The Lesson Covid Taught Us About Safe Boxes and Storage Services for Gold
It goes without saying that the entire Covid experience has been a game changer in our daily lives. One unique area we’ve seen a huge change in perception is the idea of storing gold in international safe-deposit boxes. With the travel restrictions, lockdowns, testing requirements, etc., investors were separated from their gold and found themselves unable to access it. Many of those who needed to liquidate some metals to supplement their income (or to take advantage of some great dips!) were simply stuck. They didn’t need to be…
I’ve been with the BFI Capital Group for over 19 years now and have seen the different variations of international investing go through different cycles, ebbs, and flows. I’ve also had the pleasure of seeing our own Group evolve, from the fixed Swiss annuity days to our own portfolio management team, to the formation of BFI Bullion (the former Global Gold), and now the launch of technology-driven solutions like aXedras and AltAlpha Digital.
Anyhow, in its early days, Global Gold was formed as a result of endless inquiries in the mid- and late-2000’s about whether we knew of the best way to store physical gold and other precious metals in Switzerland. We didn’t feel there were good options, so our founder, Frank R. Suess, decided to create our own. 13 years later, now as BFI Bullion, we have over 700 clients and current metals value of nearly $320M in storage for our clients.
Watching the history of BFI Bullion, and then being a direct part of it when I joined the team in 2017, I have seen what I feel is a “first” thanks to Covid that I had never seen before. That is, the allure of storing physical metals, and particularly gold, in safe-deposit boxes, albeit outside of banks, or direct international storage, i.e., storing directly with a facility instead of through a group like BFI Bullion.
Many prospective clients I’ve talked to over the years were only looking for ways to store their metals. They weren’t concerned about the storage facility being able to buy or sell for them, but purely the ability to store their gold outside of their home country, and outside of the banking system.
There was an allure to storing gold in a storage box, in a storage facility where then only the owner of that box could come with their key or code. In other words, you had to be physically present in order to remove or add gold to the box or storage facility. Maybe, if you used a well-known and quality company in storage and logistics, like Brinks or Loomis, you could instruct them to ship your metals to you as well. But by storing directly with them, or by storing your gold in a safe box or other high security access storage, you had the benefit of maximum asset protection. No one other than you could do anything with the metals.
Covid threw a wrench into the best laid plans
Then along came Covid, disrupting travel, barring non-citizens from getting into a country, or simply introducing so many other restrictions that made travel downright impossible.
In the past 2 years since the start of the Covid mess, we’ve had more inquiries than ever from people with physical storage outside of their home countries that were “stuck”. Their metals were stored somewhere they couldn’t get to, and they needed liquidity urgently, to cover unexpected expenses related to unemployment, retirement, supporting family members, etc.
Despite having the best intentions in mind when they initially set up their long-term strategy for storing their metals, they couldn’t access them. Brinks or a Loomis will not sell metals for their direct clients, nor can they make additional purchases on their behalf. They provide storage services. And for those with gold in lock boxes in secure facilities from Central America, across Europe, or elsewhere, neither they nor an “attorney” could get to those metals.
At BFI Bullion, we have three different storage options. We have a Collective storage, a Segregated storage, and a Key box storage. Under our Collective and Segregated storage options, our clients can still contact us and request to add to or sell their holdings. If selling, we can wire the proceeds of the sale anywhere in the world to them within 5-7 days after the sale is executed.
And what about those wanting to buy in the dips in the gold price? Sorry, when you are physically storing with other storage facilities or a safe box, there is no way to do it unless you ship metals to them, or again, if you physically have someone on the ground with a key. Again, those investors we left out to dry.
Hey, what about your Key Box Storage?
Yes, for anyone that knows BFI Bullion, you know we have our own version of the very thing I’m talking about here. As previously mentioned, we have our own “Key box storage” solution, which has our clients buying their own box, lock, and two keys. Once metals are placed in the box, only the client (or a person with “power of attorney”) has access to that box.
It’s a great option for an investor who understands the aforementioned risks and can weigh them against the benefits of this type of storage solution. This is why when we have a prospective, or even existing, client interested in the option, we thoroughly and clearly go through the whole process and advise each investor according to their specific circumstances and needs. Where they live, how often they travel, what their mid- and long-term goals are for storing their gold this way, these are all factors to be considered and we make it clear that they have to be present in order for metals to be taken out of the box.
What is the right storage for you?
In summary, for the many clients we have talked to over the past two years, and for those, in particular, that have been able to transfer their metals in storage with a company like Brinks or Loomis to us at BFI Bullion so that we could sell or transact for them, the aphorism of “all that glitters is not gold” comes to mind.
Many investors with the best intentions jumped into storing their gold thousands of miles away from home for all the right reasons, they did their due diligence, and they chose storage companies that are highly reputable. There’s nothing wrong with what they did.
However, the unprecedented disruptions we witnessed since the Covid crisis started serve as a great reminder to look at the all the details, always read the small print and make sure what you are doing with your gold storage is right for you.