The Risks of Using Banks for Gold Storage
Sorry, You Can’t Have Your Gold - by Jeff Thomas We regularly caution our clients of the risk involved in storing wealth in banks. They’ve made the removal of your deposits increasingly difficult, in addition to colluding with governments to allow them to legally freeze or confiscate your money. To add insult to injury, they’re creating reporting requirements with regard to the contents of safe deposit boxes and restricting what can be stored in them – again, at risk of confiscation. More and more, banks are becoming one of the more risky places to store wealth in any form. Not surprising, then, that many people are returning to those facilities that treat wealth storage the way the first banks did, millennia ago – vault facilities that store your wealth for a fee, but engage in no other banking activities. But, in suggesting to our readers that such facilities are a better bet, I’ve also repeatedly warned readers that many such facilities don’t store actual, physical gold. They instead provide a contract to you that states that they will deliver an agreed-upon amount of gold upon demand. The trouble with this idea is that it becomes tempting for such facilities to sign such a contract with you and collect the purchase price, but never actually purchase and store any gold. It’s been estimated that the total worldwide value of such contracts equals 150 times the amount of gold in existence in the world. Uh-oh. This is why it’s imperative that you purchase only physical, allocated gold. And another caution: I’ve repeatedly stated that, although many of the most secure facilities in the world are located in North America and Europe, these jurisdictions are on the cusp of economic crisis, a fact that suggests that, if and when the crisis arrives, the rule book will be thrown out the window. Governments and facilities alike may prove untrustworthy and, at some point, you may drop by the facility to withdraw your gold and be told, “Sorry, we’re unable to provide delivery.” There could be a multitude of reasons given, hoops to jump through and endless red tape to deal with. And still, in the end, you may never be able to take delivery. It’s for these reasons that we advise that, although nothing in life is guaranteed, you should always protect your wealth by choosing the least risky option. This means that you should follow two simple rules - Rule #1: Select the jurisdiction with the best laws and reputation. Rule #2: Make sure there’s a reputable storage facility in that jurisdiction that has a Class III vault and a contract that meets your needs. But, am I being overly cautious when I so frequently offer this advice? Unfortunately, no. I’ve predicted that, in the future, as we get closer to a monetary crisis, banks and storage facilities that are located in countries that are likely to be heavily affected, will work ever-harder to avoid releasing either money on deposit (in the case of banks) and precious metals (in the case of storage facilities). Recently, the reports that I’ve been receiving from wealth storage facilities in advantageous jurisdictions are indicating that that prediction is beginning to come to fruition. In case after case, clients are having a harder time getting their money and their metals out. In most cases, those institutions that don’t wish to deliver are creating red tape, stalling techniques (which are costly in both time and money) and, in some cases, outright refusals to deliver. Let’s look at two actual examples – one of a bank, one of a wealth storage facility. USA: A client asks his bank to wire transfer US$178,000 in funds to an overseas facility to purchase precious metals for storage. The bank then created a series of roadblocks:
- Required a written request, with an original, signed copy to be hand-delivered.
- Once that was done, a voice authorization of the letter by phone was required.
- Once that was done, it required the client to receive a PIN number, which would take several days to create and would need to be sent by courier.
- After the client jumped through all those hoops, the bank changed its requirements completely, requiring that a cashier’s cheque be sent instead, which required ten days clearance.
- Refused to ship the products themselves and refused to arrange shipment.
- Refused to release the goods to FedEx when they arrived, even though proof of insurance was provided. The bank then insisted on the hiring of a Brinks truck.
- They then refused to release the coins at all, except to another bank.
- They then claimed that they were “not ready” to release the coins. The client was invited to “try again” if he wished. (Eight attempts were required.)
- Finally, they agreed to release the coins, but only if a 1% withdrawal fee were applied (not part of the original agreement – essentially a ransom.)