How Offshore Banks Handle Precious Metal Storage

Most people imagine precious metal storage as a simple vault and a big door. Offshore banks treat it as a tightly controlled operating system: legal structures to preserve title, logistics networks to move bars safely, accounting to the gram, strict audits, and insurance that’s only as good as the exclusions you negotiate. If you’re considering holding gold, silver, or platinum through an offshore bank, understanding how the machinery works behind the scenes will help you pick the right setup, pay the right price, and avoid the traps that catch even seasoned investors.

Why offshore banks get involved in metals at all

Offshore banks serve two types of precious metal clients: investors seeking diversification and private wealth clients looking for stable, cross-border holdings that sit outside the financial system—but still inside a controlled, auditable framework. Banks fill the gap between retail coin dealers and institutional market makers. They can source Good Delivery bars at institutional spreads, arrange storage in top-tier vaults, and provide liquidity and financing when needed.

Two advantages stand out. First, custody through a bank can bring professional-grade governance—segregation of assets, formal chain-of-custody, regular reconciliations, and audit rights. Second, the bank’s network reduces friction. Need to move bars from London to Zurich, or liquidate 100 kg at the London PM fix with same-day settlement? A bank has the relationships with vault operators, refiners, and carriers to make it routine.

The trade-off is cost and complexity. Bank custody is rarely the cheapest, especially for modest balances, and paperwork is heavier than working with a private vault provider. Offshore also introduces jurisdictional considerations—privacy benefits, yes, but also reporting and sanctions screening that may be stricter than you expect.

What “storage” actually means in bank language

When a bank says it “stores” metals, it could mean three very different things. Your choices here have more impact on risk than the address of the vault.

Allocated vs unallocated

Allocated: Specific bars or coins are held in your name under a bailment agreement. You own identified assets; they don’t sit on the bank’s balance sheet. You should have a bar list with refiner, serial number, weight, and fineness. Best for those prioritizing title and bankruptcy remoteness.

Unallocated: A claim on the bank for a quantity of metal, not specific bars. It sits on the bank’s balance sheet like a deposit; you’re an unsecured creditor. Unallocated is cheap and convenient for trading, but it introduces counterparty risk and typically cannot be audited down to bar numbers because there aren’t any tied to you.

Banks often offer both. Professional practice is to hold a core position allocated and use unallocated only for short-term liquidity or hedging. Basel III made unallocated funding more capital-intensive for banks, nudging many clients toward allocated for longer holds.

Segregated vs allocated omnibus

Allocated storage comes in two flavors:

Segregated (sometimes “allocated segregated”): Your bars sit apart in a bin or shelf unique to you. You can visit (subject to bank policy) and see “your” bars.

Allocated omnibus: Your bars are allocated to you but stored together in a shared location with others. The bar list still identifies your exact bars. This is common; it’s efficient and still preserves title.

If you care about physical access or have unique items (numismatic coins, odd bar sizes), segregated is worth the modest premium and operational clarity.

Bailment, title, and contract language

For allocated storage, the legal relationship is bailment: the bank (or its appointed custodian) holds your property for safekeeping. That differs materially from a deposit or a derivative claim. Look for:

A custody agreement stating you retain legal title at all times.

Explicit prohibition on rehypothecation or lending of your metal.

Your right to withdraw, take delivery, or transfer to another custodian.

Clear description of records, bar list issuance, and audit rights.

If you don’t see those elements, you might be looking at a deposit-like product masquerading as custody.

The infrastructure behind the vault door

Offshore banks rarely own the vault. They contract with professional secure logistics firms and recognized depositories. That nuance matters for insurance, audit, and operational risk.

Vault operators and locations

Common names you’ll see: Brink’s, Loomis, Malca-Amit, G4S (now part of Allied Universal), and specialized facilities like Swiss vaults in Zurich and Geneva, Le Freeport (Singapore), DMCC-approved vaults in Dubai, and LBMA-recognized vaults in London. London is the global hub for wholesale gold; as a reference point, LBMA vaults in London typically report over 8,000 tonnes of gold and tens of thousands of tonnes of silver held for clients—enormous scale that underpins liquidity.

Banks leverage these networks to:

Source Good Delivery bars from approved refiners (PAMP, Metalor, Argor-Heraeus, Valcambi, etc.).

Move metals via armored air freight with customs handling.

Maintain “vault-to-vault” transfer capability, which avoids breaking chain-of-integrity and helps with VAT in some jurisdictions.

Chain-of-integrity and Good Delivery

Good Delivery (LBMA/DMCC/COMEX standards) isn’t just a stamp. It’s a chain-of-custody process that keeps bars within approved handlers to avoid re-assay and discounting. Break the chain by taking delivery at home, and you may face costs and delays to re-enter the institutional market.

Banks protect that chain by:

Taking delivery only from approved refiners and counterparties.

Using tamper-evident seals and custody scans at each handoff.

Recording serial numbers and weights in vault management systems.

Rejecting bars from suspended refiners (e.g., Russian refiners placed on restricted lists since 2022).

Security and controls

Expect multi-layered physical and operational controls:

Dual-control access, biometric entry, time-locked vaults, seismic and acoustic sensors.

24/7 CCTV with time-stamped retention and offsite backup.

Regular inventory reconciliations (daily electronic, monthly physical sampling).

Independent audits: ISAE 3402/SOC 1 Type II reports on controls; occasional client-attended counts for segregated storage.

If a bank can’t provide a recent controls report for its custodians, that’s a red flag.

Insurance—what “all risk” usually covers

The vault’s insurer (often via Lloyd’s market) typically covers “all risk” of physical loss or damage while in the vault, during transit under policy, and sometimes while temporarily out for authorized activities (assay, fabrication). Key points:

Named insured vs. bank’s blanket policy: Ideally, your bank’s policy covers “for and on behalf of its clients” with clear wording.

Sublimits: There are often per-location and per-event caps; confirm your holdings fit comfortably below them.

Exclusions: War and nuclear exclusions are standard; “mysterious disappearance” may require stringent proof. Cyber-triggered losses may be ambiguous unless addressed.

Valuation basis: Settlement often uses the LBMA fix (AM/PM) or spot at the date of loss. Clarify whether premiums paid on coins are covered.

Ask for a certificate of insurance or a letter of assurance from the bank detailing scope, carriers, and limits.

Jurisdictions and their legal character

The “offshore” label covers a spectrum. The right jurisdiction balances legal certainty, logistics, and your personal tax and reporting situation.

Switzerland: A mature metals hub with strong private property protections and well-developed private banking. Custody assets are segregated from the bank’s estate under Swiss law. Access to top-tier refiners and multiple vaults in Zurich and Geneva. FINMA supervises banks; physical custody agreements are standard. A favored choice for gold.

Singapore: MAS-regulated banking sector, robust rule of law, and a growing bullion market. Investment-grade gold is GST-exempt; silver is not, unless stored in bonded/freeport facilities where GST is suspended. Top-quality vault infrastructure and strong logistics to Asia-Pacific.

Liechtenstein/Luxembourg: Popular for structured wealth planning and private vaults. Banks often use Swiss or local vaults. Solid EU/EEA access (Luxembourg) and asset protection frameworks.

Channel Islands/Cayman: Often used for fund structures and custodians; less common as primary metals trading hubs but viable for custody via global vault networks.

Dubai (DMCC): Rapidly expanding bullion center with good delivery standards and a strategic location between Europe and Asia. Check sanction screening policies carefully and your own comfort with regional geopolitical risk.

Hong Kong: Excellent logistics and proximity to China’s demand centers. Political risk perceptions have shifted; policies and counterparties must be vetted with a sharper lens.

No jurisdiction eliminates the need to comply with your home-country reporting, nor does it automatically improve privacy in the era of CRS/FATCA. The legal framework mainly affects title certainty, court efficiency, and practical access to markets.

How banks source, store, and record your metal

Here’s the lifecycle a bank typically follows.

Sourcing and settlement

Price discovery: Banks quote off live OTC prices with a dealing spread. For institutional-sized gold (e.g., 400 oz bars), spreads can be 10–40 bps; for kilobars, 20–80 bps plus fabrication premiums (which vary with market conditions).

Refiners and bars: Banks prefer recently minted bars from LBMA Good Delivery refiners. They’ll avoid bars from sanctioned or suspended refiners.

Settlement: Trades settle T+0 to T+2 in major currencies. You fund cash first; the bank allocates metal to you once the deal is confirmed.

Booking and bar lists

Recording: In allocated storage, your custodian issues a bar list detailing serial numbers, refiner, gross and fine weight, and fineness.

Reconciliation: The bank’s custody system matches trade confirmations with custodian records daily. Variances trigger investigation and, if needed, physical counts.

Statements: Expect monthly or quarterly statements listing holdings, location, and valuation. You can request bar lists on demand.

Audits and surprise counts

Banks engage external auditors to test controls and occasionally conduct surprise counts, especially on segregated holdings. Client-attended inspections are possible but must be scheduled and are often charged per hour, with strict rules on handling.

What it costs—realistic pricing

Fees vary by bank, location, and balance. Typical ranges (industry ballpark, not quotes):

Storage (allocated gold): 0.25%–0.60% per year, often with an annual minimum (e.g., $300–$1,000).

Storage (silver): 0.50%–1.20% per year due to bulkier volume and higher insurance costs.

Platinum/palladium: Usually 0.40%–0.80% per year.

Handling/transaction fees: 5–20 bps per in/out movement, or flat fees per bar/lot.

Insurance: Often included in storage; some banks show it as a separate 5–15 bps line item.

Delivery/shipping: Vault-to-vault transfers can run 10–40 bps all-in for moderate sizes, with minimums (e.g., $500–$2,000), plus customs paperwork.

Buy/sell spreads: As low as 10–25 bps for 400 oz gold bars, 20–60 bps for kilobars depending on market tightness. Silver premiums can be wider and more volatile.

Example: Holding 50 kg of gold (approx. $3.5m at $2,200/oz) at 0.35% p.a. would cost about $12,250/year in storage, plus occasional handling fees for movements. Selling later might cost 15 bps on the way out ($5,250) if liquidity is normal.

Liquidity and financing options

One benefit of bank custody is the ability to act quickly and unlock funding if needed.

Selling and settlement

Execution: You can sell allocated bars without physically moving them first; the bank books them to its dealing desk, confirms the order, and settles cash T+0/T+1 to your account.

Partial sales: Easy with 400 oz bars if you also hold smaller bars; otherwise, you may need to swap a large bar for smaller units to match the sale size, incurring a fabrication/handling fee.

Timeline: For standard sizes and locations (London/Zurich/Singapore), same-day trade and next-day value are common.

Lending against bullion

Lombard loans: Banks lend against allocated gold with loan-to-value (LTV) typically 50%–80% depending on volatility, client risk, and bar quality. Silver’s LTV is lower (30%–60%).

Haircuts and margining: Expect a dynamic haircut that can widen in stressed markets. Margin calls are possible; interest rates track benchmark plus a spread.

Pledge mechanics: Your bars are pledged under a security interest; title remains with you unless you default. Ensure the pledge language doesn’t allow rehypothecation.

Financing can make metals a productive collateral pool, but beware procyclicality—prices drop, margin calls arrive, forced sales lock in losses.

Moving metal between locations

There are two ways to move metals offshore and across borders without headaches.

Vault-to-vault transfers

The cleanest method is an in-system transfer:

Bank instructs current custodian to transfer specific bars to a new custodian within the approved network.

Chain-of-integrity remains intact; no customs clearing into free circulation, so taxes like VAT often don’t arise for investment gold.

Costs are lower, and the process can complete in days rather than weeks.

Physical export/import

If metal must cross borders into free circulation:

Export permits and customs paperwork are required. Many countries treat investment gold differently from silver/platinum for tax.

GST/VAT: Investment-grade gold is often VAT-exempt; silver usually isn’t. Storing silver in bonded warehouses can suspend VAT until it enters the local market.

Insurance during transit: Confirm policy coverage for “out-of-vault” risk with clear declared value and routing.

A good bank will propose the vault-to-vault path whenever possible to reduce friction.

Compliance, sourcing, and reporting

Banks operate under tight compliance frameworks. Expect it, plan for it, and you’ll save time.

KYC/AML: Source-of-funds and source-of-wealth checks apply, especially for large purchases. Provenance of any client-supplied bars will be scrutinized and often rejected without clear documentation.

Responsible sourcing: Banks align with LBMA’s Responsible Gold Guidance and the OECD Due Diligence Guidance. They avoid bars from high-risk or sanctioned regions and perform refiner-level due diligence.

Sanctions: Since 2022, many banks will not accept bars from Russian refiners and may decline older bars associated with suspended entities, even if legally tradable, to avoid compliance risk.

CRS/FATCA: Metals held via a bank custody account are generally reportable financial assets. Expect your holdings’ value and income to be reported to tax authorities via the bank’s normal protocols.

Tax: Offshore storage doesn’t change your domestic tax obligations on gains or wealth tax where applicable. Get advice tailored to your jurisdiction, especially regarding FBAR/8938 in the U.S. and VAT/GST on non-gold metals.

Risk management and worst-case thinking

Holding metal at a bank offloads much operational burden, but you still own the risk oversight.

Counterparty risk: Allocated metal minimizes bank credit exposure, but you still rely on the custodian and sub-custodians. Review diversification by location and provider if holdings are large.

Legal risk: Ensure bailment terms are airtight and governed by a jurisdiction you trust. Confirm that in insolvency, your assets are segregated and returnable without set-off.

Insurance gaps: The word “insured” means little without specifics. Ask for limits, exclusions, and valuation basis. Confirm coverage during transit, audit visits, or temporary relocation for assay.

Operational risk: Demand regular bar lists, reconcile statements, and use test transfers for larger positions to confirm processes. Consider a right-to-audit clause or at least the ability to attend a count.

Political risk: Sanctions, capital controls, or sudden policy shifts can affect movement and liquidity. Diversify jurisdictions if size warrants it.

A practical stress test: If your primary vault closed for 60 days, could you access liquidity via a second location or a line of credit? Design for that.

Common mistakes—and how to avoid them

Confusing “segregated” with “allocated”: Some providers use the term loosely. Ask for a bar list with serial numbers and legal title language.

Assuming safe deposit boxes equal custody: A bank’s safe deposit box is private, yes, but contents usually aren’t insured by the bank and aren’t in the bank’s inventories. Liquidity is worse, and access can be limited in crises. Use boxes for collectibles, not your primary bullion.

Ignoring VAT/GST on silver and platinum: Many investors discover the tax only at import. Use bonded storage or choose jurisdictions with suspended tax mechanisms.

Accepting vague insurance: Get evidence of coverage, not just marketing lines. Insist on specifics.

Overpaying on spreads: Compare dealer quotes with bank quotes. For standard bars, spreads should be tight. If you see >1% on institutional-sized gold, dig into the fee stack.

Overusing unallocated accounts: They’re fine for short-term trades, but not for long term “safety.” Move core positions to allocated.

Forgetting exit costs: Fabrication to swap bar sizes, delivery fees, and handling on exit add up. Model total lifecycle costs.

Bringing home the bars: Taking physical delivery often breaks chain-of-integrity, complicates resale, and pushes you into retail spreads and security headaches at home.

Poor documentation: Keep copies of contracts, bar lists, and statements. If you ever transfer or sell, clean paperwork saves time and money.

No estate plan: Cross-border assets can get stuck in probate. Align titling and beneficiaries with your plan, and ensure heirs know the bank contact.

Step-by-step: setting up allocated storage with an offshore bank

1) Define your objective

Are you hedging currency risk, seeking an insurance asset, or looking for collateral to borrow against? Objective determines bar size, location, and whether financing makes sense.

2) Choose jurisdiction and bank

Shortlist 2–3 banks with metals desks in Switzerland or Singapore if you value liquidity and strong custody infrastructure. Confirm they offer allocated storage with bar lists and external audits.

3) Open the account

Prepare KYC: notarized ID, proof of address, source-of-wealth narrative, and bank statements. For entities, add corporate documents and ownership charts.

4) Select custody type and location

Opt for allocated (segregated or omnibus) with a major custodian. Decide on Zurich, London, or Singapore based on your time zone, currency exposures, and VAT/GST implications for non-gold metals.

5) Agree fees in writing

Storage rate, minimum annual fee, handling fees, buy/sell spreads, insurance specifics, and delivery/transfer costs. Ask for a one-page fee schedule.

6) Execute the purchase

Fund the account. Place an order during market hours with a not-to-exceed spread. For larger tickets, request competitive quotes from two dealers via the bank, if allowed.

7) Verify allocation

Within 1–3 business days, obtain your bar list and confirm serial numbers match your statement. File documents securely.

8) Test operational flows

Do a small intra-vault transfer or partial sale to validate timelines, fees, and reporting. Small dry runs reveal friction points.

9) Set monitoring and audit cadence

Quarterly statements, annual bar list refresh, and request the vault’s latest controls report. For large holdings, schedule a client-attended inspection every couple of years.

10) Prepare exit and contingency

Pre-authorize a secondary vault location or a credit line secured by your bullion. Maintain instructions for heirs and trusted advisors.

Case studies (composite examples)

The 50 kg Zurich allocation

A family office wants a $3.5m gold allocation in Zurich, with potential to borrow against it. They opt for five 400 oz bars (~62.2 kg), then swap one 400 oz bar into kilobars to allow partial liquidity without slicing up large bars. Purchase spread is 20 bps, fabrication for the kilobars adds 15 bps, and storage is 0.32% p.a. Financing terms offered: 65% LTV at SOFR + 2.25%, callable if gold drops more than 15% from the entry price.

Within two days, the bank provides the bar list. The family office requests a test sale of 10 kg from the kilobar tranche—fills at 15 bps spread, settles T+1, confirming desk responsiveness. They park documents in a shared vault of records with their trustees, and add a second storage location in Singapore as a contingency, transferring one 400 oz bar vault-to-vault at a cost of 18 bps.

The SME hedger moves from unallocated to allocated

A mid-sized electronics firm used unallocated silver to hedge quarterly needs because it was cheap and flexible. After reviewing counterparty risk, they migrate 20 tonnes to allocated bonded storage in Singapore to suspend GST and tighten insurance. Their storage cost rises from 0.25% to 0.70% p.a., but they eliminate unsecured credit exposure to the bank and improve auditability for their own auditors. They retain a small unallocated buffer for weekly purchases and roll overs. Timing transactions around inventory counts avoids extra handling fees, and the improved documentation helps their external audit close faster.

Frequently debated questions

Are safe deposit boxes a good alternative?

Boxes provide privacy and can be inexpensive, but banks usually don’t insure contents, and you lose market liquidity benefits. In some jurisdictions, box access has been restricted during emergencies. For institutional-grade bullion, bank custody with allocated bar lists offers better control and exit options.

Coins or bars?

Bars are more efficient for storage and spreads; coins carry higher premiums but are useful for small, private holdings. For bank custody, stick to Good Delivery bars or kilobars from top refiners. If you store coins, verify how grading and numismatic value are treated in insurance—often only metal value is covered.

Is silver worth storing offshore?

It can be, but costs and taxes bite. Silver takes up ~80x the volume of gold for the same value, raising storage and insurance costs. GST/VAT exposure is common. Using bonded storage in a low-friction logistics hub helps. If your allocation is small, consider whether ETFs or futures-based hedges better fit your objectives.

Does offshore custody improve privacy?

You gain professional custody and geographic diversification, not secrecy. Banks follow CRS/FATCA and AML rules. If privacy is a priority, discuss entity structures and reporting with counsel; don’t rely on myths.

Can I visit my bars?

Often yes for segregated storage; less common for omnibus allocation. Visits require advance scheduling, ID, and fees. Touching or moving bars may void certain insurance protections during the visit; most facilities allow viewing, not handling.

Due diligence checklist for choosing an offshore bank and storage setup

Legal: Is the arrangement a bailment with explicit title retention? Governing law? Insolvency treatment of custody assets?

Allocation: Allocated vs unallocated clarity; segregated vs omnibus; bar list availability and frequency.

Vaults: Which operators and locations? Controls reports (ISAE 3402/SOC 1)? Chain-of-integrity procedures?

Insurance: Named insured, limits per location, exclusions, valuation basis, transit coverage.

Fees: Storage rate, minimums, buy/sell spreads, handling fees, delivery and transfer costs, audit visit fees.

Sourcing: Approved refiners list, sanctions policies, responsible sourcing alignment with LBMA/OECD.

Operations: Settlement timelines, statement detail, client portal, ability to attend counts or request third-party verification.

Financing: LTV, margins, rehypothecation prohibitions, default procedures, and cure periods.

Tax/reporting: Bank’s CRS/FATCA processes, VAT/GST implications, and your domestic tax treatment.

Exit: Liquidity in your chosen location, ability to transfer vault-to-vault, and typical timeframes under stress.

Practical tips from the field

Use standard bar sizes unless you have a compelling reason. Liquidity and spreads are better.

Ask for two quotes on large trades. Even within one bank, different dealers may match a tighter market.

Keep silver in bonded storage if you need it. Paying VAT/GST to bring it into free circulation rarely makes sense unless you’ll consume it in manufacturing.

Request a sample statement and bar list before you commit. Format and detail vary more than you’d think.

Don’t ignore operational minutiae. Misspelled refiner names or mismatched bar weights on paperwork can later delay transfers.

How banks handle shocks

During market stress—flash crashes, airline groundings, or geopolitical events—offshore banks lean on redundancy:

Multiple vaults per region, with fallback routing through alternate airports.

Increased haircuts on collateral and temporarily wider dealing spreads.

Prioritization of vault-to-vault transfers over physical exports.

Tighter compliance screens on origin bars and counterparties.

Clients who have pre-arranged secondary locations and who understand that spreads will widen briefly fare best. If your plan assumes perfect logistics, it’s not a plan.

Wrapping it up: the mental model that works

Think of offshore bank metal storage as three layers working in sync: 1) Legal: Bailment and title that make your metal bankruptcy-remote and verifiable. 2) Operational: Vaults, bar lists, audits, and insurance that keep the physical reality aligned with the records. 3) Market: Sourcing, liquidity, and financing that let you move, sell, or borrow against your metal with minimal friction.

Get those layers right, and offshore storage becomes a robust, boring part of your wealth plan—the good kind of boring. Focus on allocation structure over marketing gloss, read the custody contract, insist on transparent fees and insurance, and test the operational plumbing before you need it. That’s how professionals do it, and it’s how you turn a heavy, shiny asset into a light, flexible tool.