Here’s another reason why your gold bullion bars and gold/silver coins held for investment purposes should always be under your control – preferably in a foreign safe deposit box, in a reputable institution, to which you and only you have access!
On Monday, a bankruptcy judge allowed Sovereign Bank to continue the seizure of valuable coins from Tampa’s National Gold Exchange, effectively shutting down what has been one of the world’s largest gold and silver coin wholesalers. NGE was seen as a solid, respectable outfit and was used by a number of people of our acquaintance.
National Gold Exchange sought bankruptcy court protection last Friday. According to reports in the St Petersburg Times, Sovereign Bank alleged fraud the owners of the business, claiming in court that NGE employees had been smuggling boxes of rare coins out the back door of the business to evade creditors. Judge Michael Williamson is quoted as calling the case potentially “serious and troublesome.” NGE were over extended and had been bouncing checks while the owner, who set up the business as a teenager during the 1970s and has made many millions from the coin investment business, continued with multi-million dollar real estate projects.
It’s not yet clear whether any private investors have been affected by this case, but what we do know is that coin dealers typically offer secure storage and safekeeping services as well as consignment for their larger clients. It is therefore likely that private individuals’ coin investments have been prejudiced.
Rare coins have, in our opinion, proven over years to be an excellent hedge against crisis, besides offering numerous advantages to privacy seekers. Unlike gold bullion coins which are priced based on the gold spot price plus or minus a thin spread, rare coins have traditionally been seen as a longer term investment.Basically gold investors either love or hate rare coins. Some people swear by them, while other investors prefer to stick with bullion which is much simpler to price, manage and liquidate.
Whatever view you might take, rare gold and silver coins are definitely a worthy part of an offshore hedging portfolio, but the story above serves as a cautionary tale. Do not just wire money to the dealer and leave your coins in their safe. Despite the inconvenience, it’s better to take physical delivery of any gold – whether coins or bullion – and keep it securely in a safe deposit box.
If you need further information and tips, you’ll find safe deposit recommendations for both Europe (Austria for example) and the Caribbean region in The Gold Report. This report in pdf format by offshore banking expert Peter Macfarlane provides valuable solutions for diversifying your portfolio out of the dollar or euro. You can view sample extracts here, while the report itself is available free for instant download to Q Wealth Report members. If you are not yet a member, sign up now to gain instant access.