Precious Metals: Custodial Accounts

The inability to safely transport and store precious metals is a big turnoff for some investors.  For an investor that wants to physically possess $100,000 in gold, or for someone who does not want to worry about transferring hundreds of ounces of silver or platinum a custodial account makes logical sense.  Custodial accounts can be found at numerous banks in the US and Canada.  These accounts are one way to guarantee that a precious metals investment is safely stored and cared for without having the physical metal in the investor’s actual possession.

Custodial accounts let investors purchase any amount of precious metals from a bank or other custodial institution and have that same entity hold custody of the metal.  That way, the metal is safe and sound in a bank vault and can be delivered, at the investor’s request and for a small delivery fee, anywhere in the world.  Custodial accounts at banks are insured and guaranteed, so the investor can sleep soundly not having to worry about the safety and security of their precious metals investments.  Foreign account holders can even buy and sell from their custodial accounts in their native currency, making international transactions even smoother.

Some of the drawbacks to custodial accounts include the inability to liquidate the precious metals position instantly, like with a pool account.  All of the custodial account providers will buy the metal back at current spot value, but often times an order takes a day or two to process.  Also, even though investors do not have to worry about the more costly, traditional expenditures of fabrication, shipping, and insuring their precious metals purchases, taking delivery of investment holdings can be expensive.  For every ounce of gold delivered, expect to pay about $40-$60 in delivery and transactions fees.  Custodial accounts are great for big time investors, or those looking for a safe way to store a six-figure gold or platinum investment, and who never have any intentions of taking delivery of their holdings.

Custodial accounts are not for people looking to slowly build a metals portfolio.  ETF’s and pool accounts are far better investment vehicles for those with a relatively small amount of cash to spend in the market.  However, many of the custodial accounts require no minimum purchase, and there is peace of mind found in the fact that a remotely-initiated purchase is backed up by physical bullion in a vault somewhere.  It is due to these very drawbacks that many investors promote diversifying their precious metals investments by buying into pool and custodial accounts as well as holding physical metal at home.

There are a plethora of precious metals investment vehicles available to the consumer, and given the volatile nature and questionability of precious metals ETF’s as of late, custodial accounts offer peace of mind, relative flexibility and liquidity, and a safe and secure way to store an investment.  A simple internet search for precious metals custodial accounts produces numerous results.  Many investment banks and institutions offer custodial accounts, but the terms vary greatly from company to company.