When considering silver storage there are really only two viable options.
- You store safely at home
- You store in a depository
Why Not Bank Deposit Boxes?
Some people will ask why they shouldn’t store silver in bank deposit boxes. Silver provides a hedge against banking collapse. If the banking system were to fail then the doors of your bank would no doubt be closed for several days, meaning you couldn’t access your possessions. You may even lose your silver altogether (depending on the situation), so therefore it is crucial that you store silver and gold outside the banking system.
Storing in the Home
If you are thinking of storing physical silver at home, you should consider issues such as insurance, secrecy, and the safety of your neighborhood. If you do not feel confident that your house would be a safe option, it might be better to keep your silver outside your home in a secure facility.
Insurance of your silver will not to be too pricey if you are storing in the correct manner. Make sure you go with a company that is reputable and covers precious metals fully. Shop around, read forums and ask your investment friends about the best companies. Above all make sure that you speak to your insurance company and get clarified in writing that they will cover your precious metals. It is best to be very clear so that you don’t get a nasty shock in the case of a robbery.
There are ratings for the security of safes, and you should ensure that you get an appropriate storage safe/vault that is UL-15 or above. It isn’t a good idea to put the silver in a box under the bed. Again speak to your insurance company about the safe that you intend to purchase and make sure that it meets their requirements.
Storing in a Depository
IRA silver must be stored in a registered depository. Some silver purchases are by default held in a depository, such as buying unallocated or allocated silver. There are cost implications of storing in a depository but you can be confident that the precious metal is safe and stored appropriately. More and more people are choosing to hold precious metals in their IRA. It is certainly an interesting option for those that think that silver and gold are going to rise into the future.
Naturally it is not practical to store a lot of silver in your home from a safety or space point of view. If you have a handful of bars then you should have plenty of space and no problem accommodating the silver, but as this gets impractical you will either want to move to a bigger house or keep your silver in a depository.
Reporting and Taxes
Most silver transactions do not require any reporting considerations. Dealers should report cash purchases of over $10,000 value of silver to the IRS, but that is their responsibility, not yours. This stands for purchases over a 24-hour period, or longer periods where the transactions appear to be “related”. The rules are somewhat vague.
Taxes on the purchase of silver will attract the sales tax in many states. This is often around 8.5%, but it is important to investigate the rates in the area that you are looking to purchase. Above a certain threshold the sales tax “kicks out” in many states (normally around $1500). If you buy from an external state by “direct selling” you may not have to pay the sales tax but may have to pay a “use” tax.
Silver is taxed as a collectable in the United States, and therefore is covered by Capital Gains Tax regulations when you sell your silver at a profit. In other countries it is treated differently, for example the UK charges 20% VAT on silver.