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Precious Metal Storage......Industry leader is leaving the individual storage business

When an industry leader offers exceptionally low rates for storing precious metals it is easy to become complacent to the real costs associated with storage. Part of a successful storage program is to offer a service that is competitively priced without sacrificing safety. If the program’s expenses do not meet their incoming revenue, a decision has to be made. What many large depositories are finding out is that the old depository model for storing precious metals is simply unprofitable. The costs associated with storage and insurance are only rising. Some large depositories are raising their fees and others are walking away.

I heard back in May HSBC might be getting out of the individual storage business for precious metals. At the time it was hard to believe. HSBC is one of the biggest depositories in the world. Well, I just confirmed today that HSBC is getting out of the individual storage business in the USA. Their thousands of clients either have to move their metals or sell them. Strangely, this comes at a time when there is already high investor demand to take physical delivery of their precious metals. 

I have also confirmed with HSBC that clients have been waiting 3-4 weeks to take delivery of Comex bars and still they do not have their metal. Besides shutting down their individual storage business, HSBC is in the middle of an audit as well. It seems many clients are trapped in the bureaucracy of a large depository.

Being in the storage business myself, I realized HSBC’s fees for storage made no sense. This might have been a case where HSBC’s individual storage business was not profitable or the fees they were charging were not compensating them for the risk they were taking in storing precious metals. Whatever the case, a lot can be told by the fees or expenses one pays to protect their assets. Please understand the true cost to protect an individual’s asset is not to offer the most inexpensive services.

Just as I reported last month on the SPDR® Gold Shares ETF (symbol “GLD”) for their unusually low expense designated for storage and insurance, many have started to ask the question.  “Just how safe are my assets when the cost I am paying to have them protected sounds too good to be true?”

Individuals need to be very certain where they store their precious metals. Storage should be a long term consideration. Ask yourself a few questions:

How safe is the facility?
Do they offer fully segregated and insured storage?
How safe is the surroundings of that facility?
How safe will the surroundings be in the future? You can store your assets in the safest vault in the world, but if that vault is in the middle of an unstable social or economic environment, how safe are your assets if you need to take delivery?
How flexible and accessible is the storage program?
How will the program cope with dynamic political and economic conditions?

Many assume larger metropolitan cities offer convenient advantages. This is not always the case. I spent 4 years studying this issue and determined the risk outweighs the convenience.

At IAV we run a private, secure, and competitive storage program for precious metals that offers storage at different facilities throughout the United States. We accept deliveries from the Comex, arrange insured transportation, and offer certain services that simply are not available with form the larger depositories.

Take your time and evaluate your storage options. Do not pick a program because of its name. Understand how this facility will protect you not only for today but tomorrow as well.

Bob Coleman