What Are Offshore Private Vaults?
So far as US citizens are concerned, an offshore private vault is a secure storage facility which is physically located outside of the United States. This could mean a safe deposit box in London or a privately rented safe in the Bahamas, for example. So long as the storage facility is owned and managed by a company that is not registered in the United States and so long as the facility itself is not on American soil, then it can be considered an offshore private vault. In other words, the assets you might store in them are held in a location that is outside of the control of the US authorities and any legal decisions that might be made about the contents of such vaults would be outside the jurisdiction of American courts.
Of course, it would be possible to rent a property in an overseas territory and to install your own domestic safe within it to store valuables. This is not an offshore private vault, however, since what we are talking about here are high-security facilities which are owned and managed on your behalf by a privately run company. As such, they are much more cost-effective than storing your money overseas of your own accord since there is an economy of scale to be enjoyed. In other words, your valuables will be held within the same high-security facility as those which belong to others even though your personal belongings are held separately within them. Private safes are rarely as secure as the sort of facilities you will find at an offshore private vault, either, something that also has a cost implication in terms of insurance. To be clear, it is often much cheaper to insure valuables that are stored in a managed offshore private vault than it would be if they were placed in a domestic safe, even if you are talking about a very secure part of the world that is relatively free from crime.
Furthermore, offshore private vaults are usually considered to be outside of the main banking system. Today’s financial world is ever more inter-related across the globe which means that it is not always desirable to use the storage facilities offered by banking establishments. Certain declarations might need to be made to take advantage of such storage facilities and your privacy may be compromised as a result of them. Instead, privately run offshore vaults offer an alternative to these overseas banking institutions where greater levels of privacy and discretion are possible according to the laws and regulations that govern the two types of institution. In short, renting an offshore private vault will, more often than not, mean storing your valuables in a highly secure manner outside of the global banking system since such facility providers are not considered to be rendering any kind of financial service, merely a warehousing one.
There are many types of offshore private vaults that can be rented around the world. Some resemble little more than conventional warehouses and only have a few additional security measures in place to make them more guarded. Such measures may range from security guard patrols to CCTV cameras. There again, other offshore private vaults are much more safeguarded with a plethora of modern security systems including bio-metric access points, among others, which help to prevent unauthorized access. The difference between the most secure and the least secure vault facilities are usually reflected in the rental price. However, the most secure ones – often held within impenetrable secret locations inside caves or old mines, for example – are still often more cost-effective than other options, such as privately owned safes of storing valuables in bank vaults.
What Are the Benefits of Diversifying in Offshore Private Vaults?
Although investors who put their physical assets into an offshore private vault will not be expecting any return in terms of interest payments, there are numerous benefits to using them. After all, ever since the global financial crash, interest rates have been at historic lows and there have even been cases around the world where negative interest rates have been charged. In other words, the traditional places to store wealth, such as banks, have not looked so promising as they once did in recent years. Instead, buying easily movable commodities – such as gold, diamonds and other precious metals – has frequently been seen as a safer option. However, such commodities come with the attendant problem of how to store them securely. Of course, this is where offshore private vaults come into their own.
However, investors who want to diversify from monetary wealth and to invest into precious commodities instead will often face the issue of transporting their newly acquired assets from the United States to an overseas storage location. That said, this is a problem that is relatively easily overcome since several of the leading offshore private vaults will be able to handle the logistical side of moving precious commodities from their current location to your privately rented vault or safe deposit box for you.
Indeed, it is also even possible to buy your gold, silver, platinum or palladium directly in the same location as where the goods will be stored, often from a precious metal trading partner of the offshore secure storage provider. In other words, if you wanted to diversify from real estate, then you could sell your property asset in the United States and use the funds to purchase accredited precious metal bullion – such as American Eagle coins, Canadian Maple Leaf coins or even Australian Kangaroo coins – in overseas locations where they will immediately be put into secure storage on your behalf. If and when you want to realize your physical asset, then you will be able to do so at market prices – perhaps without ever leaving the United States or seeing your property in person.
Of course, gold is just an example of what you can buy remotely and have stored for you in an offshore private vault. It just happens to be a particularly good example given how crisis-proof it has shown itself to be over the last few centuries, certainly compared to currency wealth. That said, offshore private vaults are equally as suited to the safekeeping of other precious metals as well as gemstones, cryptocurrencies, important documents, and digital media – such as hard drives, DVDs and flash drives, for example.
Bear in mind that most offshore facilities of this sort will only allow you, the renter of a vault or safe deposit box, access to your stored items. However, it is also possible to authorize certain individuals to act on your behalf to store items or to retrieve them. All you will need to do is to provide some suitable form of proof that they are acting on your instructions. This way, you can choose to stow whatever you like in your storage facility, subject to the usual legal controls on legally controlled items, without the offshore private vault service provider ever knowing – or needing to know – what you are putting inside.
It should also be mentioned that diversification is not only about storing items securely overseas for the potential yield they will afford in terms of value growth. Often diversification is about hedging your bets and putting some wealth into a very different sort of investment vehicle as your main one. This way, if you have any unforeseen problem with one, then the other can come to the rescue. If you look at what has happened to the New York Stock Exchange in recent times, for instance, then you will soon realize that investing in stocks and shares is not always the safe bet that it used to be. Equally, real estate speculation can be a riskier business than it used to be based, in part, on the condition of the wider economy and people’s ability to pay their mortgages back in full.
In troubling economic times, there are, of course, profits to be made. However, that does not mean that risk cannot be entirely eliminated. As such, diversifying into physical commodities, such as gold, or digital ones, such as cryptocurrencies, can make a lot of sense when a high proportion of your wealth is tied up in conventional investment vehicles. For US citizens, in particular, storing such assets overseas also makes a great deal of sense from the point of view of diversifying outside the political as well as economic orbit of the country. For many Americans, this means choosing a facility in Europe where the standards of security are high, where the regulations that cover service providers are superior to much of the rest of the world, and where the wider infrastructure is well maintained. In particular, Switzerland is often singled out as a country where offshore private vaults are especially strong.