“Having gold is important… having it in the right place is paramount.”
The way I look at gold, it is not an investment. It is a standard. Just like for most Americans the dollar is their base currency that they value everything else in, or euros for Europeans, my base currency is Gold.
If the price of gold as valued in other currencies rises, it’s a nice additional benefit. If it doesn’t, I’ve still got the gold. No matter what happens to the value of the dollar, euro, yen or Swiss Franc, an ounce of gold is an ounce of gold.
However, I’m probably preaching to the converted here so today I want to move straight on to a more practical topic: where should you store your gold?
For many people, the ones we call “midnight gardeners,” burying it in their backyard is a solution. I’m not against this at all: history has taught us that keeping some gold coins close by where one sleeps has saved countless lives in the past and will no doubt do so in the future. If things go to the wall and you need to get out of dodge quickly, you need to have something valuable to hand. Paper currency can help, for sure, but in the event of a currency crisis where does that leave you?
So, by all means keep some gold coins nearby: either in a safe, or a very secure hiding place which might well be at the bottom of the garden. However, aside from the obvious security risks, if you’ve ever tried transporting gold, you’ll know it’s darned heavy! You don’t want to be running away from trouble with more gold than fits in your pocket. You need to have a secret stash elsewhere that you can access in case you need it.
What if something happens to you? How will your chosen heirs get at the gold? What if the government where you are passes a law appropriating gold? How about geographic diversification? And what about the mere practicalities of access to international markets, being able to buy and sell conveniently at close to spot price?
When we weigh up all these factors, it makes sense to store gold somewhere safe, in a major financial center. Here are my two choices: Switzerland is still the hub of the world gold market, while Singapore is catching up soon.
Other major gold-friendly places include London, Hong Kong and Dubai. However, the British government long ago threw out any notion of financial privacy, and Hong Kong and Dubai are too much under the influence of untrustworthy Chinese and Arab governments for my liking… I would personally cross them off my list. No point in jumping out of the frying pan into the fire.
Panama is another possibility: for those who want to store gold offshore in the Americas, or perhaps have homes or second residencies and citizenships in Latin America, Panama is good. But when it comes to buying and selling, Panama still suffers from a lack of liquidity (then again, that might work in your favor in case of a systemic collapse, because all the Latin Americans will suddenly want to buy gold…)
However, I still see Switzerland and Singapore as hands down the best places to store precious metals. Both have strong legal systems and a history of safe haven status.
In my next article, I’ll take a look at these two options in more detail.
By Peter Macfarlane, international banking expert for Q Wealth.