Taking advantage of the secure nature of storage facilities, U.S. foreign investors in precious gold and silver have begun to use storage facilities as giant safes. On Monday, Oct. 18, 2010, Kitco Metals, one of the world’s premier retailers of precious metals, announced that it will soon be offering a gold and silver storage program in Canada to its investors. Kitco had previously opened gold and silver storage facilities in the United States and Asia. Opening the new program in Canada is part of Kitco's strategy of geographical diversification, which means distributing holdings across different physical locations.
Kitco offers a complete line of bullion bars and coins to investors who are interested in precious metals, and the minimum amount for opening an allocated storage account is $25,000.
Previously, it was common for investors in precious metals to store their own gold and silver in a personal safety deposit box located at a bank. But the process of moving a precious metal to an individual's safety deposit box could take between two and five business days, according to Peter Hug, Kitco Director of Investments, who was quoted on the website Money on October 18. Hug noted that because the market prices for precious metals change daily, a time lag of several days in moving a metal could cause an investor to lose money. Storing metals at a facility dedicated to that purpose can reduce the time involved in transferring the metals, saving the investor from that potential loss.
Kitco also expects to open a precious metals storage facility in Hong Kong by the end of November.
Kitco is not the only company to offer a precious metals storage program to its investors. JP Morgan currently operates a storage facility in Manhattan. HSBC, Bank of Nova Scotia and the Federal Reserve of New York also store gold in the facility. JP Morgan recently completed construction of a storage facility in Singapore.
During the last 18 months, investors have requested 2,789 tons of gold, causing what analysts are calling a new "gold rush." The jewelry sector followed up with 2,667 tons. Banks are again in need of storage space.
As demand continues to rise, more and more space will be needed for the small investor, as well as the large investor. And as banks look for solutions, storage facilities are high on their list.
Sources used:
"Kitco Introduces Canada’s First Allocated Storage Program for Gold and Silver," CNBC, Oct.18, 2010, PR Newswire, Oct. 18, 2010.
"Kitco to Offer Storage of Bullion in Canada," Money, Oct.18, 2010.
"Banks Have No More Storage Spaces for Investments in Gold," Metrolic, Oct. 18, 2010.