How do I know my gold is there?
One of the most apparent differences between owning a Gold IRA versus any other type of IRA is that you own physical gold, an actual object rather than a digital bit. Stocks and bonds are recorded digitally these days; paper stock certificates are not used anymore by investors in publicly traded companies. With physical gold, you can actually look at your investment, touch it, and make sure it’s stored where it is supposed to be stored.
There are 4 separate questions that come to mind with regards to storing physical gold:
- What is the level of security in the place holding my gold?
- How do I know that my gold is held where I’m told it is?
- How do I know that the gold I am holding is authentic?
- What happens if …
1. What is the level of security in the place holding my gold?
The IRS requires all gold in a Gold IRA to be held in the possession of a bank or an IRS-approved non-bank trustee, such as a precious metals depository that was approved by the IRS to hold Gold IRA metals. We recommend storing your gold and other metals at an IRS-approved depository for maximum security.
There are 10 IRS-approved precious metals depositories in the United States. The most well-known are:
- Delaware Depository
- Brinks Depository
- International Depository Services
- HSBC Bank, USA
- CNT Depository
- JP Morgan Chase Bank NA
At Gold Alliance, we recommend the Delaware Depository. We’ve worked with them for years, and they are highly credible and reputable. This IRS-approved depository handles billions of dollars worth of transactions on a monthly basis, and most importantly they are debt-free and focus on the business of being a depository without the distraction of being a bank like HSBC or an armored-car service provider like Brinks.
To prove it, the precious metals owned by our company are held in the Delaware Depository. We have nothing against the other depositories, just a lot for the Delaware Depository.
Some of our clients want to store their metals in a depository closer to their home, others away from the coasts. We don’t have a horse in the race, and we’ll provide you with the same level of service for any depository you’d like to go with.
2. How do I know my gold is being held where I’m told it is?
The depository you chose where we will ship your coins to be held under your name will do a strict audit of the coins we ship them on your behalf. Once they confirm that they received the coins and bars you acquired, they will notify your custodian of what they received.
Your chosen depository doesn’t receive your invoice — they only get a packing slip or a notification of what’s coming. So they match what they receive to what they were told they’d receive, and they notify your custodian — for example: “For John Smith’s IRA account #1234567, we just received X number of gold coins of this type and Y number of silver coins of that type.” Now your custodian, who just received this notification, will confirm this information with a copy of your invoice, and once it matches, they will post the details of your holdings into your online account, which you can access 24/7. And if the notification does not match your invoice, your custodian will notify your dealer to rectify the issue.
Remember, they are your custodian, and they are protecting your interests. If a dealer makes a shipping mistake (perhaps the number of coins is wrong or the wrong coins were shipped), this process exposes the problem, and everyone involved immediately jumps into action to rectify the issue. From your perspective, your custodian is responsible for your coins, and they have tools to enforce their will if a depository or a dealer is not meeting their requirements.
It’s not trivial to be able to work with a custodian either. We were vetted very carefully by the custodians we work with to be able to work with them. Custodians don’t want to work with unscrupulous dealers as it would taint their business.
In addition, Gold IRA gold depositories typically offer auditing and accounting services in which a depository employee periodically records and verifies the content of each storage compartment. All this should give you the peace of mind that all your precious metals are there.
However, if you want to see it for yourself, you can visit the depository. Most depositories will allow you to “visit” the metals you store there. If you wish to check in on the gold in your Gold IRA, go to your depository’s website or call them directly to find out their specific visitation process and/or guidelines. If you’re using the Delaware Depository, simply contact your IRA custodian, who will arrange a viewing of your precious metals.
3. How do I know that the gold I’m holding is authentic?
The audit done by the depository of the coins received is not just to count what came in. It’s also an audit to ensure the coins’ authenticity as part of the depository’s insurance requirements. Here’s something you may not know: An IRA Depository is not like a vault where you put whatever coins you have and where the authenticity risk is on you. The IRS-regulated Gold IRA process puts the authenticity responsibility on the depository. This means that literally every coin that comes into the depository is carefully inspected, and once the depository accepts a coin, it is insured as an authentic coin. If the depository makes a mistake, it’s on them, not you.
This is one of the key benefits of having a Gold IRA compared to acquiring your gold and silver directly: The depository provides another layer of authentication.
At Gold Alliance, we have our own measures that guarantee the authenticity of coins for clients that acquire gold and silver outside of an IRA, and I can proudly say that we have a 100% authenticity track record: Not a single coin or bar we have sold was ever deemed as a forgery (and we guarantee replacement if that should ever happen). Our track record is due to our own internal checks and, most importantly, because we’re working directly with the mints that provide the coins. However, I cannot ignore the fact that using a depository provides another layer of protection. It’s like having a third party come in and state that your coins are authentic and that they are willing to insure them as such for no additional fee.
Should a depository find coins to be forgeries, they will not accept them, and the dealer will be required to replace them. If the depository finds the coins to be damaged, they will not accept them into an IRA, and the dealer will need to replace them. Thankfully, buying directly from the mints means we have never had to deal with either scenario.
4. What happens if…?
Now we get to the nitty-gritty of what happens if the process I described fails. What happens if…
- my dealer will not do what they’re supposed to?
- my custodian made a mistake?
- my depository made a mistake?
- my coins were stolen?
- something else goes wrong?
For anyone who is concerned about theft of their gold within their IRA, I would argue that hacking your stock market portfolio or your bank savings account can be more easily done than stealing your gold from a licensed depository. The Delaware Depository is guarded like a top-secret army base, but there are additional safeguards in place as well.
The Gold IRA process is regulated by the IRS, and our government doesn’t want retirees to be taken advantage of or lose their wealth due to malicious actions by a third party. So, in addition to the fiduciary obligations of the custodian and to the insurance policies each player (dealer, custodian, and depository) has to cover their day-to-day activities, you have additional safety precautions.
After the depository receives your metals, it is responsible for any loss or issue related to authenticity. If your gold is stolen from the depository, the fiduciary responsibility falls on the depository itself. To help their business and to protect your investment, all IRA depositories boast a fully comprehensive insurance policy underwritten by one of the world’s oldest and most prestigious insurance providers, Lloyds of London. So, you can be sure of unparalleled storage for precious metals.
When we work to ensure our clients’ financial security, all these safety layers matter to you and to us. So, the bottom line is your Gold is there. You made a wise move to protect your portfolio with a portion in gold, and now you can enjoy your life and sleep well.