Reporting from: Kuala Lumpur, Malaysia
While I’m no fan of the state, I’m no fan of bureaucracy in any form. I was doing an interview for a radio show the other day and the host and I got to talking about airlines that grow larger become bigger enablers of Big Government. All in an effort to ensure their growth trajectory continues.
And in my case, that meant that Thai airline employees not knowing the current visa rules for Myanmar left me stranded in Bangkok, easily my least favorite city in Southeast Asia.
I quickly diverted to Kuala Lumpur.
And to be honest, I’ve always been a fan of “KL”, so much so that I now have a base here.
And earlier this year, I wrote about how – even a hundred years ago – Malaysians understood that value came in the form of tangible assets.
We frequently speak about the need to protect your assets by playing legal keep-away from your home government. This isn’t just for offshore bank accounts; it’s for your gold bullion, too.
How to find the best international gold storage
In my opinion, keeping your gold in a coffee can in the basement won’t help when the next FDR rolls into town with his army of thugs itching to take whatever they can from you.
Well-known investor Marc Faber has suggested offshore gold storage as a means of protecting against this.
But where is the best country for offshore gold storage? It depends on which method you use.
There are a growing number of offshore gold depositories where companies allow you to buy gold from them and store it in their vaults. I find this option not only to have the most counterparty risk but also the most political risk.
Earlier this year, precious metals storage firm Viamat dropped their US clients to avoid dealing with draconian US tax laws like FATCA.
These buy-and-deposit options have gotten a bit tricky and now often involve layers of middlemen who sell you gold, then connect you with their preferred vault partners who levy more fees on storing it. For smaller transactions, this type of gold storage is traditionally non-segregated, which means your gold is stored alongside other gold owner’s investments.
This isn’t a bad thing per se; I’ve been in huge gold vaults in Singapore where larger investors got a locked cage for the gold, while smaller investors had their loot sitting in a box on a shelf. The fact that getting to the vault required several security clearances, biometrics checks, and other precautions seemed plenty safe to me.
However, what troubles me most about some of these offshore gold depository options is the jurisdictions they operate in. Some of these gold vaults operate in Canada and the United Kingdom – not exactly cutting-edge, free-market jurisdictions known for fighting tooth and nail for wealthy investors.
Do I trust the UK, a soft totalitarian country, to keep my gold safe if Uncle Sam decides to call in private bullion investments, or if their own government pulls a similar stunt? I’m not suggesting you never see your gold again, but I am suggesting that the UK and Canada aren’t much better than The Land of the Free at protecting wealth.
Lastly, I’m not a huge fan of offshore gold depositories for the simple fact of the hassle involved. To me, it feels similar to buy a gold or silver ETF. Nothing wrong with that, but what is the purpose of physical gold bullion if you’re trading it entirely through a computer?
With governments tracking your every move, do you really want your every buy and sell recorded for anyone to see?
I suspect that these depositories will be the first to be subjected to more and more regulation and more reporting requirements.
The alternative: Private vaults for offshore bullion storage
I’m a much bigger proponent of taking control of your own offshore gold storage needs. Granted, it may be a bit more costly or require a visit to the jurisdiction you’ll be storing your bullion in, but such are the costs of protecting your wealth from increasingly desperate governments. Better safe than sorry, I say.
That means considering a private vault for your offshore bullion storage. As mentioned, several institutions in Singapore offer a variety of options, with some offering free non-segregated storage for free for a certain period of time.
The government, while not perfect, does understand where its bread is buttered and has undertaken an initiative to vastly increase its offshore gold deposits in just a few years. The first thing Singapore did was to trash the goods and services tax (GST) that it used to charge on gold bullion purchases in order to make itself a more attractive place for gold investing.
If you don’t qualify for free gold storage, or you require a higher-end service, it’s easy to rent a private vault box starting at a few hundred dollars a year at any of the Singapore bullion vaults. (You can also store artwork, cars, and other valuables at the Free Port there.)
Renting a vault does require the vault owner to know who you are. The Singapore government doesn’t demand that information be turned over to them, but it’s not the Singapore government you’re worried about… is it?
Anonymous gold storage is available in Vienna, Austria. I’ve spent time at Das Safe there, which is one of the world’s only investment-grade, offshore facilities that allow you to rent a vault with no registration whatsoever.
Austria is a jurisdiction that has long stood up for bank secrecy. They pushed back against the EU’s demands for them to end bank secrecy, saying it was part of their culture. When new banking regulations put an end to anonymous bank accounts years ago, banks were prohibited from maintaining anonymous safe deposit boxes.
So one bank with a large number of anonymous box holders sold its physical assets to a new company that turned the place into a private vault, free from such regulations. (Such facilities are also currently free from US reporting requirements as they are outside the banking system.)
If anonymity is important to you, Austria should be on the top of your list.
If you’re not convinced about Singapore or Austria, consider Switzerland – if you can get in. US persons have basically been shut off from most financial services in Switzerland, but some other foreign nationals may be able to store their international bullion there.
Earlier this year, for example, the firm Viamat shut American customers out of its gold storage program on the basis of FATCA. It’s no secret most Swiss banks have done the same, even long after the days of the somewhat mystical numbered bank accounts.
I do believe other countries will see the value in offering offshore bullion storage in the future, but it will take time to determine which of these jurisdictions is worth trusting.
For now, I’d stay away from anything in the United States, even if you’re not a US person. This could be extended to include companies that also deal in the United States, such as companies that offer vault services in New York or Salt Lake City in addition to overseas options in places like Zurich and Hong Kong.
I prefer to deal with a truly offshore company, not just the latest “me too” reseller of some other guys’ vault space.
Simply because the desperation of the US government is just too intense to argue that they’d steal their own citizens’ gold but not that of foreigners they have no accountability to.
By using private vaults in places like Salt Lake City or Las Vegas, you’re still betting that the US government isn’t in the business of wealth confiscation.
Not a good bet in my opinion.
One option that falls into the first category is Australian gold deposits with the Perth Mint. I’ll share more on that later…
For now, check out my article on free offshore gold storage in Singapore if you’d like to get started.
Now, if you want to learn more about offshore gold options, as well as watch the world’s 20 top offshore experts help you internationalize, then…