What is Depository?
hird-party storage facility where precious metal bullion is managed and stored. There are two types of storage: segregated and non-segregated storage. Segregated storage has gold separated by its account owner. Non-segregated storage is held in a communal area where all bullion is stored.
For investors and bouillon collectors, there are many advantages in choosing a precious metal depository instead of keeping/storing bullion themselves. First is the added security of choosing an institution. Precious Metal Depositories have advanced security protocols and regulatory services to ensure that clients’ bullion and metal deposits are protected, and to secure loss prevention. These security protocols include armed security, on-site electronic monitoring, regular accounting and auditing, and reporting. Most depositories are also temperature controlled to ensure that the bullion is never subjected to temperatures that would lead to the degradation of the metal.
Second, precious metal depositories offer insurance which gives depositors security that a loss of their deposit will be compensated. Many of these insurance policies include monetary reimbursement if there is any loss or damage to their assets.
Depositories are subject to oversight because of the wealth they hold. However, only a few depositories are endorsed by the IRS they include:
- Brinks Global Services with global depositories in New York and London
- HSBC Bank one of the largest precious metal depositories in the world
- JP Morgan Global Metals with global depositories in New York, London, and Singapore
- Scotiabank-ScotiaMocatta Depository provides 24-hour global coverage of the precious metal market, and CNT Depository the largest provider of raw gold to the Fed.
Depositories can also be organizations that hold financial assets and facilitate trading. A depository is required to safeguard the deposited asset and return it in good condition upon request by the requestor. Depositories can use money assets deposited to lend to others and to invest in other assets.
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