Segregated vs. Non-segregated Storage: What’s the difference?

When you invest in precious metals choosing the right storage option is as important as the metals themselves.

Understanding the difference between segregated vs. non-segregated storage can help you choose the most secure way to protect your investment.

More than one-third of retail investors are interested in gold. While you can store your gold at home, many investors opt for secure storage facilities.

Depositories offer segregated vs. non-segregated storage options but what’s the difference?

This article covers the differences and key drawbacks you’ll want to know.

Does precious metals storage really matter?

Choosing the right storage option for your precious metals matters quite a bit. While storing gold and silver at home may sound like a good idea, it comes with extra risks and doesn’t meet IRS standards making it eligible for tax-advantaged status.

Depositories, on the other hand, offer secure storage, full insurance, and are compliant with IRS standards. But this does come at a cost. You’ll have to pay a fee and the overall cost varies depending on whether you opt for segregated or non-segregated storage. 

Vault storage at a depository is ideal for investors who hold significant amounts of physical gold or silver.

Keep in mind that this can add costs to managing your investment, affecting the overall value of your precious metals.

What is segregated storage?

Segregated storage means your precious metals are stored separately from other investors.

You get your own dedicated space inside a depository vault and you retain legal title to the specific coins or bars inside that space, giving you clear documentation proving ownership of your precious metals.

Let’s say you purchase five gold American Eagle coins through your gold IRA and pay for segregated storage.

At the depository where your IRA is held, those exact five coins will be set aside in your name and returned to you when you want to withdraw them. 

Segregated storage typically costs more but it is good for investors who want to maintain ownership over particular coins or bars.

This can help ensure their collectible value and condition are maintained while giving you peace of mind over the precious metals in your portfolio.

Some of the key benefits of choosing segregated storage include:

• Maintaining title to specific items to prove ownership
• Documentation makes it easier to perform audits or reconcile accounts 
• Coins and bars aren’t co-mingled with other investors’ assets

If you want to ensure you’ll get your exact metals back, segregated storage is your best bet. But there are some trade-offs you’ll want to consider:

• Higher storage fees
• Not as efficient for large-volume storage
• Can require more administrative steps to retrieve assets

While there is a risk that you could lose your gold if a custodian becomes insolvent, segregated storage can mitigate some risk.

By having clearly identified assets stored in your name with documentation to prove ownership, you can reduce the chance of disputes in the future.

What is non-segregated storage?

Non-segregated storage is sometimes referred to as co-mingled storage. This type of storage option means your precious metals are stored in bulk alongside other investors.

Instead of tracking individual items, ownership is tracked by weight and type and everything is kept in a shared pool.

Let’s say instead of storing your five gold American Eagle coins in segregated storage you opt for the lower cost option of non-segregated storage.

When you’re ready to liquidate your portfolio and withdraw your coins, you’ll receive five coins equivalent to five troy ounces worth of gold back, but it might not necessarily be the original coins you deposited into the vault.

This form of storage can be more efficient and cost-effective, especially for investors who care more about the value of their metals than the specific form they’re in. 

These are some of the benefits of non-segregated storage:

• Lower costs
• Faster withdrawal processing time for large investors
• Easier liquidity access due to pooled availability
• Insured and professionally managed like segregated storage 

While there is a cost savings to using non-segregated storage, there are some drawbacks to consider: 

• When you make a withdrawal, you don’t get the exact items you originally invested in which can be bad for collectors
• There’s less documentation and transparency, making it difficult to prove ownership if a dispute arises
• Metals may be substituted with like-kind equivalents upon withdrawal

Non-segregated storage can be appealing for volume investors, but it has drawbacks collectors will want to be mindful of.

Segregated vs. Non-segregated Storage: Key differences

Segregated and non-segregated storage are both options you can consider for your gold IRA. Here’s a closer look at how the two options compare.

Feature	Segregated	Non-segregated
You retain Ownership of Specific Items	Yes	No
Storage Fees	Higher	Lower
Insurance Coverage	Full	Full
Access to Specific Metals	Yes	Like-kind equivalent
Maintain Legal Title Clarity	Yes, for exact items	Only by weight and type
Ease of Liquidity	Extra steps involved	Withdrawals pulled from shared pool of assets
Auditability & Transparency	High	Limited
Best For	Collectors and individual IRA investors	Bulk investors and cost-conscious investors

Which one is right for you?

If you’re storing coins in a gold IRA, or you’re a collector who cares about preserving the condition of your coins and withdrawing the exact coins you deposit, segregated storage is your best bet.

Even though it comes at a higher cost, you’ll have more control over your precious metals. 

For investors interested in generating a higher return over the long-term investment or who are making bulk investments in bars that don’t have unique collectible value, non-segregated storage is more bang for your buck.

Most custodians offer both options, but you’ll want to verify the availability and cost when choosing which custodian to partner with.

Whichever one you choose, you’ll want to make sure it matches your investment goals and risk tolerance. 

A collector who values the artistic value of a specific piece is going to have different goals than an investor focused on metals as a hedge against inflation.

Segregated storage offers more documentation to prove ownership and ensures you get your exact items back, while non-segregated storage is ideal for cost-effectiveness.

Determining which option is right for you will come down to your own preferences and investment priorities.

Is it better to use non-segregated or segregated storage?

Great job on reading this article on segregated vs. non-segregated storage. You now know some of the key differences between each storage option and are aware of the drawbacks.

You have enough information to make an informed decision for yourself.

Remember, when it comes to investing, there isn’t a one-size-fits-all option. Both segregated and non-segregated storage provide secure, insured, and professionally managed storage for your gold IRA.

It’s up to you to decide whether you want to cut costs or retain ownership of your metals.

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