Answers Money Protection Recession Planning

How Should You Own Physical Gold or Silver?

How Should You Own Physical Gold or Silver?
Written by Paul Deloughery

The current economy is causing more people to buy gold and silver. As a result, the price of gold has risen recently to a 7.5-year high. Some people are buying into programs where you buy gold and they store it for you. One such example is the Tocqueville Gold Fund. While others are literally buying precious metals in its physical form. So, how should you own physical gold or silver?

gold bars

The price of gold has risen to 7.5-year highs recently.

Every family should probably have some “junk silver”

I’m a lawyer. And I’m not trying to sell you gold or silver investments. However, I personally believe every family should have at least some junk silver. Why? First, there is always the possibility of an event in which your paper (or electronic) dollars are either devalued or unusable. For example, we may enter a period of hyper-inflation, war, or some other catastrophe. If something like that sends the economy into a tailspin, you won’t want the metal in an ETF. You’ll want it in a tangible (spendable, useable) form such as junk silver.

Second, if nothing bad happens to the economy, you’ve at least diversified your portfolio with some precious metals.

The only way you can lose by holding physical gold or silver is if you don’t know how to properly store it and control who has access to it. So, how should you own physical gold or silver?

Questions to ask about how to own gold or silver

  • Where do can you safely store precious metals?
  • If you become incapacitated, who do you want to be able to access the metal to be able to pay for your care?
  • If you die, who do you want to get the metal … and how do you ensure that your wishes are carried out?
  • If you get sued or have creditor issues, how do you protect the metal?
    Have a question about what to do with your silver or gold? Click Here to schedule a Bulletproof Your Assets Strategy Session with me, attorney Paul Deloughery.

Where do can you safely store precious metals?

You have FOUR OPTIONS for how you can own gold or silver

1. You can purchase it through a company that then stores the metal for you.

Goldmoney, Inc. (goldmoney.com) is one company that does this for you. (I have no affiliation with this company. I’m listing it merely as an example that I found quickly in an internet search.) I call this the SOLUTION FOR OPTIMISTIC PEOPLE. Goldmoney advertises:

“All client assets are segregated, fully-reserved (1:1), and securely stored in insured vaults around the world.”

Of course, if we experience hyper-inflation or the power grid goes down, or any number of other possible Doomsday scenarios happen, and you actually need the gold or silver in order to pay for food and supplies, you won’t actually have access to it.

Thus, this solution is for optimistic people who believe governments will always be there to protect the vault
where your gold is stored, that everyone at the storage company is honest, and that the system for buying and selling the gold (the internet, the stock exchange) will always work.

Verdict: This is the most convenient and cost-effective solution if you see gold and silver simply as an alternative investment. However, you may not have access to the physical asset in case of a Doomsday event.

2. You can have it held at a storage facility close to you.

There are secure facilities located in various metropolitan areas around the U.S. where you can store physical gold or silver. This is a variation of the first approach. Except with this method, you actually purchase the physical gold or silver yourself and then manually take it (in the trunk of your car, I suppose) to the storage facility. An advantage is that you own the gold or silver in your name, and it is stored in a vault in your name. The downside is still that if there is civil unrest or for some reason the storage facility is closed, you still don’t have access to your gold.

Verdict: This is the best solution if you have more than (let’s say) $25,000 worth of gold or silver at your house, but you also want the ability to take physical custody. However, there is a possibility of a rogue employee stealing it, or civil unrest happening so you can’t access it. (Think CHAZ zone in Seattle.)

3. You can keep it in a safe in your house.

Hidden safe in garage

Hidden safe in garage.

This is probably the best solution for amounts worth less than $25,000. At least a portion of this should be in junk silver so you have a way of buying food and supplies in the case of a doomsday event such as war or Venezuela-style inflation.

Verdict: Keep gold and silver worth less than $25,000 in a home safe. Make sure someone else knows the combination or knows how to get it.

4. You can keep it hidden in a place that only you know about.

And then there’s the Captain Flint approach: Hide the gold like a pirate so no one will ever find it. (Arrrgh!)

I knew a Fund of Funds manager several years ago who advocated for this approach. He told me that even his wife didn’t know where his gold was. This is great for him … as long as he is alive and able to manage his affairs. But if he is ever hospitalized or gets dementia, no one will be able to access it to help pay for his care. And his loved ones will never find it after he’s dead.

Verdict: This is a dumb idea, unless you plan to make a game of it for the people you leave behind. In that case, at least leave a treasure map and some clues.

If you become incapacitated, who do you want to be able to access the metal to be able to pay for your care?

For this, you need a General Durable Power of Attorney. That document will name an agent to be able to manage your finances and property in case you are incapacitated. That agent needs to have access to the gold or silver. You can keep the password, safe combination, and other necessary information in a password management program such as LastPass or 1password. LastPass allows you to name someone as an emergency contact. Then if you die or become incapacitated, that person can provide evidence to the LastPass and they can allow you to get access to the information.

If you die, who do you want to get the metal … and how do you ensure that your wishes are carried out?

The person who gets what when you die is typically spelled out in either your Will or your revocable trust. But if you also want asset protection, read the next section. Owning the gold or silver in your personal name (or in your revocable trust) does not protect it from your creditors.

Just like I mentioned in the previous section, the person named to be in charge needs to be able to get your password, safe combination, and other information (such as where you hid the safe). Again, LastPass or 1password are good solutions for safely storing this information.

I was involved in the probate of a fellow’s estate some years ago. When he died, he had a massive safe in his garage. No one knew how to open the safe. And there were multiple beneficiaries to his estate. Each beneficiary hired a separate attorney. I represented one of the beneficiaries. On a chosen date and time, all of the beneficiaries, plus their lawyers, plus a locksmith (with a saw) and plus multiple representatives from Sotheby’s met in the garage. It took about an hour and a half to open the safe. (Remember, there were multiple lawyers all charging by the hour.) Then the Sotheby’s purchaser sat and cataloged all of the coins. That took another 4 or 5 hours. (Again, the lawyers’ time clocks were going “cha-ching” this whole time.) Finally, the coins were divided among three separate armored SUVs that all took alternate routes on the drive from Scottsdale, Arizona to a location in Texas. The coins were subsequently sold at auction (with around a 40% commission going to Sotheby’s). The whole process took at least 4 months.

This could have been made easier if there were co-Personal Representative or co-trustees named who each had part of the combination. Multiple people each having part of the combination would help prevent one person from being able to steal the contents. Then the coins should really have been distributed in kind rather than sold. In other words, the beneficiaries should have all been given an equal amount of the actual coins. (This should have been spelled out in a Will or trust.) Then the beneficiaries would have an investment to hold onto the coins (without taking a 40% hit on the sales commission to Sotheby’s).

And that’s why having a good estate plan is important.

If you get sued or have creditor issues, how do you protect the metal?

If you want asset protection (aka creditor protection), then don’t leave the gold or silver in your personal name. The rule when it comes to asset protection is:

What You Own Can Be Taken from You.

If you get personally sued, and the other side wins, the court can order that most of your personal assets get transferred to the creditor to pay for the debt. There are exceptions to this, such as a small amount of equity in your home (called the Homestead Exemption) and qualified retirement accounts (like IRAs and 401Ks). But most of your other assets can be seized and sold to pay for the judgment. This almost certainly includes physical gold or silver, as well as precious metal ETFs.

Get competent legal advice before making any decision about how to protect your wealth. Do not rely on the general information provided here to make important decisions regarding your particular situation. Call us at 602-443-4888. If we don’t know the answer, we will refer you to someone who can help.

A common solution is to have it in a limited partnership. You can be the 1% general partner. But you want the 99% non-managing limited partner to be a protective trust that is out of your name.

If you’re more adventurous, there are ways of protecting your wealth outside the U.S. For example, if you really want to hedge your bets regarding the U.S. and global economies, you can open a safe deposit box in another country. Then put investment grade diamonds or valuable coins in it. Because it’s not an “account”, you don’t need to report it to the federal government.

Remember all the caveats mentioned above, however. Make sure someone will have access to the safe deposit box if you become incapacitated or die. And make sure there is some legally enforceable way of ensuring that no single person empties the safe deposit box without distributing the contents according to your wishes.

Do You Want To Protect Your Wealth?

Click Here to schedule a Bulletproof Your Assets Strategy Session with me, attorney Paul Deloughery. I charge a $1,000 FULLY REFUNDABLE fee for this. This helps my team focus our time on people who are serious. Again, this is FULLY REFUNDABLE. If you’re not satisfied with the advice I provide for any reason, I’ll refund the money.

Here are some of the benefits of working with my team and me:

• Our trusts are the strongest, most flexible asset protection solution available. They are supported by over 140 years of case law. They are valid in all states and under federal law. They protect every kind of asset in every location from every type of legal claim, including bankruptcy, divorce, IRS audits, government seizures, creditors, and lawsuits.
• We offer a 60-day MONEY BACK GUARANTEE. If for any reason you aren’t satisfied that we have provided world-class asset protection, we will refund your money. No questions asked.
• We provide a LIFETIME WARRANTY. I’ve never heard of any other law firm offering this. What this means is that if we ever decide that there is ever a change in the law or some other development that makes a different solution better for you, we will update your documents FOR FREE. (Costs such as filing fees not included.) We have already done this for one client, and it meant that we provided an additional $15,000 worth of work for free. Why do this? Because we like sleeping at night knowing that we’ve done the right thing.

Click Here to schedule a Bulletproof Your Assets Strategy Session with me, attorney Paul Deloughery.

Disclaimer: Yes, I am an attorney, but I’m not your attorney and this article does not create an attorney-client relationship. I am licensed to practice law in Arizona and have based the information presented on U.S. laws. This article is legal information and should not be seen as legal advice. You should consult with an attorney before you rely on this information.

© 2020 Magellan Law, PLC. Written by attorney Paul Deloughery.

About the author

Paul Deloughery