The cost of storage: allocated versus unallocated
Custody is quoted as one number and billed as four. Here is how to reconstruct the real figure before you commit metal to a vault.
01The four components
A published storage rate almost always covers vaulting and basic insurance. It rarely covers everything you will actually be charged.
- Vault fee — the headline annual percentage, often with a monthly minimum
- Insurance — sometimes bundled, sometimes a separate 0.02–0.05%
- Audit and reporting — bar-list access and independent audits may be tiered
- Withdrawal and fabrication — the largest single charge, and the least advertised
02Minimums distort small accounts
A 0.12% annual rate with a $4 monthly minimum is 0.12% on a $50,000 holding and 4.8% on a $1,000 holding. For monthly savers in the first two years of a plan, the minimum is frequently the dominant cost in the entire structure.
Our savings-plan calculator applies the fee in metal, annually, so the compounding drag is visible over the full horizon rather than hidden in a footnote.
03Exit is where the money is
Taking delivery converts a pooled or allocated claim into specific bars, which means fabrication, assay, insured shipping and often a re-entry spread if you later sell back. Budget 1–3% for a physical exit, and check whether the provider will settle in cash at the same spread they quoted on entry.
A provider with a 0.40% premium and a punitive exit is more expensive than one at 0.90% with settlement at spot, for any plan that ends in a sale.
04Fees are quoted on three different bases
A quoted storage percentage is meaningless until you know what it is charged on. Three bases are in common use: the market value of the holding, the weight held, or a flat account fee irrespective of size. Value-based fees rise with the gold price, which means your cost grows in exactly the scenario you bought the metal for. Weight-based fees are indifferent to price and therefore far more predictable over a decade.
Flat account fees are the most punishing at small size and the cheapest at large size, which is why platforms that use them tend to also set high minimums. When you compare two tariffs, convert both into cost per gram per year at your actual holding size before drawing any conclusion.
- Value-based: cost compounds with the gold price
- Weight-based: predictable, and cheaper in a rising market
- Flat account fee: only competitive above a size threshold
05Insurance is part of custody, and it is not automatic
‘Fully insured vaulting’ is a phrase, not a specification. The questions that determine whether it is worth anything are who the underwriter is, whether the policy covers full replacement value or a capped sum per account, whether it covers employee infidelity and mysterious disappearance as well as physical loss, and whether the policy is held by the vault operator or the platform.
A platform that will name its underwriter and describe its cover in writing is materially different from one that shows a padlock icon. This is a document request, and a reluctance to answer it is itself an answer.
06Modelling ten years honestly
Take a 5,000 unit starting position and a monthly contribution. Apply the entry premium to every contribution, then deduct the annual custody charge monthly on the whole holding — which is how vaults actually bill — and finally apply the realistic exit cost you would face on the way out. That last step is the one most consumer calculators skip, and it is frequently larger than a year of storage.
Do this twice for the two platforms you are choosing between, and the answer usually stops being close. Our savings-plan model applies exactly this order of operations so that a low headline premium with a high recurring fee cannot flatter itself.
- Premium on every contribution, not just the first
- Custody deducted monthly on the whole holding
- Exit spread and any fabrication or delivery fee at the end
- Compare total cost per gram accumulated, not headline percentages
