Allocated & Segregated Storage – The Gold Standard for Precious Metals Storage

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Summary of allocated & segregated storage of precious metals

Bank-independent allocated & segregated storage of precious metals and other assets in Switzerland at Swiss Gold Safe represents an alternative to traditional safe deposit boxes.
In particular, this arrangement offers a convenient way to store large quantities of gold or silver products in high-security facilities, with full insurance cover.
Segregated storage is available either in a domestic warehouse or in a bonded warehouse. The transit warehouse solution is particularly suitable for storing white metals such as silver, platinum, or palladium. Purchase transactions remain VAT-free under this storage option.
Precious metals stored at Swiss Gold Safe are always fully insured.
Unlike collective storage contexts, with allocated & segregated storage the original goods delivered are clearly assigned and remain the client’s property. Swiss Gold Safe only offers allocated & segregated storage (also known as individual or segregated storage).
The contractual partner does not need to be on-site for deposits and retrievals. Swiss Gold Safe can handle this as part of their service.
The management of deposited assets can also be handled by pre-authorised individuals – e.g. life partners, children, or specified company representatives.
Allocated & segregated storage always involves ownership of the original physical precious metals. This feature distinguishes this option from exchange-traded gold certificates, precious metal accounts at banks, or precious metal deposit arrangements with dealers.

Secure and appropriate asset storage

There are various options for secure precious metal storage. Depending on the metal and the quantities involved, gold- and white metal bars and coins can be deposited in a safe deposit box or held in segregated storage. Especially with larger quantities, many investors much prefer allocated & segregated storage. This non-bank safekeeping option offers many advantages over other storage solutions or capital-based products.

Given today’s high commodity prices, precious metals represent a consistent value option which is particularly suitable for the creation and protection of asset wealth over the longer term. Precious metals are also frequently used to expand a portfolio of assets in combination with other value-creating reserves such as stocks, funds, or bonds. To ensure your precious metal holdings continue to serve their purpose, it is important to arrange appropriate storage solutions for your precious metal bars and coins. Secure storage in a safe deposit box is often a good option for gold products, given that, unless exceptionally large quantities are involved, gold’s high value density will always make best use of the available storage capacity.

The situation is a little different with the storage of silver: It would take many more ounces of silver to create a value equivalent to one ounce of gold. Thus this white metal always requires a correspondingly larger storage area – so an arrangement with no quantity or weight limits will always be an advantage. At Swiss Gold Safe, precious metals can be stored either in collective storage or in allocated & segregated storage. When choosing an optimal storage option, clients should also bear in mind that the purchase of white metals such as silver, platinum, or palladium is subject to statutory VAT. Later in this article, you’ll learn how the right storage solution can legitimately save on payment of this levy.

Storing gold and silver in allocated & segregated storage

So what exactly does allocated & segregated storage mean? This storage solution differs from a traditional safe deposit box option, which is usually subject to quantity or weight restrictions. With allocated & segregated storage, clients do not rent a box or locker in a safe deposit box facility, but instead request storage in a large-capacity vault located inside a high-security building. The special feature of this option is its allocated & segregated storage arrangement, which means the goods are stored as one particular entity and kept separate from other inventory. This ensures the client’s original ownership and title to the goods is carefully preserved, so the goods can always be traced back to their owner at any time.

Furthermore, there are no quantity, size, or weight restrictions. So segregated storage is suitable for all types of valuables, especially precious metal bars or coins made of gold, silver, platinum, or palladium. And to guarantee individual items can always be clearly identified and assigned, all bar and/or seal numbers are carefully recorded when goods are accepted for storage.

Allocated & segregated storage can, for example, be arranged in a traditional domestic warehouse, and is usually recommended for storing gold bars or gold coins. Alternatively, the same allocated & segregated storage can also be arranged in a bonded warehouse (ZFL) or in an open bonded warehouse (OZL) to qualify for the VAT-free storage of silver, platinum, or palladium products. You can learn more about this storage option in the section “Allocated & segregated storage in a bonded warehouse can save on VAT”.

Allocated & segregated storage: better service and more benefits compared to a safe deposit box

In contrast to safe deposit box storage, allocated & segregated storage provides many benefits for our clients, as well as an entitlement to enhanced service. While using a safe deposit box facility requires your personal attendance, individual segregated storage does not require you to be present on-site. Your assets can be conveniently deposited and retrieved in accordance with your instructions. For example, you can purchase precious metals from a specialist dealer of your choice and have them delivered direct to a domestic warehouse or bonded warehouse. Swiss Gold Safe will then take care of the rest of the process on your behalf.

This service is of particular benefit to overseas clients or those in distant locations: You can store your precious metals securely, independent of banks, without being tied to one dealer, and with no capacity limits or onerous Swiss reporting requirements. In addition, you will also save valuable time and travel costs. No bank account is required, nor is there any obligation to open a Swiss bank account, because storage fees can be settled using a flexible range of various payment methods. The purchase of white metals offers a further advantage: If these purchases are immediately stored in a bonded warehouse, the purchase transaction remains VAT-free.

The secure storage of your property is ensured by a deposit agreement which is fully compliant with Art. 472 of the Swiss Code of Obligations (OR).

Comprehensive insurance cover for individual storage of goods

Unlike other storage concepts, the allocated & segregated storage of your precious metals at Swiss Gold Safe also includes full insurance cover. Renowned and internationally active insurance partners such as Lloyds of London cover your goods according to their value against damage by burglary, theft, or fraud, as well as damage by fire or water. This all-risks insurance also covers damage caused by natural hazards such as earthquakes, floods, or landslips.

Allocated & segregated storage arrangements in a bonded warehouse can save on VAT

When you buy bullion gold from a precious metals retailer, no VAT is charged, which makes gold an important exception among commodities, because it is considered to be purely an investment asset. However, the purchase of white metals attracts a statutory VAT levy. Since January 2024, the standard VAT rate in Switzerland has been 8.1%. Here, the Swiss Federal Tax Administration justifies this levy by stating that silver, platinum, and palladium are regarded as industrial metals and thus not primarily used for asset protection alone.

This means silver buyers must factor VAT costs into their available investment budget. However, there is an alternative: Provided the silver is immediately delivered to a Swiss Gold Safe bonded warehouse, that purchase remains VAT-free. This storage solution acts as a transit warehouse arrangement: So long as the bars or coins remain inside the bonded warehouse, no customs duties or VAT liability applies. This segregated storage arrangement can continue indefinitely – which means further purchases and sales are possible at any time, even without any physical movement of goods. Swiss Gold Safe can handle the transaction processing on your behalf; so you don’t need to be present in person. This bonded warehouse arrangement thus facilitates the VAT-free purchase of silver and other white metals.

Convenient designation of authorised persons

Individual transactions under an allocated and segregated storage account are normally carried out by the clients account holder. This also applies to written authorisations implementing storage or withdrawals at Swiss Gold Safe. However, there may also be situations in which the client contractual partner wishes to be represented by someone else. This requires the designation of authorised persons, which often involves the individual authorisation of a spouse or partner, for example. Children can also be authorised to handle the disposal of stored goods, which may often entail a collective representation for several people. In such cases, only the collective, or at least two of its authorised persons, will jointly be able to exercise power of attorney. This procedure is designed to enhance the security of deposited assets.

Swiss Gold Safe can also offer custom authorisation options for corporate structures, which may also be varied from any existing formal regulations in the commercial register. This allows authorised company representatives to carry out all relevant transactions and movements related to the storage of valuables on behalf of the contractual partner.

Regardless of the kind of authorisation requested by any contractual partner, an authorisation can only be granted using the appropriate authorisation form provided by Swiss Gold Safe. This document must then be personally signed – digital signatures are not permitted.

Why allocated and segregated storage is superior to collective storage

For commercial or administrative reasons, many banks and storage companies only provide customers with collective storage for their precious metals. Under this standard method of storage, coins or bars of the same type and/or weight are all grouped together. Such collective storage is only suitable for investors who wish to acquire precious metals but are not interested in specific pieces. Upon later retrieval of the goods, they will only receive items of equivalent specification, not the originally purchased goods.

By contrast, allocated and segregated storage offers a superior alternative to collective custody. Under this storage arrangement, the precious metals are not only segregated and registered in the client’s name, as mentioned above, but are also securely covered by a guarantee of ownership. This is the only way a client can be sure to receive back the original deposited goods during any later retrieval.

Allocated and segregated storage as an alternative to precious metal ETFs and ETCs

Investors can not only buy physical precious metals to build wealth, they can also purchase gold securities which track the market performance of gold or silver. Precious metal ETFs or precious metal ETCs designed to achieve this are widely available. Exchange-traded funds (ETFs) are exchange-traded index funds classified as special investment assets. They offer interested parties the opportunity to invest in various commodity markets via a comparatively low capital outlay.

Exchange-traded commodities (ETCs) operate according to a similar principle, but are securities which can also traded on the stock exchange but they reflect the performance of just one underlying asset – for example, the market pricing of gold or silver. Gold securities like precious metal ETFs or ETCs are an option for investors who wish to benefit from the performance of commodities without physically owning them. However, they demand in-depth knowledge of the buyer, who may need to be aware and take account of issuer risks and some special tax considerations.

While ETFs or ETCs may not be backed by actual precious metals, or may ultimately prove not to be deliverable due to inappropriate denominations, the allocated & segregated storage of gold or silver always relates to physically existing precious metals owned by the client. Like gold securities, precious metals in segregated storage offer high trading flexibility – but with the simultaneous advantage of direct ownership.

Allocated & segregated storage is better than a precious metals account at a bank

Another option for purchasing gold or silver for the purposes of asset accumulation is via a precious metals account held at a bank. Under this option, investors can deposit any amount of money into their metal account and thus invest in a desired type of product. These capital amounts are used to purchase precious metal shares at the prevailing daily market rates. Subsequently, such shares can be easily bought and sold via automatic debit and credit accounting procedures.

Depending on the provider, precious metal accounts are backed by large deposits of physical gold and/or silver bars acquired in high-value units. Some contracts may also provide for the actual delivery of precious metal, but investors are primarily interested in trading performance at the current precious metal price, rather than in pursuing any actual ownership claims. Account management fees apply, and these can also increase in line with the amount of your investment. Those who nevertheless still wish to insist on claiming a physical delivery often have to wait until the return value reaches an appropriate available denomination – and, of course, in this storage context any silver delivery would be subject to VAT. A special feature of precious metal accounts is that, especially in banks, the shares are usually held in the form of bonds. This means that in the event of a bank insolvency, precious metal accounts would become part of the bankruptcy estate. So in a worst case scenario a total loss of your investment funds could be a real possibility.

However, with allocated and segregated storage, you always retain ownership of your precious metals and are thus free to dispose of your available denominations. And if your holdings are stored in a bonded warehouse, your physical silver products remain VAT-free. Swiss Gold Safe offers segregated precious metal storage outside the banking system, thus eliminating the risk of sustaining a loss through a bank insolvency. Even in the unlikely event of a Swiss Gold Safe bankruptcy, your stored precious metals will never be affected. This is because precious metals held in allocated and segregated storage are deemed separate assets which are not part of Swiss Gold Safe’s balance sheet, and therefore not part of any bankruptcy estate.

The advantages of allocated and segregated storage over precious metal depository with a dealer

Larger specialist dealers or producers with a direct sales facility often provide their customers with what is termed a precious metal deposit. With this solution, investors purchase bars or coins made from gold or white metals. These precious metals then remain with the respective provider to be stored in the company’s own vault. Although they are the customer’s property, they are usually stored together with similar products belonging to other customers. Only common coins or bars are generally accepted, and upon delivery, any coin denominations will be issued at random to make up the appropriate value. In addition, storage fees are often higher than the charges levied for a bank safe deposit box.

Compared to such a precious metals depository, allocated and segregated storage at Swiss Gold Safe not only offers the advantage of being bank-independent, it also allows you to freely choose your own specialist dealer and products. Furthermore, you can also store any precious metals you already own with Swiss Gold Safe. And just like a dealer depository, you don’t have to worry about storing or retrieving them yourself. Last but not least, as a purely private storage company, Swiss Gold Safe is not subject to reporting obligations to government agencies.