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How Counterparty Risk Arises Based on How & Where You Store Your Coins

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How Counterparty Risk Arises Based on How & Where You Store Your Coins

A few months back, we addressed the FTX collapse and the issue of counterparty risk. We covered a number of topics, including details on the FTX situation, various gold and gold-related investments and how and where to store coins and bullion. It is always best to reduce counterparty risk with respect to your investments, and in the case of precious metals, the only way to completely eliminate counterparty risk is by taking possession of your gold and silver coins.

We’ve said in the past, but it bears repeating: “if you don’t hold it, you don’t own it.”

We were reminded of this risk recently when we read this article from Fox News. In a nutshell, a private depository in Beverly Hills was raided by the Feds a while back due to suspected illegal activity by some of the safe deposit box holders. Most of the boxes were emptied out in the raid and individuals were required to provide proof of ownership before the items were returned. For anyone who has dealt in precious metals in the past, you’ll know that sometimes this is difficult to do, especially if you received coins as a gift or through an inheritance.

Circling back to the Fox News story, some of the box holders allege thatfed raid meme silver HR cash or coins from the raid are missing and have sued the FBI in response to the missing items. At this point, it’s impossible to know what the final outcome will be, but at the very least, it will be costly and time intensive to pursue litigation.

Government intervention is not the only risk. On a somewhat related note, we were told secondhand that locksmiths were hired to drill out safe deposit boxes at banks that were flooded from Hurricane Katrina. We have no additional insight on the matter to provide, but it goes without saying that if you happen to have items stored in a safe deposit box that are contrary to the financial institution’s policy (even if they’re legal), you run the risk of having these items seized.

If you’re going to use a depository, we recommend that you store your items privately with an individual or company or chose one of the largest depositories in

Texas Bullion Depository
Texas Bullion Depository

the U.S. While not necessarily a recommendation per se, it’s safe to say that the depositories throughout the U.S. that have been approved for self-directed Gold IRAs have been properly vetted and meet stringent requirements.

However, whenever possible, we recommend that you store the items yourself or store them nearby in the event you ever need them in an emergency. As always, best practices are to limit the number of people that areTL 15 Safes aware of your holdings, store them in a commercial grade safe that is water and fireproof, such as a TL-15 safe, and bolt the safe to a concrete surface. Some people also choose to do “midnight gardening.” In other words, they bury the items in their yards or nearby. Some folks were so paranoid that their neighbors witnessed their activity, they’d “garden” overnight which ultimately meant moving their hidden coins from one spot to another.

If you choose to go this route, make sure that the items are properly secured and sealed, such as in a PVC pipe, are watertight, and are buried deep enough to prevent a metal detector from finding your items. For good measure, take a few handfuls off BBs and spread them all around the area to “mask the scent” of your stash.

The big takeaway is to do your best to limit your risk, regardless of the investment option you choose. If you opt to store your coins or bullion with a third party, make sure that you properly vet them, and to the extent possible, find a company or individual you trust that can privately store the items for you.

Atlanta Gold and Coin Tip of the Week

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Tony Davis
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Tony frequently writes on various economic and numismatic related topics affecting the coin and bullion markets and has been published on some of the industry’s leading websites, including Coin Week, the American Numismatic Association, Coin Collector, Coinflation, and Coin Auctions Help, just to name a few. Visit Atlanta Gold & Coin’s website at atlantagoldandcoin.com to obtain additional information on the products, services and educational resources offered by his company. Tony can be reached at sales@atlantagoldandcoin.com or at 404-236-9744

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