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Bloomberg: Hide Your Gold

"...Dig a hole in the ground four feet deep, pack gold and silver in a piece of plastic PVC pipe, seal it, and bury it."

A recession in the U.S., the eurozone crisis, protesters on Wall Street, the Arab Spring, etc.

With all of these dark portents of things to come, is it really surprising that one of the most discussed topics on Bloomberg this month was titled Hiding Gold in All the Unusual Places?

Bloomberg's Ben Steverman writes:

If you’re looking for a safe place to put your investments, Chad Venzke has a suggestion: Dig a hole in the ground four feet deep, pack gold and silver in a piece of plastic PVC pipe, seal it, and bury it.

Venzke is hardly the only investor who wants his precious metals nearby at all times. A pound of gold worth about $24,000 can easily fit in a pocket; how to protect it is a decision that carries expensive consequences. Do-it-yourself investors who don't trust banks must find creative storage options, whether burying gold in the yard, submerging it in a koi pond, stashing it behind air-conditioning ducts, or placing it under carpets.

And there is more than just a general distrust of banks that would make an investor leery of entrusting their precious metals to anyone but themselves:

Indeed, as Venezuela is about to reclaim possession of its tons of gold from UK vaults, even as the Dutch central bank proudly admit to hiding its own gold in precisely the same venues that are no longer good enough even for Chavez, the topic of where one should hide their physical is rapidly becoming a very incendiary.

One thing is certain: among the hard-core "physical" community, the idea of storing it in the same banking system that would be insolvent once the fiat status quo collapses, is verboten anathema. So what are the options?

Bloomberg continues.

[T]here are growing piles of precious metals in, under, or near American homes. From mid-2010 to mid-2011, U.S. investors bought up more than 100 tonnes of physical gold coins and bars, up from 15.2 tonnes in 2007, according to the World Gold Council . . .

The notion of keeping one’s gold in a safety deposit box—inside the banks many gold aficionados find so untrustworthy—is anathema to many gold bugs. Venzke, who predicts "runaway inflation" and a crisis leading to a "new form of currency within this decade," worries that the boxes won't be accessible if banks shut down in a crisis. "How are you supposed to get your stuff out of there?" he asks.

For those storing gold and silver in or around their home, the most immediate danger isn’t a crisis or a dip in metal prices. It’s theft. The FBI, which tallies the theft of precious metals and jewelry in one category, says $1.6 billion was stolen in 2010, up 51 percent from 2005. Just 4.2 percent of the lost loot was recovered last year.

Metal detectors are a big worry. Basic detectors can find metal on the surface or in the first 12 inches to 14 inches below ground, depending on soil conditions, says Louis Mahnken Jr., a sales representative for Kellyco Metal Detectors in Winter Springs, Fla. That’s why Venzke advises burying it at least four feet deep. There are online debates about the best way to frustrate such thieves, including using scrap metal as decoys or hiding metal by covering it underground with asbestos or mirrors.

Metal owners also use the "hiding in plain sight" maneuver. According to dealers, some customers buy 100-oz. silver bars, paint them black, and use them as doorstops. That's foolish, says Steven Ellsworth, a coin dealer in Clifton, Va., who teaches security classes for the American Numismatic Assn.

Safes can certainly deter thieves. Yet an inexpensive fire safe may be exactly the wrong place to put your valuables. Richard Krasilovsky, president of Empire Safe, calls such safes "handy carrying cases for burglars." A fire safe is designed to protect papers from fire, not from intruders, says Ryan Smith, a senior product manager at SentrySafe. "It wouldn’t be wise to put any more than $20,000 of valuables in our products," he says.

Yet, writes Zero Hedge, as many of the more pragmatic survivalists have pointed out, in a game of rock, gold or lead, it is the latter that usually wins:

[W]hether gold is buried, put in a safe, or hidden under your bed, there’s nothing to stop a determined person with a gun from making you show them where you put it. That’s why it’s important no one ever know you have gold in the first place. Krasilovsky’s company will deliver safes in the middle of the night, installing them where no one, including a contractor, is likely to stumble across them.

"People have to be extraordinarily secretive," Krasilovsky says. This secrecy keeps away not only thieves but also prying relatives and the tax man. "One of the benefits of owning precious metals is nobody knows you own it," Venzke says. "It’s the most private investment you can make."

Practical advice or worrying too much? Recent trends seem to lean in favor of the former rather than the latter.

One last thing…
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