The Benefits of Offshore Wealth Storage In Gold

The idea of storing your wealth in an overseas high-security vault can be very appealing, especially when you are considering doing so in a very stable location such as Switzerland. The guarantee of private property in Switzerland and the nearby Principality of Liechtenstein are particularly suited to investors from locations where such a guarantee is not always possible. However, what investors may not have fully considered is in what format they should store their wealth in. One of the tried-and-tested methods of storing wealth and seeing it grow as an investment is gold. Read on to find out why bars and bullion of this precious metal may be the best overseas investment vehicle for you.

Investing In Gold

When you look at all the possible things you could diversify your wealth into while it is in storage, gold will often win out.

A 250 g gold bar lying on a certificate from the maker
Nearly all gold bars are sold with a certificate today.
© vladk213 – stock.adobe.com

As a material, golden components can be found in many electronic devices. It is a superb conductor of electricity, for example. It is also still in demand for dental applications and is also widely used in the jewellery making industry. Therefore, although the price of all commodities can go up as well as down, bullion is usually a bankable long-term investment vehicle that is not subject to short-term economic shocks.

Indeed, even if industrial demand were to drop for the precious metal due to a global economic downturn, for example, then one of the first investment options that people would seek around the world would be gold. Historically, the price of it mostly has risen when there have been downturns in the past and there is nothing to indicate that would change going forwards.

In short, storing your wealth overseas and gold ownership are two things that go together very well. Bear in mind that it is possible to store any golden coins or bars you own by transporting them to or buying them directly in the country where they will be stored. This is certainly the case in Swiss storage facilities. Furthermore, when you want to end your storage contract you can do so. You either book an appointment to collect your valuables in person or by nominating an agent to act on your behalf. Alternatively, it is easy to sell your holdings back to a precious metal trader in Switzerland and turn your asset into something more liquid, such as your preferred currency, for instance.

Gold Versus Other Investment Forms

As mentioned, golden bars and coins can be obtained readily as a means of reliable wealth storage which are then held securely for you until you want to access them. These can be kept in your own private safe deposit box or they might be stored in a vault.
With storage in a vault you can choose between collective custody and allocated and segregated storage. Collective custody means you own a share of a larger body of the precious metal along with other investors. Allocated and segregated storage means that your own bullions and coins are stored separately from the metals that belong to other customers.

Dozens of 1 kg gold bars laid side by side
1 kg gold bars are popular with major investors
© photobc1 – stock.adobe.com

The international price of the precious metal is set independently in London by traders, so it is always easy to establish just how much your stored valuables are worth if they are held in this format. By contrast, there is a much less regulated market for other physical stocks. Diamonds and other gemstones fall into this category where regional price variations might come into play.

Bear in mind, too, that exchange-traded funds – or ETFs as they are often called – can be purchased in gold, as well. These are traded in much the same way as stocks or bonds but they relate to the price index of certain commodities. This is a way some people choose to diversify their wealth into the precious metal without the need to store large quantities of it. That said, an ETF provides potential counterparty risk. This is in direct contrast to a securely stored physical asset, such as a bullion bar, for example.

Furthermore, even if an ETF were to be physically replicated, then it will commonly only be so for the equivalent sum of the biggest investment bars, such as 400 ounce ones. As a consequence, you cannot take delivery of your golden assets if you invested less than 40 ounces of Gold – even if physically delivery were to be possible according to the terms and conditions of the ETF agreement itself.

Compared to cash, golden bars win out, too. They have a high value density compared to most paper-based wealth. For example, if you were to store the equivalent value of a bullion bar in dollars, Euros of pounds, then you would need much more physical space to do so. Since renting a safe deposit box in high-security vault comes with an attendant cost, it is often best to make the most of the storage space you have. In this regard, the precious metal wins hands down.

Finally, it should be noted that it is possible to store your wealth held in deposits of the precious metal along with anything else you like. This is not the case in a collective custody model, of course, another good reason to opt for individual, private storage instead. In your own safe deposit box, you can fill it with coins or bars and any other valuable items you like. This could include business contracts, securities, cryptocurrencies, cash or even family jewels. The precious metal is well-known for being extremely stable so it won’t react to anything else it is put into storage alongside.

Understanding Tax Issues

In many jurisdictions around the world, golden bars and coins are considered to be a means of exchange. In short, this means that they operate as legal tender and are not, therefore, subject to sales tax. In the UK, for example, no value added tax – or VAT – is levied against the purchase of investment forms of the metal. To be clear, this is usually interpreted as bullion coins and bars but not jewellery by Her Majesty’s Revenue and Customs (HMRC). That’s a big plus point for anyone looking for a tax-free investment commodity, of course.

In the United States, the situation with sales tax differs depending on which part of the country you happen to be purchasing it in. Sometimes it is levied and sometimes not. Transporting wealth out of the country in this format may result in tax being applied, too. It is a similar situation in many European states where different rules apply depending on where you are based. As soon as the precious metal crosses a non-EU border, tax may be levied on it.

For this reason, it is common for overseas investors keeping their wealth in Switzerland or the Principality of Liechtenstein to purchase their bullion from local traders. No sales taxes are applied at all with this method which is both secure and reliable.
Most investors who are attracted to the idea of storing their wealth overseas in secure vaults soon realise the advantage of avoiding unnecessary taxation. Doing so quite legally allows more wealth to be stored in the commodity which means more can be set aside for a rainy day or for retirement plans, for example. It means more potential yield as the price of gold goes up over time, too.

Summing Up

Bullion bars and coins offer a superb investment vehicle for overseas investors who want to store their wealth securely and reliably. ETFs and physical bullion are both ways investors can tie their wealth to the internationally agreed commodity price of the metal but physical storage offers a number of additional benefits that holders of ETFs do not enjoy. Physical assets of the precious metal may be purchased without VAT or sales tax from Swiss precious metal dealers and they can be put into secure storage vaults immediately on your behalf. Gold investors can sell their assets at any time of their choosing or relocate their property if they so wish.

Various 250 gram gold bars and Vienna philharmonic coins.
Gold coins and bars are can be stored offshore
© Erwin Wodicka – stock.adobe.com