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Risks of Having 'Unallocated Storage' in IRAs

By Patrick Heller 

Virtually all Americans who have self-directed Precious Metals Individual Retirement Accounts (IRAs) have chosen the less expensive form of “unallocated storage” in vaults for their holdings in these IRAs.


As we learned during the bankruptcy of MF Global during the Great Recession, unallocated storage means you don’t own real gold and silver. In unallocated storage, you have a claim against the assets of the operator of the storage vault, who is the party who has title to the gold and silver that you think you own. The assets titled to the vault operator are subject to third-party claims. There is also a great risk that the gold and silver inventory may be subject to claims by multiple owners (some analysts project as many as 100 claims for each ounce), some of whom may have pledged the gold and silver as collateral for loans they may not be able to repay.

With some professional money managers converting their paper gold and silver assets into physical, the risks of you ending up not owning any gold or silver in your Precious Metals IRAs using unallocated storage are rising. If you cannot get your metal, you may be forced to settle for cash. Or, if the vault operator such as MF Global is in bankruptcy, you may receive little or nothing.

If you have a Precious Metals IRA using unallocated storage, you can take at least two actions to protect yourself. The first option is to convert to “segregated storage.” This costs more because specific inventory is set aside (segregated) for you alone. We are aware that at least one vault operator that stores Precious Metals IRA assets will put your gold into segregated storage, but does not offer this option for your silver. Once in segregated storage, you have title to specific assets. They are your assets, not that of the vault operator. While this is an improvement, there were people in the MF Global bankruptcy who did not receive all of their precious metals in segregated storage.

Option two is to get delivery of your metals into your direct custody. This would be considered a distribution of your account, meaning you would have to pay income and possibly excise taxes on the current value of what you receive. Plus, you will have to pay shipping charges. Before going this route, be sure to check with your financial and tax advisors. Even if you have to pay these taxes and costs, it may still be worth it.

Since many other coin dealers have a high volume of their sales made to Precious Metals IRA accounts, don’t expect them to necessarily be familiar with or give you straight answers about the risks of losing your holdings.

With a flurry of activity underway to convert paper gold and silver into physical form, you may have little time to protect your assets. If you don’t own physical gold and silver that is in your direct custody or stored in a safe deposit box or segregated vault under your own name and title, you don’t own gold or silver!

Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award 2012 Harry Forman National Dealer of the Year Award, and 2008 Presidential Award winner. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2019), Professional Numismatists Guild, Industry Council for Tangible Assets, and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio and text archives posted at