Gyroscopic Investing

Safe deposit vault in Joplin, Missouri after the 2011 Joplin tornado, remaining intact despite the destruction of the bank that housed it.

The "safe deposit box for gold storage" debate is as old as the Permanent Portfolio itself. In mining through over a decade of posts on this subject I noticed a strong division of opinion on this subject.

Roughly 1/3 of PPers are intensely against using safe deposit boxes for even a fraction of their gold allocation. I used to be in that camp, but I am reconsidering my position.

If you opt for zero counter-party exposure then you have to guard your gold yourself. You are simply trading one form of risk for another: counter-party risk is traded for the risk of theft, or even a violent home invasion. It doesn't matter if you have a TL-30 safe, the risk imposed by having a home safe derives from what the robber is willing to do to you to make you open the safe. Think In Cold Blood. All it takes is the faintest rumour of the existence of a safe in your house to paint a target on you, your home, and your gold.

Hiding in plain sight seems superior, in this regard. But this comes with significant risks, as well. Children like to explore. Floods happen, and so do tornadoes, fires, earthquakes, etc. Memory is fickle, and so is life; if you don't tell anyone where the gold is stashed and you die, it may very well be lost forever. If you do tell someone that you have gold, and where it is, you have re-introduced counter-party risk. If you write down the locations of your hiding spots then you have to secure that note as well as the gold itself.

It really is quite remarkable how gold storage is all about trade-offs. There is no possible way to eliminate risk altogether. Risk seems to be inherent to existence, it is just the nature of reality.

However, I have come to view safe deposit boxes as, perhaps, the best method of storing gold. They achieve an optimized balance between counter-party risk and the risk of theft/violence/loss. SDBs eliminate the threats outlined above because security is outsourced to the bank and police; I consider the risk of a robber breaking into a SDB as being zero. This method also mostly avoids the sorts of counter-party risk introduced by hiding your gold in your house or burying it, as the picture above demonstrates. Insurance can cover the very low risk of a bank being wiped off the face of the earth.

SDBs also effectively mitigate many of the problems inherent to outsourcing storage to a third-party. Gold in a safe deposit box isn't equivalent to allocated or segregated storage solutions because you literally hold the key. You can drive to a local location, walk right into the vault, open up your private deposit box and visually inspect the contents. You have physical access to the gold in a way that you do not with, say, the Perth Mint, or Bullionvault, or whatever.

The main criticism of SDBs is that there are lots of horror stories about the boxes being forfeited due to inactivity, lost during a move of the box, or just inexplicably drilled open for no good reason. These stories (usually in the form of news clippings) are true, but how representative are they of the experience of the vast majority of SDB holders? 1 in 10,000? 1 in 100,000? 1 in a million? Furthermore, the vast majority of these stories involve someone failing to pay the bill and/or not checking up on the box for years, even decades. This is, therefore, a risk that is very easy to mitigate. Pay the rent and open the box up once a year.

I also think there is something to be said for opening a SDB with a local credit union. You are much less likely to be "lost in the shuffle" by a community owned bank than a major national bank that views you as just a faceless client number. Customer service is usually much better at local credit unions. They are less likely to just start drilling open SDBs, even if you haven't visited for years or missed a rent payment, without first making a serious effort to contact you.

Anyways, what is the current consensus of using safe deposit boxes for gold storage around here?

Great post, and I love the photo. (Wikimedia Commons).

I think about this all the time even though I made up my mind some time ago. I agree with pretty much all of your post: risk tradeoffs, and all the ways that you can lose your gold at home without being robbed or burglarized. I often think about the guy who stashed wealth (cash not gold) in some old clothes because he was saving up to surprise his wife with a vacation. She donated the clothes to Goodwill! Happy ending in this case. An honest employee got them their money back, and that’s why it was in the news. But, how many people lose money this way? Probably a lot. It’s just not very newsworthy.

I am a believer in safe deposit boxes. Yes, there are things that can go wrong. So far, so good. Mine is walking distance. No geographic diversification, but I am planning to put some in my sibling’s boxes so that their kids can inherit some coins. My wife is already authorized to access ours directly.
I get a little nervous every time I go and the banker remarks that the box is heavy.

When I reach the halfway mark between my last box visit and the next visit, I’m going to start buying insurance. I visit every six months to keep things active. I used to balk at the idea of insurance, but it’s cheap peace of mind as Steve or someone here said long ago.

I hated having to worry about having gold on hand or in a SDB. It was a relief to sell it and just use ETF.

It was more stressful to worry about what I would mess up with the gold than what the ETF would mess up. At least the ETF has the power of the masses on it's side.

whatchamacallit wrote: ↑Mon Jul 04, 2022 10:35 pm I hated having to worry about having gold on hand or in a SDB. It was a relief to sell it and just use ETF.

It was more stressful to worry about what I would mess up with the gold than what the ETF would mess up. At least the ETF has the power of the masses on it's side.

Good counterpoints to the idea of having it on hand.
I've mentioned before, having first hand knowledge of a hunt for PMs after a person had died. While it sounds like fun, it's not.

Blue Ruin:

Your photo of the bank safe that survived the tornado at Joplin, Missouri is the best kind of argument. For those who don't know or recall, the tornado that hit Joplin utterly flattened the core of the city and knocked out basic services for many weeks. No internet either. Your evidence clinches your argument!

Two additional points:
1. A safe deposit box can also be used to store paper I-bonds. I keep mine at a local bank that survived the Great Depression of the 1930s intact. Whether there is an equivalent physical bond for Blue Ruin's fellow Canadians is something he might address.

2.Diversification within a given asset class is always a useful tool for managing risk. I hold both physical gold in an SDB and in the form of an ETF. Holding SOME assets in SDBs and SOME assets in the form of ETFs is always a way to guard against the possibility of natural or manmade disasters

Xan wrote: ↑Thu Jul 28, 2022 1:02 pm What Is the FBI Trying To Hide About Its Raid on Innocent Americans' Safe Deposit Boxes?

This is fascinating and terrible.

What is currently the best SDB Insurance?

johnnywitt wrote: ↑Fri Sep 09, 2022 6:22 pm What is currently the best SDB Insurance?

Diversity.

Split it up between multiple boxes in different small town no name banks.

That said, that was my strategy last year. This year, I started getting nervous about the trend for banks not really giving safe deposit boxes the respect that they used to. So I no longer have anything in SDB's.

johnnywitt wrote: ↑Fri Sep 09, 2022 6:22 pm What is currently the best SDB Insurance?

I have only seen safedepositboxinsurance dot com mentioned.
What is the best? No idea.

Mark Leavy wrote: ↑Sat Sep 10, 2022 7:25 pm

johnnywitt wrote: ↑Fri Sep 09, 2022 6:22 pm What is currently the best SDB Insurance?

Diversity.

Split it up between multiple boxes in different small town no name banks.

That said, that was my strategy last year. This year, I started getting nervous about the trend for banks not really giving safe deposit boxes the respect that they used to. So I no longer have anything in SDB's.

Where did you move everything?

Of course he moved it to the wine storage

dualstow wrote: ↑Sat Sep 10, 2022 8:23 pm Of course he moved it to the wine storage

Close

Grappa vault?

I'm buying up old Victorian houses in Mad Max neighborhoods of San Francisco, Portland and Vancouver. Then sealing tubes of Eagles behind the false drawer fronts in the bathroom vanities. It's a sure thing.

Xan wrote: ↑Thu Jul 28, 2022 1:02 pm What Is the FBI Trying To Hide About Its Raid on Innocent Americans' Safe Deposit Boxes?

Update from the LA Times:
FBI misled judge who signed warrant for Beverly Hills seizure of $86 million in cash

flyingpylon wrote: ↑Fri Sep 23, 2022 12:50 pm

Xan wrote: ↑Thu Jul 28, 2022 1:02 pm What Is the FBI Trying To Hide About Its Raid on Innocent Americans' Safe Deposit Boxes?

Update from the LA Times:
FBI misled judge who signed warrant for Beverly Hills seizure of $86 million in cash

It’s like the FBI and Justice Department are lawless. Here in maga country, their reputations are in the toilet.

Speaking of safes & vaults, I posted a story about cracking Prince's vault here - viewtopic.php?f=9&t=12737
(New thread because it's not really on topic).

The journey continues:
I went into my local branch because the rental fee is going up big-time. My teller happened to be the branch manager and he informed me that the bank as a whole are "pulling away from safe deposit boxes." Well shit. Not FDIC insured, not waterproof... He recommended a home safe, like he himself has. I said that I'd looked into it but I feel it's dangerous once it's known that you have one. That was the one moment his smile vanished.

I've spent years trickling gold coins into my box, and then a larger one. I showed Mrs DS the ropes and authorized her entry for when I kick the bucket. And, I finally got some peace of mind when I bought insurance on it, just a few days ago.
Back to the drawing board.

dualstow wrote: ↑Thu Feb 02, 2023 3:57 pm
The journey continues:
I went into my local branch because the rental fee is going up big-time. My teller happened to be the branch manager and he informed me that the bank as a whole are "pulling away from safe deposit boxes." Well shit. Not FDIC insured, not waterproof... He recommended a home safe, like he himself has. I said that I'd looked into it but I feel it's dangerous once it's known that you have one. That was the one moment his smile vanished.

I've spent years trickling gold coins into my box, and then a larger one. I showed Mrs DS the ropes and authorized her entry for when I kick the bucket. And, I finally got some peace of mind when I bought insurance on it, just a few days ago.
Back to the drawing board.

My thought is that if you have a home safe that is telling an intruder intent on robbery EXACTLY where something valuable is located.

vnatale wrote: ↑Thu Feb 02, 2023 4:01 pm

dualstow wrote: ↑Thu Feb 02, 2023 3:57 pm The journey continues:
I went into my local branch because the rental fee is going up big-time. My teller happened to be the branch manager and he informed me that the bank as a whole are "pulling away from safe deposit boxes." Well shit. Not FDIC insured, not waterproof... He recommended a home safe, like he himself has. I said that I'd looked into it but I feel it's dangerous once it's known that you have one. That was the one moment his smile vanished.

I've spent years trickling gold coins into my box, and then a larger one. I showed Mrs DS the ropes and authorized her entry for when I kick the bucket. And, I finally got some peace of mind when I bought insurance on it, just a few days ago.
Back to the drawing board.

My thought is that if you have a home safe that is telling an intruder intent on robbery EXACTLY where something valuable is located.

What you need is a big honkin' home safe in the garage, drilled into the floor, the whole enchilada. Inside is a shotgun and a couple of gold coins. Underneath a floorboard or behind your bookshelf is a small safe brimming with gold coins.

Personally I don't do either: so far I'm so lazy I just use the ETFs.

dualstow wrote: ↑Thu Feb 02, 2023 3:57 pm He recommended a home safe, like he himself has. I said that I'd looked into it but I feel it's dangerous once it's known that you have one. That was the one moment his smile vanished.

Hilarious. That's when you ask him what model safe he has, how are his wife and kids and does he have a business card you can have.

I did ask him what brand and he said he didn’t remember offhand ( ) but that he got it at BJ Wholesalers or something(?)
Xan - I don’t have a garage! I keep thinking about a happy medium between between ‘thief will miss it’ and ‘wife won’t throw it out’.

dualstow wrote: ↑Thu Feb 02, 2023 8:26 pm I keep thinking about a happy medium between between ‘thief will miss it’ and ‘wife won’t throw it out’.

There’s always money in the banana stand.

One of the greatest shows ever made.