Once we broke support a few months ago in the metals market, I began pointing to much lower levels b...
Owning Gold as Property
06/02/2014 11:02 am EST
Anthem Blanchard highlights the pros and cons of owning gold as outright property and several ways to buy and hold it.
SPEAKER: Hi, I'm here with Anthem Blanchard, CEO and founder of Anthem's Vault. They own gold, or show you how to own gold as property, so we want to talk a little bit about that. What is it with owning gold as property? How does work versus numismatics or ETFs or bars in your mason jar or your safe deposit, how does that work?
ANTHEM BLANCHARD: Sure, so holding it as property means that you hold it outright, so it's a property right, and you're protected under the law as property as the holder of that property much more so than as the holder of say a deposit at a bank where from an accounting and legal standpoint it's a liability that's owed back to you, so for example when you have an exchange traded fund you have to hold it in street name, you have to hold it in a stock brokerage account.
ANTHEM BLANCHARD: Well, underneath that stock brokerage account is a bank, it's a bank holding company, so there's credit risk there. There's other layers of credit risk also in an ETF in terms of who holds the metal in the ETF, bank custodians, so again any time that anything touches a bank then there's credit risk associated, so the beautiful thing about owning gold as outright property is that there's no one else's credit risk, no one else can come in and take your gold without you actually having a say-so in it.
SPEAKER: When you can own gold as property and keep it at your house, then it's the same thing, correct?
ANTHEM BLANCHARD: Absolutely, you can, and there are really important aspects to understand. Typical home insurance policy will cover about $1000 of bullion.
ANTHEM BLANCHARD: If you want to go anything more than that, you have to go with a real premium provider like an ace insurer, there you're looking for about 1.5% to 3%, and you're going to be required to put in thousands of dollars worth of alarm and safe equipment.
SPEAKER: So your gold hedge is eaten away by the insurance costs.
ANTHEM BLANCHARD: Correct, and also there's personal liability as well, so you're putting yourself in danger. I've heard way more stories than I wish I ever did about people whose homes have been broken into and life savings have been stolen and lives have been personally at risk.
SPEAKER: So what do people do if they want to own gold as property and they don't have to have the risk of putting it in their house?
ANTHEM BLANCHARD: All right, so you have a few choices. You can hold some of it at a bank safety deposit box. The issue you there is a lot of states, the abandonment laws have come, way, way, way down, there's been a lot of pressure on the state level to get as much funds as possible, so say like California for example, you can literally leave a bank safety deposit box abandoned for a year and not check on it, and have the contents taken out, so if someone was physically incapacitated, say they had a stroke or something happened, then those funds could be at risk, so our solution at Anthem Vault is to allow people to hold the metal in a secured vault at the Brinks Vault in Salt Lake City, and for us to be a custodian to facilitate just like a bank would, but without any of the credit risk because we're a non-bank, we're not a bank, so that's the protection. People get the advantage and utility of being with an institution without the credit risk.
SPEAKER: Thanks, Anthem.
ANTHEM BLANCHARD: My pleasure.
SPEAKER: Thanks again for joining us at the MoneyShow.com video network.
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