Storing silver: A guide to everything you need to know

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Summary of important facts about storing silver

Many financial experts believe silver is suitable for storing asset wealth and portfolio diversification.
Physical silver can be stored in home safes, safe deposit boxes, and, most securely and conveniently, in bonded warehouses.
Bounded warehouses offer many advantages – even large quantities of silver can be stored under ultra-secure conditions free of VAT and customs duties.
With allocated & segregated storage, your own silver is stored separate from other holdings, so you can always inspect your silver holdings as necessary and retrieve the same precious metal you originally deposited.
Should you opt for the somewhat cheaper collective storage option, you are only entitled to an amount of silver equivalent to the quantity and quality of the precious metal you put into storage.
When acquiring silver, anyone looking to store their holding should choose for bars from reputable manufacturers in standard sizes, as they are acceptable almost everywhere and the purchase premium involved is negligible.

Introduction to storing silver

Precious metals have been used for thousands of years as a means of storing wealth and safeguarding assets. That’s why many financial experts still recommend them to today’s investors for portfolio diversification. Silver is thus in high demand for this purpose. Yet, unfortunately, legislators throughout most of Europe primarily view silver as a raw material or industrial metal rather than an investment. As a result, and unlike any gold purchase, buyers will generally have to pay VAT on the purchase price of any silver acquisition. The bottom line is: There are a number of good reasons to buy this precious metal in physical form, but where, how, and in what form can that purchased silver be stored? There are several options here, and those who make an optimal decision can not only store their silver safely, but also make entirely legal tax savings. Our guide to “Storing Silver” reveals how this is possible.

Storing silver securely: But what’s the best way?

Theoretically at least, there are numerous ways to store silver. But you probably don’t want to store your precious metal any old how, and would always wish to keep it safe and secure. We will therefore look at the three most obvious and important storage options that will provide the best possible protection for your precious metal. This immediately rules out alternatives such as simply hiding your silver away. We generally advise against this and similar storage options, because experienced thieves can usually discover all such hiding places in a very short time, and clear them out. This not only causes inconvenience, it also risks a considerable financial loss. The following three storage options are a much better bet:

Storing silver in a home safe

If you definitely want to store your silver at home, a home safe is certainly better than hiding this valuable precious metal in some other hiding place. Furthermore, the price of such safes have tended to fall in recent years, but this generally applies to the smaller more compact models. Nevertheless, you should undoubtedly take a moment to reflect on a few possible limitations before making a purchase. Smaller home safes, for example, offer very little space for storing a precious metal like silver. Although this white metal is valuable in its own right, it still has a significantly lower value density when compared to gold or platinum, for example. Larger capacity safes are not only significantly more expensive, many people also lack the space this requires in their home. Storing a quantity of silver in a home safe often incurs additional costs. This is the case, for example, if you want to protect your precious metal with modern security technology – such as an alarm system. Further problems arise, even if, via appropriate extra investment, you do manage to store your silver holding safely at home. Many ordinary apartments are just not structurally designed to store large quantities of silver. Problems quickly arise with the floor loading limit, which in residential buildings is usually a maximum of 150-300 kg per square metre. So a large safe without contents often already exceeds your maximum floor load, and any structural improvements can quickly become very costly. Accordingly, home safes are often inadequate and/or too expensive for secure and efficient silver storage.

Storing silver in a safe deposit box

An alternative to storing silver in a home safe could be arranging safekeeping in a safe deposit box. These are rented not only by banks and precious metal dealers, but also by companies who specialise in this service. A Swiss Gold Safe dealer- and bank-independent safe deposit box in Switzerland, or a safe deposit box in Liechtenstein from the same company source are particularly suitable options. Firstly, both these countries have a global reputation for political stability, economic prosperity, and the stringent protection of property rights. Secondly, you often benefit from greater discretion and security with specialist safe deposit box providers. Some banks are very reluctant to invest in the latest security technology. This is because safe deposit box rentals are no longer viewed as part of their core business, but merely as a customer service or a source of additional income. Accordingly, storing silver securely in such locations is not a widely available option and comes with certain limitations. Often, there are only small safe deposit boxes available, in which you can perhaps store valuables up to a maximum weight of 25 to 30 kilograms. While such a limit is rarely an issue for particularly dense precious metals like platinum or gold, if you want to store silver, you’ll reach this limit quite quickly. In general, the ratio between the value of the stored precious metal and the safe deposit box rental fee is rather unfavourable for silver holdings. This is because the rental fee is usually independent of the value of the contents. If you’ve already rented a safe deposit box to store platinum, gold, important documents, or valuable jewellery, and still have some space available, small amounts of silver would be quite well-protected there. However, if you wish to store larger quantities of silver, a safe deposit box is not the optimal solution.

Storing silver securely in a bonded warehouse

The best option for many investors is likely to be storing silver in a bonded warehouse (ZFL) in Switzerland. This is a special storage facility for valuable items such as precious metals, antiques, or other special collectibles. Such locations are controlled by the Federal Customs Administration and you can store silver safely here because these high-security facilities are equipped with state-of-the-art alarm technology and staffed by trained security personnel. There’s also a special feature, relating to the requirement that anyone wishing to import silver into Switzerland must pay import VAT and customs duties.

Silver holdings stored in these bonded warehouses remain free of VAT and customs duties. This is because these special warehouses are not deemed to be part of Swiss customs territory. Storing silver VAT-free in a bonded warehouse is very simple: You just place an order to purchase your desired amount of silver from a dealer who, as part of the service, offers direct delivery of the precious metal to a bonded warehouse. If you later decide to resell your silver within the bonded warehouse or return it to the dealer, that transaction too remains tax-free. Customs clearance and taxation only become necessary once the silver eventually leaves the bonded warehouse.

Methods of storing silver: Allocated & segregated storage vs. collective storage

If you want to store silver in a domestic warehouse or a bonded warehouse, you can generally choose between two storage options: allocated & segregated storage or collective custody. Both these storage options have different advantages. However, the bottom line is that allocated & segregated storage offers more advantages for investors than collective custody.

Allocated & segregated storage

With allocated & segregated storage, your silver is stored separately and can always be clearly identified. Terms such as individual custody, segregated custody or special custody are also common descriptions for this type of storage. Under these arrangements, storage takes place in vaults and on pallets which are marked with the respective bar or seal numbers. Segregated precious metal and valuables storage thus guarantees you will always receive back the very silver you deposited, and can also inspect your holding whenever this is necessary. The precious metal remains your property at all times and will never become part of the storage company’s bankruptcy estate, even in the unlikely event of a company insolvency. Thus, if you store your silver in allocated & segregated storage, you can easily access it and also document your ownership of specific bars or coins.

Collective storage

While only a few storage companies offer allocated & segregated storage due to the extra administrative effort required, there are a greater number of providers offering collective storage. Here, your silver is pooled together in storage alongside the holdings of other customers. In effect, this means that upon any subsequent retrieval, you are never guaranteed to receive back the precious metal holding you put into storage – just the same amount of silver you stored and of the same comparative quality. So, unlike an allocated & segregated storage option, you as the owner can never conduct an interim audit, because you cannot inspect or monitor your silver holding. This collective storage format requires less effort for the storage provider, which means it often results in lower storage costs. However, if a bank, precious metal dealer, or storage company operating such arrangements then becomes insolvent, silver owners are more likely to experience subsequent delays and legal complications when attempting to recover their deposited holdings.

Storing silver: What’s the best format?

Physical silver exists in many forms. However, not all of these are equally suitable for investors or necessarily permit efficient storage. Those who plan to have their silver stored primarily have the choice between the following formats:

Silver bars

When it comes to storing silver, bars are almost always the best choice for investors. This is because bars offer the lowest premium over their pure metal value. However, this does not really apply to pieces weighing only a few grams. One-kilogram bars are particularly popular and efficient, but for greater savings, five- and fifteen-kilogram silver bars can also be a good choice. Bars are ideal for storage in bonded warehouses because their standard sizes makes them easier to handle and stack, and inventory management is far more straightforward. Investors should generally focus on bars from reputable manufacturers certified by the London Bullion Market Association (LBMA). This guarantees the highest standards in terms of purity, quality, and origin, which then means your silver bars can be readily sold, even on international markets.

Silver coins

Silver coins are only moderately acceptable for investors as an efficient way to store silver. This is primarily because the premium over the pure precious metal value is higher than for silver bars, which are of course considerably heavier. This increase is mainly due to the higher minting costs involved. Furthermore, the number of dealers offering or purchasing silver coins in bonded warehouses is much lower. That in turn means sales of silver coinage usually realise lower profits. Those who nevertheless choose silver in coin formats should always focus on popular bullion coins, because these offer widespread acceptance and meet very high standards regarding their fineness. Internationally popular silver bullion coins include the Maple Leaf, Vienna Philharmonic, Krugerrand, and the American Eagle. These coins are also available in various denominations, with the most popular and saleable being silver bullion coins weighing one troy ounce (31.1034768 grams).

Silver granules

In principle, physical silver can also be traded in granular form. Indeed, this format is sometimes relatively inexpensive to purchase because – unlike silver coins, for example – there are no minting costs. Furthermore, at least in theory, you can purchase the precise quantity of silver you require. However, these sale offers are invariably aimed at industry, refineries, or jewellers, and these commercial buyers do not purchase any silver granules they require from private investors. This makes it much more difficult for private individuals to find a buyer. Furthermore, it is a more complex task to prove the purity of silver granules. Therefore, investors who want to store silver or purchase this precious metal should opt for formats other than granules.

Silver jewellery

Silver jewellery can be valuable, but it is not suitable for investors or for duty-free storage. In addition, many pieces of jewellery are often not made from pure silver at all. Instead, they also contain metal alloys and precious stones – rendering jewellery items unsuitable for those who wish to store silver and profit from its subsequent value appreciation. The combination of different – albeit valuable – materials found in jewellery pieces also makes it difficult to determine an accurate precious-metal value. Furthermore, the value of jewellery items is itself subject to fluctuations brought about by changing fashions. So investors are always better off with silver bars, and should keep any silver jewellery in a home safe – especially if it has a personal or sentimental value.