How to Choose the Best Gold and Silver Vault for Offshore Storage

Offshore precious metals storage refers to storing gold and silver bullion outside one’s home country for strategic, financial, or security reasons, minimizing potential geopolitical and economic risks.

If you have decided on such an offshoring strategy, the next challenge is to identify the best gold and silver vaults to store your bullion securely. This task can be difficult because very little is discussed on this subject, and only a little information is available.

In this article, we share from our over-a-decade-long experience as a wealth protector and vault operator how to choose the best gold and silver vault for offshore precious metals storage.

Four Common Bullion Storage Industry Shortcomings

Let us begin with a little history of The Safe House vault and its parent company, Silver Bullion. Founded in 2009 by Gregor Gregersen, Silver Bullion launched its bullion storage program, S.T.A.R. Storage, in 2012. The company then stored bullion for its customers with a third-party global secure logistics company at the Singapore Freeport, now renamed Le Freeport.

Vaulting precious metals with a global secure logistics company gave us insight into how the bullion storage industry works and its common practices. Additionally, our international clients shared their concerns about potential exposure to excessive geopolitical risk.

In 2014, Gregor decided to establish his own vault, The Safe House, after realizing that the concerns he saw in the conventional bullion storage industry could not allay his customers' fears.

Below, we summarize the four common shortcomings of the gold and silver storage industry.

#1 Lack of Transparency

In the bullion storage industry, global secure logistics companies commonly accept corporate clients instead of individuals. This is largely because of their stringent Know-Your-Customer (KYC) procedures and the need to comply with Anti-Money Laundering and Terrorist Financing regulations, given their extensive global operations.

Therefore, individuals seeking bullion storage are likely to do so through a bullion dealer who is a client of a secure logistics company. However, not all bullion dealers are managed excellently in the same way, and not all of their storage programs are created equal.

Through many conversations with clients with different experiences storing precious metals internationally, we realized that the lack of legal bullion ownership is a common and massive issue. Many clients believe they continue to own the bullion once it is handed over to the storage provider when, in fact, they are just unsecured creditors.

Many clients received “certificates of ownership” from their storage providers as proof that they were the legal owners of their gold and silver. These certificates have fancy designs that make them look official, but they are ultimately issued by the storage provider. Clients often fail to realize that certificates issued by a private company have little legal value. Without legal proof of bullion ownership, certificate holders would become unsecured creditors to the company if it goes bankrupt.

Ownership of an asset requires two components: a uniquely identified asset and a legal means to transfer ownership of the asset. In many bullion storage programs, both or one of the components is missing, thereby rendering ownership dubious.

For example, an apartment can be owned because of its unique address in the property’s title deed. Similarly, many ownership mechanisms of bullion storage programs merely show that clients own an ‘X’ quantity of, say, 1 oz Canadian Maple Leaf gold coins. Since bullion coins do not have serial numbers, which coins do individual clients own?

Without asset unique identification, many potential problems can arise. For example, could multiple clients own the same gold or silver coins? If you had purchased precious metals through a bank or bullion dealer, how can you be sure that bullion was indeed purchased and stored?

We encountered a case in which a client purchased gold coins from a Swiss bank and paid annual storage fees. After several years, the client withdrew the gold coins from storage and transferred them to The Safe House in Singapore. Upon unsealing the bank’s parcel, we found that all the coins bore mintage years of the current year, not the year when the client purchased the gold coins.

Despite receiving documents from the bank stating that ‘X’ quantities of gold coins were ‘owned,’ the bank did not buy any coins for the client to store. Adding insult to injury, the bank charged the client annual storage fees for non-existent bullion. The bank only purchased the gold coins upon the client’s withdrawal. While the client still received the exact quantity of gold in the end, the same outcome could not be guaranteed if a financial panic resulted in a gold shortage. The client would be one of many unsecured creditors banging on the bank’s doors should such an adverse scenario happen.

Some clients also informed us that they were not allowed to visit a gold or silver vault to inspect their stored holdings. The excuse given for declined visits was often “security reasons.” Without visits, clients have no way of knowing if their stored precious metals exist, or understand the storage conditions of their assets. In truth, well-managed vaults will permit client visits without compromising security.

These shenanigans are often imperceptible to people unfamiliar with the bullion storage industry. They result from a lack of transparency and a lack of will to truly protect client assets from geopolitical and financial system risks.

#2 Unacceptable Insurance Terms

During the early years of our bullion storage program, when we were storing precious metals with a third-party secure logistics company, we also had the opportunity to scrutinize the fine print of the vault operator’s insurance policy.

Undeterred by the legal jargon and wall of text on the policy’s pages, we reviewed the vault insurance policy to assess and understand potential risk exposure to our clients. We realize that most vault operators offer typical ‘All-Risk’ policies to insure stored precious metals.

Most clients would assume that an ‘All-Risk’ insurance policy would protect their assets against all risks. Unfortunately, this is not the case. We found a list of exceptions that are not covered by the policy. One of these exceptions stated that the vault operator “shall not be liable for loss of assets due to mysterious disappearance.”

Upon further research, we understood what ‘mysterious disappearance’ was. It is a common term in the insurance industry and refers to a situation where an insured item goes missing without any evidence of theft, loss, or other identifiable cause. This term is used when there is no clear explanation or trace of what happened to the property and is simply unaccounted for.

Mysterious disappearance is commonly cited in cases involving jewelry, cash, or other small, valuable items that are easily misplaced or taken without a trace. In situations where there is no foul play, mysterious disappearance can be due to human error that cannot be adequately verified. Insurers may be cautious about such claims to rule out potential fraud, as verifying that the loss occurred without any supporting evidence is often challenging.

To summarize, typical vault insurance policies are ‘All-Risk’ policies that do not cover loss caused by a mysterious disappearance. While such indemnification may be acceptable for vaults providing general bullion storage, the lack of mysterious disappearance coverage is unacceptable for a vault whose mission is to protect wealth.

#3 No Assurance That Vaulted Assets Are Genuine

In the bullion storage industry, a common practice is to store precious metals on a "said to contain" (STC) basis, which carries certain risks and limitations that clients should be aware of. "Said to contain" means that the storage provider acknowledges receipt of a package or container that is reported to contain specific contents — such as gold bars, silver coins, or other precious metals — based solely on the information provided by the depositor. However, the vault provider does not independently verify or audit the actual contents upon storage.

Without verification of the contents, storage providers rely on the integrity of the depositor's report. This lack of independent verification leaves room for errors or discrepancies that may only come to light when items are retrieved. If, for instance, the actual contents differ from what was reported, disputes could arise between the storage provider and the client, with no third-party validation available to resolve discrepancies.

When stored on an STC basis, bullion cannot be reliably audited or reconciled by third-party inspectors or auditors, as the actual contents are unknown. This can undermine the reliability of bullion audits and the accountability of storage facilities that need to confirm the presence of physical assets on behalf of investors or regulatory authorities. For facilities managing significant volumes of precious metals, this can lead to substantial challenges in asset management and auditing.

Storing on an STC basis also provides no warranties that the stored gold or silver is genuine, potentially allowing counterfeit precious metals to be stored for years. Most conventional vaults that provide STC storage are storage-focused and do not have the expertise to authenticate precious metals. Therefore, they are unconcerned if depositors’ gold is genuine.

If your bullion dealer rents vaulting premises from an STC storage provider, the latter is not verifying the former's claims that they are storing genuine gold on behalf of clients.

You can see how the gaps in STC storage can potentially result in bullion quantity errors and fake bullion being stored if the bullion dealer is negligent.

#4 Excessive Geopolitical Exposure

A force majeure clause is a provision in a contract that frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control, such as a natural disaster, war, or pandemic, prevents one or both parties from fulfilling their contractual obligations.

It is common for major vault service agreements to include a force majeure clause stating that “in case of nationalization, confiscation, or seizure by any country, you agree to indemnify the vault operator.”

Unlike the onset of a war or natural disaster, we believe the risk of gold nationalization, confiscation, or seizure by foreign nations can be mitigated by reducing jurisdictional exposure.

When a silver or gold vault operates in multiple countries, the company will have more jurisdictional exposure than a company that operates solely in one country. Vault operators insert the abovementioned force majeure clause in their service agreements because they are not wealth protection specialists. Instead, their core businesses are global secure logistics and short-term in-transit storage.

Given the volume of business revenue potentially at stake in a government gold confiscation event, a logistics-focused company would naturally protect its business interests in that country.

Therefore, while some precious metal companies promote gold and silver storage in multiple jurisdictions as international diversification, doing so will expose clients to excessive geopolitical risks.

Assessing Precious Metal Vaults for Long-Term Wealth Protection

The four shortcomings we mentioned are also excellent criteria for assessing whether a precious metal vault meets your requirements for long-term wealth protection. They are crucial in protecting your silver and gold assets, especially at a time of excessive central bank money printing and exponentially rising national debts.

History has shown that governments often take extreme measures to shore up confidence in their currencies and economies when unsustainable debts explode. In the past, they have resorted to gold expropriation from citizens to increase national gold holdings in desperate bids to regain the confidence of trading partners in their currencies.

Examples include the 1933 U.S. gold confiscation through President Roosevelt’s Executive Order 6102, which forbade the hoarding of gold and required “all persons” to deliver all gold coins, gold bullion, and gold certificates to a Federal Reserve Bank or a branch of the Federal Reserve.

Similarly, in 1996, Great Britain banned private citizens from owning more than four precious metal coins, as the government tried to stem the Pound Sterling’s depreciation after the country went off the Gold Standard. The import of gold coins into the country was also blocked.

Suppose the long-term security of your bullion sparked your interest in offshore precious metals storage. In that case, finding a gold and silver vault that is also a wealth protection specialist that considers minimizing risks to your wealth is crucial.

The Safe House Vault is a Wealth Protection Specialist

Using the four criteria we have provided, eliminating shortlisted vaults makes choosing the best gold and silver vault easier. If you plan to store bullion in Singapore, The Safe House vault is an excellent choice.

Located in The Reserve alternative asset center, about eight minutes from Changi International Airport, The Safe House vault addresses the four shortcomings in the bullion storage industry.

Transparent Precious Metals Storage

Clients who store precious metals at The Safe House are legal title owners of their property, not creditors. Whether they rented a safe deposit box or stored under the Direct Storage program, clients always receive itemized statements for their transactions with us, be it depositing bullion into a safe deposit box or one of our institutional gold vaults.

These itemized statements list the silver or gold bar serial numbers and detail bullion descriptions held under the client’s account. If the bullion has no serial numbers, like most silver and gold coins, we seal it in serial-numbered tamper-evident bags, allowing unique identification of client precious metals. Therefore, you will receive the same bullion bars or coins deposited should you withdraw them in the future.

Bullion audits are conducted quarterly at The Safe House by third-party auditors to ensure that the bullion is accounted for in the vault. Bullion audit reports are published transparently on the website. Additionally, clients are welcome to engage auditors of their choice to inspect their holdings at The Safe House outside our quarterly audit schedule.

We also welcome clients to visit The Safe House in person with an appointment. During the visit, you can check your bullion holdings and meet with our staff to clarify any doubts.

Comprehensive Vault Insurance

Over the past decade, we have built a strong reputation in the industry and worked with international insurance brokers to obtain some of the industry's most comprehensive precious metals insurance policies.

Underwritten by some of the world’s largest Lloyd’s of London underwriters, The Safe House vault insurance covers loss due to theft, infidelity of employees (inside jobs), and mysterious disappearance.

As explained earlier, mysterious disappearance coverage protects against losses that cannot be explained even after investigation, including human error.

Our policy will replace any loss based on its value at the time of loss discovery, ensuring that an asset can either be replaced or its full value can be compensated.

Institutional clients may obtain a loss payee certificate directly from the insurance broker, allowing for verified loss claims to be paid directly to the client.

Bullion Testing and ‘Known Good’ Storage Basis

The Safe House stores bullion on a ‘known good’ basis, not on a ‘said to contain’ (STC) basis. Conventional storage-focused vaults store on a STC basis because they do not want the hassle that testing precious metals brings. Imagine the additional manpower and time needed to test each silver bar or coin. Additional handling is required if fake bullion or borderline testing results are detected.

However, The Safe House is not like conventional vaults. It tests all bullion transferred by clients or other vaults. We do not just take a client's word that the bullion transferred is gold or silver. Instead, we authenticate precious metals in our testing laboratory before accepting them into our vault.

With the authenticity of stored bullion certain, we can store gold and silver on a ‘known good’ basis.

Minimized Jurisdictional Risk

The Safe House vault operates in only one jurisdiction—Singapore. With no other jurisdictional exposure, our clients’ risk of foreign gold confiscation, expropriation, or nationalization events is greatly minimized.

We are only subject to Singapore law and are not obliged to consent to instructions from other governments that are not directed through the Singapore justice system. With no business interests in other countries at risk of foreign government sanctions, we can protect our clients' wealth well.

Today, Singapore is one of the best countries in the world for offshore gold and silver storage. The city-state does not impose a sales tax on the purchase of investment-grade precious metals. Additionally, there is no capital gains tax on profits from bullion sales. Singapore is also renowned for its safety, open economy, and strong rule of law, key factors that make it one of the best countries to store precious metals.

Singapore is well-governed. It has no net debt and runs a balanced budget for every government term. The country is prosperous, and the crime rate is low. Unbeknownst to many, Singapore invests heavily in defense, and its military is one of the most modern in Southeast Asia.

Choose the Best Gold and Silver Vault for Offshore Storage

We hope that this article will help you select the best vault for offshore gold and silver storage. Offshore storage, by definition, requires holding your assets far from you, and you may not be able to monitor your holdings frequently. Therefore, your precious metal assets must be stored in the best vault that truly protects your interests. We believe that The Safe House is such a vault. Contact us should you have any questions. We look forward to assisting you.