The simplistic definition of a depository is that it is a place where anything can be left for safekeeping. The safekeeping of gold, because of its worldwide status as the traditional store of value, is of paramount importance internationally. Again to put it simply, the wealth, importance and influence of a nation can be measured by the amount of gold it owns. Gold is stored in secure vaults located in various centers throughout the world with the US holding, in its three largest storage facilities, more than any other country. It is important to be aware that much of the gold held in the US vaults is the property of other countries but is left in the US for security reasons. The world’s best known gold depository is Fort Knox in Kentucky and is known as The United States Bullion Depository.
Situated very nearly below the World Trade Center in New York is the US Federal Reserve Banks´ vault rumored to be the size of two football pitches. At the time of the 9/11 attack it was at first feared that the Fed vault was the target. One of the rules and regulations of the International Monetary Fund (IMF) states: Gold Depositories of the Fund shall be established in the US, UK, France and India. The gold of the Fund shall be held with the depositories designated by the members in whose territories they are located at places agreed with the Fund. The growing trade in physical gold from hedge funds to private individuals has highlighted the importance of the role of Gold Depositories.
If, as many individual investors are now doing, you are considering trading in gold, it is impractical to collect and privately store the metal in bullion form. Limited quantities of gold coin can be purchased and delivered but secure storage at the buyers home can become a problem, insurance will be an added annual expense and then there are the costs involved when selling and passing on the metal to the buyer. When dealing in physical gold transfers of ownership in any but exceptional circumstances take place by exchange of Depository Receipts. In other words the physical metal stays in the same secure vault before and after the trade with proof of ownership being passed on by paper. It is therefore of importance to deal only in physical gold stored in an Authorized depository where receipts can be relied upon as proof of ownership. If in any doubt check it out. Begin by going online to the depositories website and carry out your due diligence from that starting point. This is big business and as such it is closely regulated so it is unlikely that any problems will be encountered but it never hurts to take the trouble to be on the safe side.
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