Today's Earthquake and the Importance of Geographic Diversification

[craigr]

Today's earthquake reminded me about the importance of geographic diversification:

https://web.archive.org/web/20160324133 ... ification/

By concentrating your wealth at one company you open yourself not only to natural disasters like we have today, but other risks like compromised accounts, cyber attacks, terrorist attacks, etc. I think it is best to spread your money between two institutions that are separated by many thousands of miles from each other. You don't want a localized disaster locking you out of all of your assets during an emergency. It just makes a bad situation worse.

[dualstow]

Good point. As chance would have it, I store part of my physical gold in the DC area where my parents live. They lost some pottery, but I'm sure the safe is intact. Now I'm thinking about adding a third location.

[TripleB]

Craig,

I had the same thought a few years back and wrote up some postings on FWF about it at the time. Since then, I have revised my opinion, and would like your input since you have more expertise in this field than I do.

It's great to have one bank on the east coast, and another on the west coast for geographic diversification. However, if both banks lease server space in "City X" then it doesn't matter where the banks themselves are, if the data is stored in the same place.

I still think it's worthwhile to do, just not as important as I initially suspected.

It's nice using Alliant Credit Union in Chicago, and USAA in Texas, so that one event likely wouldn't disrupt both main branches, so while the data may temporarily be inaccessible due to internet tubes failure, I can at least get one of my banks on the phone if necessary.

I also feel geographic diversification is worthwhile for gold bullion storage. If you can travel across country and put coins in a different safe deposit box, that might be worthwhile. However, don't do California, because they have screwed up laws such that even if you pay the SDB on time, if you don't physically go access it, the state can consider it abandoned and seize the property.

Thus, I made a semi-sarcastic post on FWF several years back, suggesting that we keep baking soda in zip loc bags in our SDBs, so *if* the bank tries to seize the contents, they call either DEA if they think it's drugs, or DHS if they think it's anthrax, and you are more likely to get your gold coins back if they are temporarily being held by a 3 letter agency than if the state or bank just seizes them. I doubt you could be hit with criminal penalties because your intent is not to obstruct justice or waste the time of a 3-letter agency. It's not your fault the bank forcibly opened your box without your approval, and had they not done that, they wouldn't have discovered the baking soda.

[dragoncar]

I have to agree -- particularly about the compromised accounts.  I always thought that there must be some level of assets at which you would not have an online brokerage account.  Even if you use multiple brokerages, all it would take is one keylogger on your computer to compromise them.  Certainly, someone with 100 million in assets would not use an online brokerage account (except maybe for a very small amount).

So what's the crossover point?  Does anyone here NOT use an online brokerage (for these reasons)?  At what point did you switch?

I'm hoping Fidelity or Vanguard would flag a million dollar bank deposit, but who really knows?

[craigr]

There are less options for US persons to store gold overseas now, but as some doors close new ones open. I am researching several options that I hope to comment on in the future. But for now I list some possibilities in the Gold FAQ.