Do you insure your Gold?

Discussion of the Gold portion of the Permanent Portfolio

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Do you insure your "physical" Gold bullion bars and/or coins that are in your possession?

Yes, I already do
5
6%
No, but I am going to
13
16%
No, and I don't plan on it
38
47%
I do not have any physical Gold bullion bars or coins in my possession
25
31%
 
Total votes: 81
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Do you insure your Gold?

Post by Gumby » Thu Nov 04, 2010 10:05 pm

Do you insure your gold?

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CLARIFICATION: Do you insure your physical Gold bullion bars and/or coins that are in your possession?

(By "in your possession" I mean gold bars and/or coins that you can and have physically touched).
Last edited by Gumby on Fri Nov 05, 2010 9:36 am, edited 1 time in total.
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Re: Do you insure your Gold?

Post by Storm » Fri Nov 05, 2010 8:16 am

I have my gold in SGOL and GLD, so I guess this sort of counts as insurance.

I do plan on getting some physical bullion at some point, but it will be most likely in the form of silver rather than gold.
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Re: Do you insure your Gold?

Post by Gumby » Fri Nov 05, 2010 8:30 am

Storm wrote: I have my gold in SGOL and GLD, so I guess this sort of counts as insurance.

I do plan on getting some physical bullion at some point, but it will be most likely in the form of silver rather than gold.
You don't have an insurance rider on SGOL and GLD. ETFs don't count for this poll since the gold isn't in your own possession and you couldn't actually insure the gold as personal property. I've added "physical" to the Poll Question to clarify and I've reset the votes to zero for accuracy.
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Re: Do you insure your Gold?

Post by Storm » Fri Nov 05, 2010 10:31 am

I didn't vote.  Sorry if I wasn't clear on that.  I guess SIPC protection sort of counts, but yes, there is no insurance on gold not in your possession.
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Re: Do you insure your Gold?

Post by Gumby » Tue Dec 07, 2010 10:06 am

I finally looked into a rider on coins in a safe deposit box. I was quoted an annual premium of a little less than 2% of the value of the coins. That seems like an awfully high expense ratio to tack onto Gold each year.
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Re: Do you insure your Gold?

Post by MediumTex » Wed Dec 08, 2010 8:30 am

Gumby wrote: I finally looked into a rider on coins in a safe deposit box. I was quoted an annual premium of a little less than 2% of the value of the coins. That seems like an awfully high expense ratio to tack onto Gold each year.
That's funny. It sounds like that insurer doesn't have much confidence in the security of safe deposit boxes.

Does that seem high to anyone else?
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Re: Do you insure your Gold?

Post by Lone Wolf » Wed Dec 08, 2010 9:34 am

MediumTex wrote: That's funny. It sounds like that insurer doesn't have much confidence in the security of safe deposit boxes.

Does that seem high to anyone else?
Definitely super high, to the point of being unaffordable.  On my list of gold ownership options, this would put "insured in safe deposit box" only slightly above "secured in my rectum".

I wonder if that premium is based on a belief that safe deposit boxes are insecure or that there's a high risk of insurance fraud with items like this.
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Re: Do you insure your Gold?

Post by Gumby » Thu Dec 09, 2010 8:05 pm

Lone Wolf wrote:
MediumTex wrote: That's funny. It sounds like that insurer doesn't have much confidence in the security of safe deposit boxes.

Does that seem high to anyone else?
Definitely super high, to the point of being unaffordable.  On my list of gold ownership options, this would put "insured in safe deposit box" only slightly above "secured in my rectum".

I wonder if that premium is based on a belief that safe deposit boxes are insecure or that there's a high risk of insurance fraud with items like this.
For now, I told them to forget about adding the rider. I couldn't help but wonder if the insurance agent punched in the wrong code for the gold coins when trying to figure out the quote. I did my best to explain that the coins were non-numismatic (which seemed to mean nothing to the agent) and that they were already in a safe deposit box. She seemed confused and then just asked for the value of each coin and how many coins there were. It was clear the agent had no idea how to value them. So, I gave her the estimated value of each coin.

Would someone who has insured their coins be able to shed any light on their experience?
Last edited by Gumby on Thu Dec 09, 2010 8:23 pm, edited 1 time in total.
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Re: Do you insure your Gold?

Post by Gumby » Sun Dec 12, 2010 12:16 pm

I've made some progress with my research. It seems that large insurance companies are not the way to go when it comes to coin insurance. From what I am seeing, most serious coin collectors are members of the ANA (American Numismatic Association) and their membership provides them with access to a group rate with Hugh Wood Inc. — the largest numismatic coin insurance broker. From what people are saying, it sounds like their policies are covered through Lloyd's of London.

http://www.hwint.com/usa/hughwood/ana/index.html

Most of the people on the CoinTalk forum seem to be very happy with the Hugh Wood coverage options (various coin locations, coin transit, replacement values, ability to change coin values for sales or market changes, etc) and the insurance rates are very reasonable. Apparently, ANA members are getting insurance rates that are a bit less expensive than many of the Gold ETF expense-ratios.

http://www.cointalk.com/t69325/

Not sure if the ANA actually cares if a particular member invests only in non-numismatic coins though  ;)

Going through a speciality insurer (like Hugh Wood) seems to be the way to go. I should have known that my homeowners plan wasn't going to cut it when I had to explain to my insurance agent how one values a non-numismatic gold coin! I'll report back if I make progress.
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Re: Do you insure your Gold?

Post by Lone Wolf » Mon Dec 13, 2010 9:56 am

Thanks for the update, Gumby!  This does sound much more workable than going through your regular homeowner's insurance.

There does seem to be one wrinkle, though.  When I read a bit further, it sounded like the policies that the collectors on CoinTalk were using are for numismatic coins and are limited in their bullion coverage.  In fact, this post seemed to indicate that the policies they're talking about cover bullion only up to 1% of the total policy value.  It sounds like most PP investors would need something a little different.

Either way, this points us in a much more promising direction!
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Re: Do you insure your Gold?

Post by Gumby » Mon Dec 13, 2010 1:44 pm

I just got off the phone with them. You are correct. We cannot use the ANA group plan because they have a limit of 20% bullion coverage.

However, they are still able to insure non-numismatic bullion collectors as individuals through a different insurance company. The agent said we should expect to pay a slightly higher premium than ANA members do for a similarly valued coin collection. She didn't think it would be a lot more than the ANA rate, but a little bit more.

To get a quote, just fill out this application form (It makes no difference if you're an ANA member or not for gold bullion insurance, so just leave the ANA Member# entry field blank) and indicate that your collection is non-numismatic and 100% bullion. She also said to be sure to indicate the general types of bullion coins next to the bullion percentage entry on the form (i.e. such as Gold Eagles, Krugerrands). Select your coverage option (see coverage options). Be sure to include your email address so they can send you a quote.

When you've filled out the form with the details I've mentioned above, send it to:

Hugh Wood Inc.
220 Match Factory Place
Bellefonte PA 16823

Makes you wonder if we could create a Permanent Portfolio Association and get a group rate like the ANA does?  :P

--------------

EDIT: Two things to remember when filling out the form (or any insurance form for that matter):

-- For the "market value" of the coins, be sure to calculate that as a replacement value (not the value of what you could sell them for).

-- Towards the end of the form, you'll notice a little line that says, "Have you suffered any loss in the last five years, whether insured or not?" Whatever you do, don't lie about this. Even if you had a minor leak in your roof, or a ding in your car, and you didn't file a claim, you still have to report it here.

The reason why is that if you (or even your mother in law) innocently called your insurance company to simply inquire about your coverage for a specific repair, they will log the inquiry in a CLUE report (logged to your name and address) that is accessible by every insurance company on the planet. The more inquiries you have, the higher-risk you are in their algorithms. You can actually lose coverage by simply inquiring about specific loss coverages too many times. People have actually lost coverage when a family member has called to inquire on a policy without the policy-holders knowledge! The point is that even if you think your insurance company doesn't know about something, there's a decent chance they do. It's scary, but the best thing is to err on the side of disclosure.
Last edited by Gumby on Mon Dec 13, 2010 3:14 pm, edited 1 time in total.
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Re: Do you insure your Gold?

Post by Gumby » Sat Jan 01, 2011 11:30 pm

I received my quote from Hugh Wood. They are quoting an annual premium of 0.31% of the total value of the bullion coin collection while in my safe deposit box, and a $250 deductible. I can change the value of the coverage as the price of gold fluctuates. Raising the deductible significantly did not improve the premium very much. Overall, it's far better than getting a rider on my home insurance, and it was nice to have an agent that understood how bullion actually worked.

The coverage is offered through "XL Speciality Insurance Company." I am told they have a very good reputation, and an "A" rating from Standard and Poor's and A.M. Best. Though, I must admit that I have never heard of them. The price is what I was expecting, and it's comparable to a typical expense ratio. Seems worth it to me for peace of mind.

Keep in mind that your quotes will differ depending on previous claims and one's perceived risks. For instance, they asked for additional information about my safe deposit box's location and building structure to determine the risk on the vault.
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Re: Do you insure your Gold?

Post by MediumTex » Sun Jan 02, 2011 1:20 pm

I wonder how many gold coins stored in U.S. safe deposit boxes has been lost to theft in recent years.

I don't know how such a loss would occur.

I see them cracking safe deposit boxes in the movies, but the reality seems to be that most bank robberies are much less sophisticated operations.

Does the coverage include losses from government confiscation?  8)

If you want something else to worry about, read the force majeure provisions in your policy. 
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Re: Do you insure your Gold?

Post by Gumby » Fri Jan 07, 2011 1:37 pm

MediumTex wrote:Does the coverage include losses from government confiscation?  8)
No, they are very clear on that point. I am posting the sample policy they sent me with the quote if anyone wants to see what types of losses are covered and what isn't covered: Sample Bullion Insurance Policy (PDF)

Apparently "shrinkage" isn't covered under the policy either :P
KevD wrote: Interesting article:

Are Bank Safe Deposit Boxes Safe? No

http://www.marketoracle.co.uk/Article14722.html
Nothing is truly "safe." I suppose one easy way to measure the difference in risk between your home and your bank is to get a quote for insuring only at your bank and another quote for only insuring at your home. They will likely ask you for detailed information about both locations. My guess is that, for most people (with wood-frame house construction), the quote for insuring bullion in a home will be higher than the bank. If so, that would suggest that a home is riskier place to store gold in terms of raw measurable risk.

It's worth noting that many states have reduced their abandoned property limits from 15 years to 3 years for the reasons mentioned in the ABC News article mentioned in that link. This means you need to be more diligent about keeping your safe deposit boxes active as much as possible to avoid it being confused as abandoned property. Talk to your bank about how they determine what's abandoned and what isn't. My bank says they put red stickers on boxes that haven't paid their annual dues, and require customers with overdue bills to settle their rental balance before they can access their boxes again. If enough time passes, the boxes officially become abandoned and are handed over to the state. If you visit your box regularly each year, you should be ok.

I believe it also helps to have a piece of paper with up-to-date contact information inside of the box.
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Re: Do you insure your Gold?

Post by AdamA » Wed Mar 16, 2011 1:07 am

Rookie question--

How do the insurance companies value your coins?  For example, if I buy a 1 oz American Eagle today, it's worth about $1450.  Say it gets stolen 5 years from now and is worth $2000.  How much do I get?
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Re: Do you insure your Gold?

Post by Gumby » Wed Mar 16, 2011 9:32 am

Adam1226 wrote: Rookie question--

How do the insurance companies value your coins?  For example, if I buy a 1 oz American Eagle today, it's worth about $1450.  Say it gets stolen 5 years from now and is worth $2000.  How much do I get?
You are responsible for calling up your insurance broker whenever you want to revalue the coins. So, if a few months go by and you see that gold is up 20%, you just call them up and tell them what the new value is that the coins should be insured for. Keep in mind that your premiums will be adjusted for the new value.
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Re: Do you insure your Gold?

Post by flyingpylon » Mon Feb 20, 2012 8:45 pm

Just wanted to add some info here... Hugh Wood has a $150 minimum policy. So on a vault policy, it's .3% on $50,000 and up, but a higher percentage for values under that due to the minimum.
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Re: Do you insure your Gold?

Post by ahhrunforthehills » Wed Feb 22, 2012 6:18 pm

.
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Re: Do you insure your Gold?

Post by Gumby » Wed Feb 22, 2012 7:07 pm

ahhrunforthehills wrote:
Gumby wrote:
Adam1226 wrote: Rookie question--

How do the insurance companies value your coins?  For example, if I buy a 1 oz American Eagle today, it's worth about $1450.  Say it gets stolen 5 years from now and is worth $2000.  How much do I get?
You are responsible for calling up your insurance broker whenever you want to revalue the coins. So, if a few months go by and you see that gold is up 20%, you just call them up and tell them what the new value is that the coins should be insured for. Keep in mind that your premiums will be adjusted for the new value.
Not necessarily.  A high quality insurance company will sometimes automatically revalue it (within moderation) when you file a claim.  I forget the technical term for it.

I lost a wedding ring that was appraised during 2006 gold prices.  They cut me a check for the replacement value at no extra cost (or raising my premium) even though gold tripled in price.  No questions asked.

But on the flip side, high quality insurance costs a lot more than mainstream insurance.
That has nothing to do with the "quality" of the insurance company. What you're talking about is written into the kind of policy you purchased. For example, when you're insuring a ring, you usually have a choice of "Actual value policy," "Replacement policy," or "Valued At Policy". Almost all insurance companies offer these kinds of policies (for wedding rings) and you'll always pay the appropriate premium for the policy you get.
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Re: Do you insure your Gold?

Post by alvinroast » Thu Mar 15, 2012 2:02 pm

I don't have enough physical to worry about at this point. More and more though I'm thinking that insurance policies should only be purchased after you've exhausted all other security options. First get the safety deposit box,etc then worry about the insurance.

Unlike most people I've got earthquake insurance on the house. I looked at what black swan events could cause the most damage to our assets and decided it was reasonable in the short term. (One less thing to worry about). I just received the renewal notice and the company decided that replacement would cost 1.5 times the current market price. The problem is that the current market price is mostly for the land. If an earthquake wiped out our house we could probably still sell the land for $200-250k. Since the deductible is now $50k I'm seriously considering just investing in earthquake straps for the house and planning on losing $100-150k (total loss of the house) in a worst case scenario situation. Maybe the PP has changed my thinking, but I think we could weather the loss of 15-25% of assets in a major earthquake and save the $1000/yr earthquake premium for insurance future gold purchases. :D

If we lived in a million dollar home I'd want it fully insured. Likewise if I had 25% of financial assets in physical gold I'd be all in on the insurance. Self insure to the extent you can first.

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Re: Do you insure your Gold?

Post by smurff » Sun Mar 18, 2012 4:37 pm

alvinroast wrote: Since the deductible is now $50k I'm seriously considering just investing in earthquake straps for the house and planning on losing $100-150k (total loss of the house) in a worst case scenario situation. Maybe the PP has changed my thinking, but I think we could weather the loss of 15-25% of assets in a major earthquake and save the $1000/yr earthquake premium for insurance future gold purchases. :D
alvinroast, what are "earthquake straps?"
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Re: Do you insure your Gold?

Post by alvinroast » Sun Mar 18, 2012 5:14 pm

smurff wrote:
alvinroast wrote: Since the deductible is now $50k I'm seriously considering just investing in earthquake straps for the house and planning on losing $100-150k (total loss of the house) in a worst case scenario situation. Maybe the PP has changed my thinking, but I think we could weather the loss of 15-25% of assets in a major earthquake and save the $1000/yr earthquake premium for insurance future gold purchases. :D
alvinroast, what are "earthquake straps?"
http://www.earthquakeprepared.com/earth ... rofit.html

I guess they're more commonly referred to as bolts. It's where you bolt the framing to the foundation. I believe this is standard building code in new homes (I did construction back in the 70-80's and we bolted the frame to the foundation). It's only needed for older houses like ours from the 40's. The city of Seattle has monthly classes on retrofitting, but I've been procrastinating until now.

http://www.seattle.gov/emergency/prepar ... l/home.htm
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Re: Do you insure your Gold?

Post by smurff » Sun Mar 18, 2012 5:54 pm

Thanks for the info.  I wonder if earthquake-resistant construction is the standard around the country.  Especially since (lately) there have been earthquakes in places that strangely never had them before.  Old faults being awakened, or simply being discovered.

If you bury your gold under your house, you should probably have earthquake upgrades, even if you're not in an earthquake zone, for that reason (old faults waking up).
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Re: Do you insure your Gold?

Post by steve » Fri Dec 18, 2015 6:56 am

has anyone had any experience with https://safedepositboxinsurance.com/
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Re: Do you insure your Gold?

Post by dualstow » Tue Jan 05, 2016 9:36 am

Did you end up going with them, Steve?
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