious metals outside of an IRA can still leverage the benefits of depositories by placing their precious metals in a depository.

How Do Precious Metals Depositories Work?

A precious metals depository operates similarly to a high-end storage facility. Placing your gold, silver, and other metals in an IRS-approved depository for precious metals is relatively straightforward, requiring a few simple steps:

  1. Opening an account: For those looking to store precious metals inside a depository without an IRA, the first step is to research the different precious metals depositories to find one that matches your preferences and open an account. IRA account holders do not need to complete this step, as they will be able to work with a depository referred to them by their custodian.
  2. Deposit precious metals: To deposit your bullion that’s outside of an IRA, you will need to fill out a deposit slip, which lists the items that will be stored in the depository. Owners can deposit bullion in their possession or opt for recently purchased precious metals to be delivered directly to the depository for storage. Customers with a precious metals IRA do not need to complete this step.
  3. Security measures: Precious metals depositories also keep bullion safe with state-of-the-art security, in addition to carrying insurance in the unlikely event of losses. In exchange for these services, customers will pay storage fees.

What Are the Benefits of Storing Precious Metals in a Depository?

Precious metals are expensive assets, which means when you’re investing in precious metals, it’s essential to ensure they’re stored safely. There are various potential risks of home storage gold IRAs, such as complex regulatory requirements that can result in non-compliance penalties if not carefully followed and limited security to safeguard your precious metals. With that said, a precious metals depository can serve as a trustworthy and reliable solution for protecting and managing your valuable metals. Below are some of the top benefits of precious metals depositories:

Benefits of a Precious Metals Depository

  • Security measures: One of the primary purposes of storing precious metals in an IRS-approved depository is the robust security measures in place to protect stored assets. Precious metals depositories typically offer state-of-the-art surveillance systems, access controls, and secure vaults to ensure that only authorized individuals can access their stored metals.
  • Insurance coverage: Another benefit of placing precious metals in a depository is that they often provide insurance coverage for stored metals to mitigate the risk associated with loss or damage due to unforeseen events like natural disasters, theft, or other emergencies.
  • Regulatory compliance: IRS-approved depositories for precious metals must abide by regulatory requirements to ensure transparency and accountability, which gives account holders peace of mind that their stored assets are being managed appropriately. The accounting and auditing departments keep accurate records that track their inventory to detect theft or misplacement and provide updates to account owners on the status of their metals.

What Are the Potential Drawbacks of Precious Metals Depositories?

While precious metals depositories offer account holders a wide range of benefits, such as strong security measures and insurance coverage, there are potential considerations to keep in mind when deciding to place your precious metals in a depository. One of the first considerations is maintenance fees, as all depositories will charge account holders a storage fee for safeguarding their assets.

In addition to fees, when opening a Gold IRA or another type of precious metals IRA, it’s important to note that the IRS only permits certain types of precious metals to be held within the IRA, and these metals must meet specific fineness requirements. Lastly, for account owners who want to visit their precious metals, location is an important factor to consider. Many precious metals depositories are located far from an account holder’s home, which can limit accessibility.

What Gold Depositories Are Approved By the IRS?

IRS-approved depositories are permitted by the United States government to provide precious metals storage for IRAs. As you can imagine, the IRS is very particular about the financial institutions it gives its stamp of approval. There are currently seven IRS-approved depositories, and at Birch Gold Group, we work with many of these depositories to help our customers find a safe storage solution, including:

  • Delaware DepositoryDelaware Depository, with over 200 years of combined experience in managing precious metals, has an expansive insurance policy, offering an all-inclusive $1 billion coverage of their managed assets in addition to a $100,000 transit insurance per package, allowing customers to rest assured their precious metals are safe from transit to the deposit.
  • Brink’s Global ServicesWhat sets Brink’s Global Services apart is their industry-leading security measures, particularly their armored vehicles, as well as their security measures by sea and air. With three locations across the U.S., including Los Angeles, Salt Lake City, and New York City, account holders with quick access to these large metropolitan areas can easily visit their stored assets.
  • Texas Precious Metals DepositoryShiner, Texas’ Texas Precious Metals Depository offers account holders low rates and world-class service that includes fully sealed, segregated, annually audited, and 100% insured storage of your precious metals.
  • International Depository ServicesAs another Texas-based precious metals depository with a branch in Delaware, International Depository Services takes a security-first approach to its precious metals storage practices, safeguarding assets in class III gold vaults with 24/7 off-site monitoring and more.

When you open a precious metals IRA with Birch Gold Group, whether a Gold Roth IRA or other type of IRA, we can explain your options of depositories to safely store your precious metals.

How Are Precious Metals Stored at a Depository?

When you deposit your precious metals, they will be cataloged and assigned to your account. When your precious metals are cataloged, you can typically choose between two types of storage options: “allocated” (or co-mingled) storage and “segregated” storage.

Allocated vs Segregated Storage for Precious Metal Depositories

  • Allocated Storage: Allocated storage means your bullion is stored alongside the bullion of other customers. Allocated storage works the same way your bank does. When you make a withdrawal from a precious metals depository, you’ll receive the same type of bullion you deposited, but it probably won’t be your exact bullion. If you deposit a 1 oz American gold eagle coin, you’ll still be able to withdraw a 1 oz American gold eagle coin, even if it’s not the one you deposited initially. This is because (in most cases) bullion is fungible (interchangeable) and, much like dollars you withdraw from the bank, doesn’t vary in value.
  • Segregated Storage: Segregated storage means you have a dedicated space that is the exclusive home to your bullion. With a segregated account, your exact precious metals bullion belongs exclusively to you, and you can store it with the confidence that your vault or bin will be yours alone.

What Factors Should You Consider When Choosing a Depository?

Choosing a precious metals depository requires careful consideration to ensure the depository you work with meets your needs and safeguards your valuable precious metals by meeting or exceeding industry standards. For IRA account holders, the depository they choose will differ depending on the custodian, as each custodian can work with a different set of depositories. At Birch Gold Group, we partner with some of the top-leading precious metals custodians and depositories to give you reliable storage recommendations you can trust. As you narrow your decision, consider these factors when choosing a depository:

  • Security practices: First and foremost, a depository should have top-notch security like surveillance systems, alarms, vaults, and access controls.
  • Insurance: Your precious metals depository should also carry precious metals insurance to protect your metals against potential theft and damage.
  • Storage features: A proper precious metals depository will also regulate climate and humidity, providing the optimal temperature and moisture levels to protect your metals from tarnishing.
  • Regular auditing: Looking for a depository that undergoes regular audits can help reassure you that high standards of quality are maintained through frequent evaluations.
  • Location: For individuals who want to physically check in on their precious metals, it’s essential for the depository to be local, so proximity to one’s home or business may play a role in choosing a depository.
  • Privacy: Another priority can include privacy and confidentiality, ensuring the details about your precious metals holdings protect your personal security.
  • Storage and maintenance fees: Another important factor to consider is storage and maintenance fees before signing off on any depository, mainly since most people store gold for investment purposes.

Precious Metals Depositories FAQs

Why would you choose a depository over a home safe?

A requirement for account owners of a precious metals IRA is for precious metals to be stored in an IRS-approved depository, as it ensures precious metals are properly secured. However, individuals making cash purchases of precious metals have other options, such as storing their precious metals in a home safe.

There are two main reasons for storing bullion at a precious metals depository over a home safe, starting with space. Anyone with a substantial amount of bullion will need to have a safe large enough to store their precious metals, which can quickly take up a lot of space in your home (especially for silver, which is a lower cost per ounce).

The second reason is security. Most people choose to keep their cash safe in a bank, where there are vaults, cameras, alarms, and strict security protocols. Should the worst happen and the bank be robbed anyway, insurance will cover any lost funds.

Precious metals depositories take security as seriously as banks do, which means a depository will always be more secure than your home safe.

Is a safe deposit box at a bank a good alternative to a precious metals depository?

While precious metals can be stored in a safe deposit box at a bank, there are several considerations to keep in mind. There are a few potential risks to storing precious metals in a safe deposit box over an approved depository, such as:

  • No FDIC Insurance: Possessions stored in a safe deposit box are not covered by FDIC insurance, which means if a bank fails, there’s a potential of losing the contents within.
  • Potential asset seizure: The contents of safe deposit boxes are subject to seizure under Civil Asset Forfeiture programs in place in many states.
  • Limited access during bank closures: Banks can be closed at any time, which can limit accessibility to your precious metals during the closure.
  • Limited Security: Finally, safe deposit boxes are simply not as secure as precious metals depositories. There’s more access and less accountability at a bank, with no one other than you keeping track of exactly what’s stored there.

How are the metals stored at depositories insured?

Bullion metals at a precious metals depository are insured to cover 100% of the value of the bullion. Many depositories underwrite the insurance policy. It’s imperative that all items stored at a depository have been accurately documented on a deposit slip, so that in the event of an insurance claim, owners will be indemnified (compensated) for the full value of their lost bullion.

Why are precious metals depositories more secure?

Precious metals depositories hold very valuable precious metals and are secured both internally and externally. Besides being designed with high-level security as a top priority (unlike a house, which typically only has basic residential locks on doors and windows), depositories are monitored 24/7 by security professionals.

Entry to the premises is controlled and recorded, and there are additional layers of security once inside. Precious metals depositories consider just about every possible scenario, implementing security redundancies to ensure safekeeping. Furthermore, depositories have strict internal accounting measures in place to confirm that every depositor’s possessions are accurately recorded and tracked at all times.

Why do you need depositories for precious metals IRAs?

According to the IRS, under IRC Section 408(m)(3), physical gold, silver, platinum, and palladium bullion must be kept with a bank or approved non-bank trustee. If you want to use your IRA to invest in gold and other precious metals, you can’t simply store them at home.

One unlucky couple in Rhode Island discovered this the hard way when they were slapped with a $270,000 IRS tax bill and nearly $50,000 in fines for storing their roughly $730,000 gold IRA assets at home. In short, the law requires anyone investing IRA assets in precious metals like gold to have an approved third-party IRA custodian store the physical assets.

Can you deposit more or withdraw precious metals from a depository? And how does that work?

Yes. Individuals making cash purchases can deposit or withdraw precious metals from their depository as long as the payments are current and the account is in good standing. To make a deposit, customers simply complete the accompanying documentation and have the bullion delivered to the depository.

You can make withdrawals in person during regular business hours, or a request for shipment to a third party can be made. Again, supporting documentation must be completed to make a withdrawal, and specific fees may apply. However, if you have your precious metals invested in an SDIRA, you cannot withdraw it (without penalties) and take it home until you’re at least 59-½ years old.

What is the difference between a precious metals depository and a custodian?

For individuals looking to open a precious metals IRA, the two primary entities you will work with are your custodian and depository. A precious metals IRA custodian is the financial institution that will oversee your account, handling everything from IRS reporting to withdrawals and transactions to ensure you remain compliant and your metals are managed appropriately. Your custodian will then need to work your precious metals depository to ensure they’re stored correctly. Your custodian will act as an intermediary between you and your depository to ensure a seamless and compliant experience when purchasing precious metals to place in a precious metals IRA.

Wrapping Up: Is a Precious Metals Depository Right for You?

Deciding if a precious metals depository is the right choice for you ultimately comes down to several factors. For anyone with a precious metals IRA or a substantial amount of bullion, a precious metals depository is a must.

For individuals concerned about security or insurance, a precious metals depository is a good option. However, there are alternatives, such as banks or third-party storage facilities which could be viable substitutes. Contact a Birch Gold Group Precious Metals Specialist toll-free today at (800) 355-2116 to learn more about buying gold and other precious metals, working with a trusted custodian, and finding a trustworthy precious metals depository that will protect your metals.

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