Adding a precious metal IRA to your portfolio allows you to store your wealth in precious metal bullion or coins. This gives you the option of storing the precious gold, silver or platinum in a secure government depository. However, you have to ask yourself how safe your precious metals are stored in onshore depositories in the United States.
Three risks of storing precious metals onshore
1. Government confiscation
Whenever people invest in precious metals, they are always fearful that the government might decide to confiscate their gold or silver. Yes, this is a legitimate fear in America. In 1930, President Roosevelt signed the 6102 Executive Order that outlawed gold ownership, allowing the government to confiscate gold from people within the United States. Even though citizens were compensated, the compensation was done unfairly. Most of them lost over 50 percent of their wealth overnight.
2. Social unrest
Some years ago, social unrest was unexpected in America. However, there have been hundreds of violent protests in America since the polarizing election of Trump. The news is riddled with scenes of unruly youths looting and damaging stores. Onshore depositories are not comprehensively insured against looting. You can lose your precious metals in such instances without adequate compensation of your assets.
Lawsuits are another major concern for individuals. One frivolous lawsuit can cost you thousands of dollars and most people are not above going after your precious metals as they seek legal compensation. This is a risk, especially for business owners who have to deal with a myriad of lawsuits from former employees and special interest groups. How do you protect your precious metal IRAs from frivolous lawsuits?
The allure of offshore precious metal storage
You have to consider offshore protection of precious metals from the perspective of litigation and jurisdiction. Currently, the IRS has included a clause that requires precious metals to be stored in six depository vaults. These are HSBC Bank, the North American branch of JPMorgan Chase, CNT, Scotia Mocatta, Brinks Security and Delaware Depository.
The IRS has approved some of the offshore depository vaults where gold IRA clients can get offshore storage of their precious metals. You can store your precious metals in Scotia Mocatta’s Toronto vault, Brinks Security’s London vault, HSBC’s Singapore, London, Hong Kong and Zurich vaults or Singapore and London vaults of JPMorgan Chase.
Storing your precious metals in these offshore vaults offers some extra protection. International law requires additional insurance of all precious metals stored in offshore vaults. It is easier to be compensated when theft occurs in offshore vaults as compared to onshore depositories. Additionally, international law protects assets that are stored in offshore vaults from litigation.
However, IRS approved offshore depositories are still within the government’s jurisdiction. If the government chooses to confiscate precious metals, the gold stored in these offshore vaults can still be accessed. Even though countries like Singapore and Hong Kong are outside the American jurisdiction, the IRS can coerce these six companies to return the gold, silver or platinum to American soil. However, there are two ways you can protect yourself from the long arm of Uncle Sam.
First, you can get a self-directed precious metal IRA that can allow you to store your gold, platinum or silver in offshore vaults of your choice. Choosing the right vault can keep your wealth away from American jurisdiction. However, you lose the IRS protection of your foreign assets. It places your wealth in the jurisdiction of another country, and they can confiscate your precious metals without any legal restriction.
However, the best way to avoid losses due to government confiscation is by storing a portion of your precious metals in specialty coins. What most people do not mention during the 1930 gold confiscation is that specialty precious metals owners were allowed to keep their gold. Confiscation only covers bullion and non-rare coins. You can store storing these precious metals in the IRS approved offshore depositories. The IRS will protect your gold, but they cannot confiscate it. In a way, you are using the system in place to protect your wealth from both domestic and foreign confiscation.
This simple method can circumnavigate all three risks guaranteeing the safety of your precious metals in offshore vaults without adding more risk from unregulated self-directed depositories. The caveat is to make wise purchases of novelty precious metal coins. A degree of patience is required to obtain rare coins at a decent price. However, no one can dispute that proper offshore storage of your precious metals secures your wealth.