7th October 2016
Written by Joshua Saul – The Pure Gold Company
Financial and political uncertainty has persuaded an increasing number of people to turn to physical gold to keep their wealth safe. Retail gold sales, to people from all walks of life, surged in the run up to Brexit, with gold coin and bar sales in the UK up 65% April-June 2016 compared with the previous year.
These private buyers are not alone. Central Banks have increased their physical gold holdings by 9% (2,400 tonnes) since 2008. Investment banks and hedge funds are net buyers of gold and are buying more now than they did in 2008. Government, institutional and private investors have contributed to a 34% rise in the gold price this year.
People who prefer to purchase physical gold instead of gold exchange traded funds (ETFs) are generally looking to reduce counterparty risk and take advantage of the tax benefits, privacy and liquidity of owning physical gold.
They want to be able to access their gold quickly and easily and having it at home is one solution, but it’s not the safest. And hiding valuables in your freezer or child’s bedroom, as some people choose to do, is actually quite an obvious first stop for a thief.
The safest option is to have the gold stored (gold storage), but naturally any buyer wants to be sure their gold will be safe AND accessible. These are the most common questions asked about how and why to have your gold stored professionally.
Q: Why do people have their gold stored instead of delivered?
- Not enough security at home.
- Insurance costs may increase to cover the value of the gold being kept at home.
Q: Where can one store their gold or silver? How do you know if it’s safe?
- Arabian Pure Gold use Loomis International once known as Via MAT before they were bought by Loomis in 2014.
- Loomis are a London Bullion Market Association member and are one of the best-known precious metal custodians in the world. They have facilities all over the world but all of our clients have their gold stored in UK.
- Loomis only deal with institutions like Arabian Pure Gold instead of retail investors but through our storage service we are able to give client’s access to Loomis. Institutional storage is cheaper than retail storage in a safe deposit box or other vault, and we can pass the cost savings and safety benefits on to our clients.
- Loomis facilities are fully armoured and secure, and all gold is fully insured against theft and fire.
- All gold is audited internally and externally by Grant Thornton.
Q: Is it important for my gold to be fully allocated and segregated and what does this mean?
- This is something that first time buyers often miss. Arabian Pure Gold only offer fully allocated and segregated storage because it’s the safest way to store gold. When you purchase electronic gold it is possible for it to be backed only by a certain percentage of physical gold, which therefore means that it is not fully allocated.
- Fully allocated gold means that 100% of what you have purchased has been assigned to you.
- Fully segregated gold means that the gold you have purchased has been separated from other clients gold and is being held within your own account or vault.
- When purchasing from other providers you may get pooled storage, which means that all gold is held together. You may even own a share of gold along with someone else. This presents problems around access to your physical gold when you need it. Furthermore if the institution that sold you their gold goes into insolvency there may be uncertainty over who will be in charge of distributing the gold, selling the gold or providing access to the gold.
- If your gold has been fully allocated and segregated there is no counterparty risk if the broker goes into insolvency.
Q: How can I access my gold?
- There are no restrictions on accessing your gold and all that is required is a signed transfer form and we will arrange for it be dispatched from storage and sent to your home and covered under our own insurance during transit.
- We may be able to arrange an appointment for you to inspect your gold at Loomis. This is something that our pension / SIPP providers tend to do as 100% of their clients who purchase physical gold from us have to keep their gold in storage and therefore only use Loomis.
Q: How much flexibility do I have?
- As much as you need. If you want to have you gold released incrementally this is possible.
- If you wish to have your gold released and then you change your mind – you can have it sent back to your vault.
Q: How much does it cost?
- It depends on how much gold you are storing but the range is from 0.65% to 0.95% of the overall value per annum. We only charge for 6 months’ worth of storage at a time.
- This includes full storage and full insurance.
Q: What documentation do I get when storing my gold?
- You receive a Storage Agreement detailing exactly what is being held for you (including weight, bar codes and descriptions) and your vaults exact location.
Q: What happens if Arabian Pure Gold cease trading, what happens to my gold?
- We encourage people to ask their provider this question when purchasing physical gold. The answer is – there is no risk to your gold. You can continue to store your gold at Loomis or upon presentation of your Storage Agreement and valid ID you can remove the gold yourself.
Storage / Delivery Statistics
Amounts
| Investment Amount | Delivered | Storage | |
| Min – Max (overall) | 19% | 81% | |
| less than £5k | 55% | 45% | |
| More than £5k, less than £10k | 35% | 65% | |
| More than £25k | 20% | 80% | |
| More than £50k | 9% | 91% | |
| More than £100k | 6% | 94% | |
| More than £250k | 2% | 98% | |
| More than £500k | 0.50% | 99.50% |
Observation: The more people purchase the more likely they are to have it stored
Gender
| Gender | Delivered | Storage | |
| Women | 14% | 86% | |
| Men | 24% | 76% | |
| couples | 20% | 80% |
Observation: Women are more likely to have their gold stored than men
Location
| Locations | Delivered | Storage | |
| Milton Keynes | 2% | 98% | |
| Glasgow | 17% | 77% | |
| Liverpool | 22% | 78% | |
| Belfast | 11% | 89% | |
| Leeds | 7% | 93% | |
| Manchester | 4% | 96% | |
| London | 15% | 75% | |
| Humberside | 6% | 94% | |
| Cleveland | 3% | 97% | |
| Lincolnshire | 33% | 66% | |
| Surrey | 31% | 69% | |
| Devon | 36% | 64% | |
| International | 2% | 98% |
Observation:
- In areas with higher crime clients tend to want to store their gold as opposed to having it delivered We’ve seen a 25% increase in the amount of International buyers (expats) having their gold stored. Owing to a fall in Sterling, storage costs are now much cheaper for them.
- Rural areas: 20% more likely to have your gold delivered as the incidences of crime are lower.
- Urban areas: More likely to have gold stored given the crime rates.
