Australian House Prices in Gold / Silver Ounces (2016)

Every 12 months I have been updating the data I keep on Australian house prices measured in ounces of Gold and Silver. Here is the latest update which takes us through to June 2016 (inclusive).

Data for house prices is via Residex (median house price indices).

Data for Gold and Silver prices is via Perth Mint (bid average AUD).

Key Figures:

Adelaide (Ounces to buy a house) 

Housing Peak Against Gold (February 2005): 501oz Gold

Latest Figures (June 2016): 258oz Gold, 19,332oz Silver

Based on Current Spot Price: 249oz Gold, 16,389oz Silver

Brisbane (Ounces to buy a house)

Precious Metals Peak (January 1980): 62oz Gold, 1091oz Silver

Housing Peak Against Gold (February 2004): 600oz Gold

Latest Figures (June 2016): 296oz Gold, 22,237oz Silver

Based on Current Spot Price: 286oz Gold, 18,852oz Silver

Melbourne (Ounces to buy a house)

Precious Metals Peak (January 1980): 67oz Gold, 1181oz Silver

Housing Peak Against Gold (February 2004): 661oz Gold

Latest Figures (June 2016): 433oz Gold, 32,460oz Silver

Based on Current Spot Price: 417oz Gold, 27,519oz Silver 

Perth (Ounces to buy a house)

Housing Peak Against Gold (July 2007): 642oz Gold

Latest Figures (June 2016): 295oz Gold, 22,128oz Silver

Based on Current Spot Price: 285oz Gold, 18,759oz Silver

Sydney (Ounces to buy a house)

Precious Metals Peak (January 1980): 103oz Gold, 1811oz Silver

Housing Peak Against Gold (February 2004): 1100oz Gold

Latest Figures (June 2016): 625oz Gold, 46,876oz Silver

Based on Current Spot Price: 603oz Gold, 39,741oz Silver

(Spot Price ratio calculated on A$27/oz for Silver, A$1780/oz for Gold)

Gold and Silver (monthly data) outperformed all capital city prices since the last update.

My position remains the same as it has been since 2014:

"Over the same period (next 3-5 years) I expect rising precious metal prices and a lower Australian Dollar, so do think investors stacking ounces for the eventual purchase of a house will be rewarded (even those in Sydney). Only time will tell if I'm right." 

That said I purchased my own home again in the past 12 months as recently covered on the site:

"But my advice would be not to live your whole life waiting for, planning for, or even hoping for, the next "big crash" (either of the financial system or housing market, arguably the two are joined at the hip in many modern economies).

That might sound odd coming from someone who's analysis, speculation and investments led them to buy a lot of precious metals and write under a handle like 'Bullion Baron'. Some readers may picture me as a nutter with a bunker full of long life food, guns and Gold, just waiting to live out the financial apocalypse 'doomsday prepper' style, but the reality is far less intense.

I'm not saying you shouldn't be prepared for and insure yourself against financial catastrophe, but once you have done so, go out and live a little. The last significant purchase of Gold I made was in late 2014 (after accumulating in the dips periodically in the 6 years prior). I have recently felt comfortable buying a home again in my local property market, Adelaide."

Here are the charts (click any to enlarge).

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Screw the Taxpayer: ATO Compels GST on Bullion

Iceblue's (pseudonym) face screwed up as he read the letter in front of him. It was early March and the Australian Tax Office (ATO) had just written advising of an upcoming audit they intended to conduct on his business, South Gippsland Bullion (SGB). They noted their intent to inspect transactions covering the last several years of trading. He was probably thinking "Why me?" (wouldn't we all under such circumstances), but he may also have been aware that many other bullion dealers have faced similar scrutiny over the past 12-18 months with an industry wide series of audits being performed.

When the audit results arrived in mid May, advising that goods and services tax (GST) should be applied to the bullion products SGB sold, it would leave Iceblue with no choice but to close his doors (figuratively speaking given it was primarily run as an online business). The wording of the letter is ambiguous to say the least. It throws into question an assumed understanding in the bullion industry of what products should have GST applied, as industry veteran Bron Suchecki put it "..the arguments that the ATO now seem to be putting forward do not adhere to the understanding the industry had about what was bullion vs collectible."

GST is not applicable to bullion when sold in investment grade form. "What does that mean?" I hear you ask. Well, it's complicated and the results of this audit make the answers even less clear. You can read the Goods and Services Tax Ruling (GSTR) 2003/10 on what constitutes 'precious metal' for the purposes of sections 38-385 and 40-100 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). In the letter sent to Iceblue finalising the audit the ATO highlighted the following passages of the above ruling:

In paragraph 8 of GSTR 2003/10 (The Ruling) the definition for precious metal identifies the metals and fineness that is set down in section 195-1 of the GST Act. Namely, 'precious metal' means:

(a) gold (in an investment form) of at least 99.5% fineness; or

(b) silver (in an investment form) of at least 99.9% fineness; or

(c) platinum (in an investment form) of at least 99% fineness.

The tradeable form is identified in paragraph 22: Bars, wafers and bullion coins are the physical forms in which the metals gold, silver and platinum are traded on the international bullion market for those metals. These are therefore forms of those metals that are capable of being traded on the international bullion market.

The term 'investment form' is considered in several paragraphs of the Ruling. In paragraph 29 a summary is provided:

- To summarise the above, for gold, silver or platinum to be in an investment form for the purposes of the GST Act, it must be in a form that:

- is capable of being traded on the international bullion market, that is, it must be a bar, wafer or coin;

- bears a mark or characteristic accepted as identifying and guaranteeing its fineness and quality; and

- is usually traded at a price that is determined by reference to the spot price of the metal it contains.

Paragraph 12 of the Ruling refers to items where: 'The price is not determined solely by the metal value of the coin. The price is determined by reference to the spot price and by reference to the quality of the physical characteristics of the coin. The latter indicates that proof coins are not traded for the metal value only and therefore 'indicates that they do not have the character of the metal, but rather the character of manufactured articles, that is, coins made from the metal. This means that proof coins are not precious metal.'

Paragraph 42 of the Ruling differentiates between the retail market and bullion markets: There are coins, such as some commemorative coins, that are marketed in the retail market as 'bullion' coins because they are made from bullion. Such coins are not bullion coins for the purposes of this Ruling. Whether a coin is precious metal does not depend on whether the coin is called a bullion coin or a proof or numismatic coin. The relevant test is not what the coin is called but whether it has the character of the metal. This will be determined, as noted above, by whether it is traded for its metal content or for other reasons.

The ATO's primary focus was on the 'Series of Dissent' (SoD) silver rounds of which SGB had several issues minted through manufacturer SBA Amalgamated. They zeroed in on the marketing used by SGB to sell these rounds, specifically referencing the wording around a strict mintage limit, that they won't be reproduced (with dies destroyed once the mintage was complete) and professionally commissioned artwork which adorned the pieces (among other characteristics).

The ATO also quoted something Iceblue had written on the forum Silver Stackers, pointing out he had called the round a 'collectible piece', however this was done so in the context of explaining that Aussie made rounds can't really compete with bullion pricing (i.e. with bullion products manufactured overseas or in larger quantities).

SGB sold the rounds on an individual basis for around $14 over spot, with a $9 manufacturing cost. The $5 profit was reduced to $1 per round when a buyer purchased in quantities of 100 or greater. The price of the rounds was adjusted in reference to the prevailing spot price. The rounds were priced as bullion, not a proof or collectors coin even if the characteristics or marketing made it attractive to collectors. They just had a higher premium due to the local manufacturing costs.

In my view the SoD rounds met the three criteria required to be considered investment form (and exempt from GST). They were capable of being traded on the international market (once you take the size of the transaction into consideration it's likely many small bullion dealers would purchase the round), they were marked with fineness and quality and traded at a price that was referenced to the spot price.

Perhaps the most worrying aspect of the letter was not even the initial focus on the SoD rounds, but what reads like an afterthought highlighting other products which the ATO does not consider to be GST exempt (explicitly quoted below):

"Coins and bars produced by different mints which also have added characteristics and are in the retail market would not satisfy the definition of 'precious metal'.

Likewise other items sold by [SGB] are sold in a retail market and are differentiated by mint brand and various characteristics including themed year of productions, animals, religious periods, lunar year characters, country."

The ATO goes on to highlight a particular lunar product which is typically sold on the retail market for twice the prevailing spot price, but their wording seems to suggest that any product with 'added characteristics' such as a themed coin may in fact not satisfy the definition of 'precious metal' and be exempt from GST.

Long term readers of my articles would know that I specifically highlight many of the Perth Mint bullion coins as worthwhile investments due to their pleasing designs, low mintage and being individually capsuled. These are many of the same characteristics that the SGB SoD series had. It appears to be these and other characteristics which the ATO is now suggesting should result in GST being applied to bullion products.

In my mind it would make much more sense for the ATO to simplify these rules and remove all ambiguity. Reducing the test to purity of the metal (which should be lowered or exceptions made for 22k gold coins and government issued silver coins) and a maximum premium that can be charged (e.g. less than 100% markup over spot), along with the basic form being a wafer, round/coin or bar. Though my fear is they go the other way and increase the scope of GST on bullion.

There's a good chance this industry crack down and audits stem from the GST gold fraud which has been rife through Australia for some years. I am told (on good authority by industry insiders) that this practice is not only ongoing, but likely the number of people taking advantage of the loophole has increased.

Instead of seeing tangible results from the ATO on the investigation into real fraud costing the country hundreds of millions in lost revenue at a time of focus on fiscal responsibility, we see them putting a small, legitimate and innovative business under the microscope and then crushing them under their proverbial boot. Really the message from the ATO can be summarised from a slogan which was coincidentally minted on one of the SoD rounds... screw the taxpayer (well at least those who are investing in or selling physical bullion).

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How About Fair GST Treatment For Bullion?

In an article I was reading yesterday about the GST-free threshold for imported goods, which postured support for a lowering the cap from $1000 to $20, there was a video containing this message from Craig James (CommSec's Chief Economist):

"Certainly we believe this is a fair tax because if it is the case that people are traveling overseas and over the net to buy goods, bypassing Australian goods. Well really the same goods should be charged the same price whether you're buying overseas or getting it domestically."

There has also been recent talk of raising the GST in Australia from 10 to 15%.

As a proponent for small(er) government and less taxes I'm not particularly fond of the latter suggestion, but I do concur with James' view that a fair tax should see comparable goods charged the same amount of tax. Not only for consumer goods, but also for investment assets. This is one area that bullion (as an investment asset) is short changed.

A guide I wrote on buying Gold and Silver in Australia describes when bullion is GST free:

GST (Goods & Services Tax): Investment grade Gold (99.5%+ fine) and Silver (99.9%+ fine) bullion is not subject to GST. Bullion products of a lesser grade (for example 22k Gold coins like Sovereigns & Krugerrands or 92.5% sterling Silver coins) do attract GST when sold by a bullion dealer.

That results in some of the most commonly purchased bullion investment coins being burdened with GST as they don't meet the minimum finesse (Gold sovereigns and the 1966 Australian fifty-cent piece are just two examples).

1966 Australian fifty-cent pieces, only have 80% Silver content

This unfair addition of GST to an investment asset is something I would like to see changed as I wrote  2 years ago:

Increase the scope of the definitions "precious metal" & "investment grade bullion" for taxation purposes to include coins containing Gold, Silver, Platinum or Palladium (any finesse) which are now or once were legal tender of Australia or any other nation and which trade as a function of the spot price.

Precious metals are often traded in widely recognised investment forms which don't meet the strict scope defined by the Australian Taxation Office. Investment grade bullion below 99% for Platinum, 99.5% for Gold and 99.9% for Silver is subject to Goods and Services Tax (GST). This means dealers are required to charge GST on coins which many hold for investment purposes, but aren't exempt from GST, for example American Gold Eagles (91.6% Gold), Gold Sovereigns (91.6% Gold) and Round Australian 1966 50 Cent Pieces (80% Silver). Such legal tender coins which trade as a function of spot price (consistently trade at spot + x% premium) would be made exempt from GST.

I was also recently made aware (thanks Bron!) that there are other limitations to the GST free status of bullion (that I wasn't familiar with), such as a requirement for the metal to have been refined by a refiner:

"To have this GST-free status one of the requirements is that the metal has been refined by a refiner of precious metal. To be a refiner of precious metal, an entity has to satisfy the Commissioner that the entity regularly converts or refines precious metal in carrying on its enterprise." ATO (What is 'precious metal' for the purposes of GST?)

That means despite the hallmarking of these hand poured Silver bars I recently purchased, if they'd been sold in Australia by a dealer they may have needed GST applied (I bought them direct from the overseas producer in a package that was lower than the current $1000 GST-free threshold).

Home Made Redwood Poured Silver Bars

I think it would be fair to see GST removed from all bullion that is bought for the purpose of investment and where it trades as a function of spot price as I wrote last year:

Perhaps the exemption could be expanded to cover any precious metal which trades as a function of spot price, so that tax fraud is no longer as simple as defacing investment grade bullion, changing it into a form which can suddenly benefit from input tax credits.

That would put the precious metal asset class on a level playing field with others (such as shares), surely that's something that even Craig James could get behind!

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Storing Gold & Silver: Safe Deposit Box In Australia

Information is Australian specific for those interested in the use of a Safe Deposit Box (SDB) to store precious metals. Not investment advice, draw your own conclusions about the risks and how to best store your physical assets.

Regular readers would know that while I prefer physical ownership of precious metals, I'm no stranger to highlighting the risks associated with doing so. As I wrote recently (If You Don't Hold It, You Don't Own It):

There is no risk free way of owning precious metals (or any asset for that matter) and safe storage is the key factor when dealing with physical.

I've mentioned my preference for Safe Deposit Boxes (SDBs) in an earlier article (7 Ways To Keep Your Gold And Silver Safe):

Get a Safe Deposit Box

This is a personal favourite of mine. If there is anywhere that's likely to be safe for your Gold and Silver it's in a facility that is built for that very purpose. Just remember that not all safe deposit box facilities are created equally. Many large banks will offer safe deposit box services, make sure you shop around for the mix of safety and price that best fits your situation as in my experience both of these factors can vary substantially between providers. While I expect it's far less likely today than in times past, you should consider that keeping precious metals in a safe deposit box does make it an easy target for any government crackdown and confiscation should it occur.

SDBs offer the safety of a secure storage facility, while leaving the physical handling of precious metals or other valuables to the individual. This avails the owner with a level of privacy and independence that allocated or unallocated accounts don't, even if stored in a similarly secure premises (see my article 'How Safe Are Unallocated Bullion Accounts?' for more information about the risks that this type of precious metal ownership entails).

You can't choose to store your bullion in a SDB facility and expect that all service providers will offer the same level of protection. Several years ago I wrote about a Kennards facility which was broken into with SDBs emptied after the criminals (who were eventually caught and jailed) scoped the warehouse by hiring their own SDB with a stolen credit card. While the Kennards facility provided privacy (no 100 point ID check) and accessibility (24/7 access), it was these same features which put a hole in their security.

If we look to the more secure SDB services in Australia (those housed in a vault) then we still have a choice to make between independent private vaults and those provided by banks, though not everyone has the luxury of choice between these two varieties if they want to keep their metal stored locally. When an individual is considering a choice of facilities it's important they compare each specifically on it's own merits (not something I can do in detail here), the below is mostly a general comparison and anecdotal observations.

The eastern states have the widest selection of private vaults with well recognised names such as Reserve Vault (RV, Brisbane), Custodian Vaults (CV, Sydney) and Guardian Vaults (GV, Melbourne and Sydney).

All three of these vaulted SDB providers offer insurance options that are underwritten by Lloyds of London (CV and GV offer $10,000 complimentary cover). All three are privately owned and proudly state their independence (of banks and government) and while the vault operators may not be covered by all banking regulations they they are considered a financial service and governed by some of the same rules as the banks (for example the AML/CTF Act).

The private vault facilities are eager to differentiate themselves from the SDBs offered by banks. CV has a handy little table outlining the differences between their service and those of the banks.

Let's tackle these line by line. Some of my points will reflect personal experience, not all bank SDB facilities are identical.

Insurance: The complimentary ($10,000) insurance is a nice bonus, but if that's enough to cover your stack then a SDB is an expensive option anyway (e.g. $300/pa for the SDB is a 3% annual storage cost on $10k in metals). Having the vault provider streamline insurance options is convenient, but you can always organise your insurance independently through a broker.

Key Ownership: At the bank SDB facility I use each box is dual key, one held by the customer and they retain the second for opening in tandem. They do also keep a copy of my key, in a locked box with my signature over a seal. In my opinion the fact that you receive both copies of the key from CV is a false sense of security. As their terms and conditions state, if the Government has legal authority to access your box CV will provide it (with or without your permission and key) and if you terminate the agreement (not paying storage fees) then they reserve the right to open the box and sell the contents to recoup their loss. The bottom line here is that not having a copy of your key doesn't stop CV from accessing your SDB contents under the terms of your agreement with them.

Accessibility: I can't speak to an unlimited quantity, but at the bank SDB facility I use I was able to add a second operator with no extra charge. I also have unlimited access to the facility, though do know of some banks who limit the number of free visits during the year before additional fees start to be incurred.

Long Term Storage Discounts: This may be a unique attribute, though don't see the discounts listed on the Custodian Vault website, so they may be trivial.

Security: Ok, they've got the banks there. I don't have biometric entry to the vault and would be surprised if any other bank SDP facilities in Australia do either.

Storage Restrictions: This would vary between bank providers, but in my case I was not an existing client of the bank and was still able to open a SDB.

Regulations: It's true the banks are covered by a greater level of regulation ("Banking Law"), I will discuss this in more detail below, but while some may see this as a con, I see the tighter scrutiny and greater accountability for banks as a positive.

While each bank SDB facility will differ and need to be judged on their individual merits compared with CV, I don't think a strong case was made from the table for avoiding bank SDBs.

GV and RV embedded videos on their site outlining risks of the banking system such as excessive leverage, derivatives, monetary system change, bank holidays and bail-in risks. I would posit that 90%+ of the content was not relevant to the safety of your assets stored in a bank SDB. That said let's look at some scenarios where your precious metals might be at risk in a safe deposit box.

Gold Confiscation: In the past when discussing the merits of bank vs private SDBs, some have pointed to Part IV of the Banking Act 1959 (suspended) which can be paraphrased as being unable to "buy, hold or sell gold unless it is a legitimate part of your trade or in the form of jewellery" (via Bron Suchecki at Gold Chat). These restrictions were applicable across the board (until 1976) and while I think it's unlikely they are reinstated in their current form, I'd expect even if they are or new confiscation laws were introduced that any crackdown on SDBs would be across the board with both bank and private facilities affected in the same way. Private SDB facilities will be compliant with any government request to refuse customer access or seize contents as required by law just as their terms and conditions state. Those who think they will avoid confiscation by using a private facility because it's "out of the banking system" are being lulled into a false sense of security. In any event I think Gold confiscation is highly unlikely in Australia and if a trend emerges globally of governments doing so then we should have enough notice to change views on the risk of it occurring and act if necessary.

Internal Theft: While theft by an employee is an unlikely event, it could arguably be made easier if the SDB facility has a copy of both keys to your box. Furthermore I have seen some bank facilities where they retrieve the box for you from the vault (so your only key is to a padlock attached to the metal storage box). It may not be the case that every private facility gives you both keys or that every bank facility keeps a copy, but in my experience the risk of internal theft from an SDB is potentially higher at a bank facility (if ease of doing so is the only consideration).

The Canberra Times, 25th April 1991

External Theft: The risk of this occurring comes down to the security of each facility. I'd expect that some bank facilities exceed the security of some private vaults and vice versa. Reading through Guardian Vaults list of security measures leaves me impressed, but whether this is a significant step up from other facilities I can't be sure. While listing security specifics may help clients feel good about their choice, marketing in this way also puts more information into the hands of those who may want to get around it.

The Canberra Times, 10th October 1984

Insolvency: In the event of insolvency of any facility the contents of your SDB should be owned free and clear. The biggest risk here is if you want access to your SDB contents while the administration processes takes place (the facility may be closed for regular access while that occurs). Here is where a bank facility might be safer than a private facility. We have a greater insight into the solvency of the banks who are open to scrutiny from the public due to their annual reports and other financial transparency. Even if you don't personally understand how to read the financial position of the bank you have your SDB with, it's likely their share price will be an indicator of health and financial news outlets will be quick to report on any trouble. Furthermore it's a fair assumption that a bank insolvency would result in government support. Contrast that to private SDB facilities, we don't know their financial position and you're not likely to have any warning of their insolvency until the day they shut their doors.

Bank Holiday: In the case we see events unfold where there are wide spread bank failures then there's a chance we see bank holidays. Like insolvencies described above this should only result in a temporary lack of access to the contents of your SDB. Some have suggested that bail-ins may extend to SDBs, but I see that as a highly unlikely. I haven't seen any evidence to suggest that SDBs in Cyprus were seized as part of their recent bail-in measures.

Bank SDB facilities get characterised as unsafe due to their connection to the banking system, but in my opinion there are some pros and some cons that result from this association and on the whole I don't see bank SDBs as less safe than their private counterparts. 

The banks are written off by precious metal holders as shady, but if the last 12 months has taught us anything it's that the bullion industry has it's flaws too (ATO and AFP Investigate Australian Gold Industry Fraud). In fact one of the aforementioned private SDB providers (CV) has management ties to the refiner implicated in the GST fraud story from Vedelago.

As it stands there is no private vault SDB facility in Adelaide so my only option for local storage is with a bank, but I feel comfortable doing so and would only consider moving to a newly available private vault if there were measurable benefits in doing so.

Whichever you choose I think both private and bank (vaulted) safe deposit box services are a smart option and in most cases much safer than keeping your precious metals at home.

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If You Don't Hold It, You Don't Own It

'If you don’t hold it, you don’t own it' is a popular meme and catch phrase used by physical precious metal owners who like to encourage others to own it likewise (avoiding fraud of the 'paper' markets)... but what are the risks of owning physical?

There is no risk free way of owning precious metals (or any asset for that matter) and safe storage is the key factor when dealing with physical.

There's risk holding precious metals in safe deposit boxes. 

There's risk holding precious metals in unallocated form. 

And there's also risk holding precious metals at home.

As I pointed out in a recent article (7 Ways To Keep Your Gold And Silver Safe), there are burglars willing to turn a house upside down if they think you have something of value: 

"A recent thread on Silver Stackers highlighted the care you need to take if deciding to store your precious metals at home, where during a break-in thieves had emptied potted plants, pulled out electrical sockets, removed picture frames, moved furniture and more."

There have been four home burglaries reported by members of Silver Stackers in Brisbane over the last 18 months. They may not be related, but some of them had factors suggesting the individuals were targeted due to known ownership of precious metals. In one case a 500kg safe was broken into with heavy duty tools (cutting torch and jackhammer), equipment that a thief is unlikely to carry on them for a random burglary. Another case had the safe 'pried open like a tin can'. Bleach was sometimes used at the crime scenes to cover their tracks, making any DNA and other incriminating evidence difficult to collect.

For some of these stackers it was a near complete loss of their life savings or investment.

It's a horrible way to lose one's life savings or even a portion of one's asset portfolio (commiserations to those affected if you're reading). You'd have to be the scum of the earth to do that to another person, but investors need to remember these cretins are out there and make sure they're not an easy target. If you're going to keep precious metals at home, make sure you take precautions when trading e.g. don't arrange deliveries to or pickups from your home address, don't transact in public where you might be easily followed home and be wary of providing any details that might be easily linked back to your home address (e.g. does searching for your full name or phone number produce an address in the White Pages or Google?).

Some individuals may ignore this risk because they believe their home and contents insurance policy will cover their losses, but most contents insurers have specific limits in place to reduce the payout for any bullion stolen. Some (Australian) insurer examples are below (my interpretation of their policy, check with the insurer for clarity and any changes over time):

AAMI (Limited to $500) - Uncut and unset gems, gold or silver nuggets, bullion and ingots (not jewellery). 

Allianz (Limited to $2000) - Item containing gold and/or silver. We will not pay more than $2,000 for any one item, pair, set or collection unless they are separately listed in the current schedule as specified contents items. 

CGU (Limited to $20,000) - Doesn't mention bullion by name, but potentially falls under a 'collection/set of contents items' (which is limited to $20,000). 

QBE (Limited to $500) - Cash, bullion or negotiable securities. Up to 1% of the sum insured to a maximum $500. 

SGIC (Limited to $2500) - Collections – cards, stamps, uncirculated mint issue or proof coins or notes, ancient or rare coins or notes, sovereigns and bullions. 

YOUI (Doesn't cover) - Contents exclude: unset gemstones, gold or silver bullion or coins, cash or other negotiable items. 

Some of these companies (or others not covered above) do offer the ability to increase the limits or list special items (incurring additional premium), however that also means you need to tell your insurer exactly what you keep at home.

If you're not going to diversify your assets, at least make sure the location of those assets is diversified. If you don’t hold it, you don’t own it? If you do hold it (in one place), you may not hold it for long.

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7 Ways To Keep Your Gold And Silver Safe

In the spirit of these lists that have flooded some of the most popular media and news sites (Business Insider I'm looking at you), I thought I'd do a series for precious metals, starting with 7 ways you can keep your Gold and Silver safe (keeping in mind there is no completely risk free way to own precious metals, as is the case with any other investment). 

Some suggestions are tongue in cheek (so don't take them all too seriously), but hopefully it gets your mind ticking about the safety of your stack. Here we go...

Keep Them On You

Keeping precious metals on your person may sound silly, but for the majority of the population that is exactly what they do. If you have Gold or Silver rings and other jewellery on your person, then someone breaking into your hotel, car or house is not going to be able to get their hands on them. It may be the safest place for them depending on your situation. If you have a more substantial investment in precious metals then some shabby looking sneakers (the smellier the better, less likely to be stolen) with trenches cut into the sole might fit some Gold bars (up to a kilo in each) snugly.

Hide Them Well

A recent thread on Silver Stackers highlighted the care you need to take if deciding to store your precious metals at home, where during a break-in thieves had emptied potted plants, pulled out electrical sockets, removed picture frames, moved furniture and more. You really can't be too careful here, but if you decide your home is a more secure place than any, then you might consider taking a look at this book for some ideas: How to Hide Anything - Michael Connor, keeping in mind that if you can read a book about where to hide something, then so can a thief. Be creative and don't share your ideas publicly.

Get a Safe Deposit Box

This is a personal favourite of mine. If there is anywhere that's likely to be safe for your Gold and Silver it's in a facility that is built for that very purpose. Just remember that not all safe deposit box facilities are created equally. Many large banks will offer safe deposit box services, make sure you shop around for the mix of safety and price that best fits your situation as in my experience both of these factors can vary substantially between providers. While I expect it's far less likely today than in times past, you should consider that keeping precious metals in a safe deposit box does make it an easy target for any government crackdown and confiscation should it occur.

Defend Them

Now this wouldn't be my first choice, putting my safety (or that of my loved ones) at risk, but if you are up to the challenge of defending your Gold and Silver at home, then you may not even need to hide them. You could take some martial arts classes or buy yourself some weapons (depending on what is legal where you live, knives or guns). Just be sure that you are familiar enough with local laws to know what constitutes 'self defense' should someone break in while you are there to take action. Another option to defend your precious metals at home might be to buy a guard dog, just be sure you are ready for that commitment.

Don't Tell Anyone You Own Them

If you do keep your stack at home perhaps one of the easiest ways to protect your stack is just to limit the number of people you tell. As they say 'Loose lips sink ships'. That also means being wary of giving out your address when buying or selling precious metals via post. Either get a post office box or get them shipped to work. Having your precious metals shipped to a home address is asking for trouble, even if you don't store them there permanently.

Bury Them

I would suggest the safest way to store your precious metals (if done right) is to seal them up into airtight containers and bury them somewhere on your own property (assuming you have one that is large enough to do so discreetly). That said this method should also be used in conjunction with the tip above about keeping quiet about your stack as burying your metals is far from infallible if someone knows to search your property with a metal detector. One woman lost over a quarter million dollars worth of Gold Krugerrands using this method after burying a safe full of them. If you do use this method, make sure you have a surefire way of finding them again and that at least a trusted loved one knows where they are in case something happens to you.

Don't Own Any

One way to avoid the loss of something is to never own it in the first place. If you don't have any precious metals then you have none to lose. However the way I see it, those who don't hold any precious metals also have a lot to lose. This is one of those cases where you can be damned if you do, damned if you don't.

Just remember, not all of these methods are practical for everyone. You should take into consideration your location and personal situation before making a decision on how to best keep your precious metals protected. Safe stacking!

 

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Gold in Istanbul

Following the theme of a post I wrote a few years back (Gold in Japan, October 2010) I thought I'd write up a short travel blog on some precious metal related highlights from recent overseas travels (Istanbul via Kuala Lumpur).

I flew to Istanbul via Kuala Lumpur (from Adelaide). The flight from Kuala Lumpur to Istanbul was on Qatar Airways so had a stopover at Hamad International Airport (Doha, Qatar). The airport only opened earlier this year and is very impressive. Along with rows of Apple computers setup for use in family areas, giant TV screens and impressive internal architecture, I spotted this Gold jewellery store, simply marked as 'Au'.

'Au' at Doha (Hamad) International Airport

After landing in Istanbul, one of the first things I was keen to checkout was the Grand Bazaar which has some 3,000 shops and hundreds of thousands of visitors each day.

Approaching from the Galata Bridge side of the market, I was not disappointed as I walked up the hill to the markets (through tight city streets covered in stalls)... this path led me through what I could only describe as the 'Gold district' of Istanbul (although there may be others) with dozens of Gold jewellery stores adorning the streets.

The windows were absolutely packed with Gold necklaces, rings, bracelets and more. Some of the pieces were very intricate, others were quite simple, but almost all of it was of a high finesse with a large selection of 22 Karat, along with some 14 - 18 Karat. Very different to Australia where most jewellery store windows are filled with 9 Karat or even 'filled' pieces.

Once under the cover of the Grand Bazaar there were many bullion dealers (some of whom also did currency exchange), much of their inventory was similar between stores with lots of Nadir or Istanbul Gold Refinery bars and coins (mostly Gold, some Silver). Only the occasional foreign coins and bars were seen... I did spot these heavily worn Perth Mint coins in one of the windows...

Perth Mint Coins - Bullion Dealer Window @ The Grand Bazaar

I didn't purchase much as I was wary of being ripped off on any high value purchases (although I'm sure most of the jewellery stores there are reputable). All I picked up were these cheap 5 gram Silver bars as a memento:

Istanbul Gold Refinery - 5 Gram Silver Bars

While in Istanbul I also took a walk to the Turkish State Mint which was around a 5km walk from my accommodation near Galata Tower. From the outside the Mint was fairly nondescript and off the main streets, only a small window with coins and the word 'Darphane' meaning 'Mint' in Turkish were the giveaways.

Turskish State Mint - Retail Shop

Unfortunately I was unable to visit the museum which is onsite as it was closed (website was out of date with opening days and I didn't have time to return). The retail store had a few display cabinets, but was fairly unimpressive (relative to the Perth Mint & others I have visited). Most of their coins appeared culturally significant, the assistant in the shop didn't speak much English so I wasn't able to get much more information than prices on the coins. I purchased a 1 gram Gold coin (generic) and a 1 ounce sterling Silver coin celebrating the XVII Mediterranean Games - Mersin 2013.

On my way back from Istanbul I stayed a couple of nights in Kuala Lumpur and visited Berjaya Times Square Shopping Complex as there were a few coins stores listed. I was disappointed with only two of the stores being open and having very limited content, though the shopping centre itself was pretty impressive with a roller coaster running through some of the upper levels. I only bought a couple of trinkets in Kuala Lumpur, namely a certified (LOL!) Gold foil keyring and some fridge magnets.

It was a great trip and although I haven't covered the general tourist aspects of Istanbul in this post, I think it's a city well worth visiting if you ever have the opportunity (not only to see all the Gold).

View of Istanbul From Galata Tower

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