HELP! Advice on private vaulting services?

[Variable81]

Hello TAE’ers,

I think I asked this before but never really got a lot of responses… hoping the second time will be more fruitful?

I know the TAE staff have emphasized that one has to be *clever* in stashing one’s money outside of the bank, and that it defeats the purpose of talking about these secret stashes here on the Internet. But one potential option that I think could be openly discussed is private vaulting services / safety deposit box (SDB) services.

I’ve been in touch with a few companies here in Canada and it seems that many are contemplating or have gotten into SDB services. I can only speculate, but perhaps the demand for SDB services outside of (risky?) banks is growing within the “smart money” community.

From what I’ve gathered the SDB would be under lock & key with armed guards patrolling the facility day & night (these are security companies after all – they do armoured car deliveries!), so seems pretty secure to me. And unlike banks, if the security company decides to up and poach my cash at least I can turn to the government/legal system for assistance… in the cash of banks who snatch our deposits (see Cyprus), I don’t know who I could turn to for help in that situation.

The downside?
Well, the amount a security company will hold in the SDB is typically only $100k as they have to insure the contents. Also, they charge a nominal fee for SDB services. For the sake of simplicity, let’s say it’s 1% of the holdings per year (which isn’t far off if you’ve got $50k or less in the SDB for the year).

The way I see it is that I can make 1% on crappy interest rates the banks would offer (no way I’m gambling in the markets, thanks!), or I can pay 1% to a security company to hold onto physical cash for me under lock & key. In my mind, the 2% loss on my money (not to mention the losses we all incur in a world of growth-at-all-costs QE) still seems like a better bet than risking all my capital in the banks (or risking capital controls like Cyprus saw where I can only withdraw $100 – $300 per day).

Hopefully you ever-intelligent and thoughtful TAE’ers can offer some insight to this arrangement and help me validate or discredit the assumptions I’ve made above.

Cheers!

[bluebird]

FWIW, it is not the amount that can be earned in interest, it is saving the principal. Divide up the principal and spread it around to several banks and/or credit unions, and a few secure places in your home.

[Variable81]

Bluebird,

Agree it’s not about the amount that can be earned in interest – I’m willing to forego those “gains” to preserve my principal.

However, what would the benefit be of spreading the principal around many banks if my concern is that all banks are running the risk of systemic failure?

Being able to take $100 – $300 per day out of 7 banks vs. 1 is better I suppose, but I’m more interested in vaulting as a solution so I can access large sums ($10k+) all at once should the need arise.

Cheers,
-Variable

[bluebird]

Variable – How does one use the private vault service? I assume you take cash to store in their vault. The idea sounds plausible. But how close is the vault to where you live? Can you walk to the vault to retrieve your money? If the vault were far away, what if there is no gas to drive or fly there, or for them to deliver your cash to you via armored vehicle? Just thinking, I’ll need to read more about this alternative service.

[Raúl Ilargi Meijer]

V81,

I don’t know much about such services, but it looks ans smells to me like a bank, building, vaults, security, safe deposit lockers, only with most other services stripped. And it seems entirely possible that a government can simply move in and take all contents in the vaults and lockers. They have from banks in the past, so why not from private vaults?? Easy pickings, methinks. Unless your locker’s in the Bahamas or Luxembourg, maybe, but then you’d need to be there too. The close to your chest the better.

[Variable81]

@bluebird,

Ideally it would be within driving distance. If it gets to the point there is no fuel left to buy I don’t know how acceptable paper currency would be (i.e. sounds like a Mad Max scenario).

Delivery by armoured vehicle is possible, though not without additional cost.

@Ilargi,

Appreciate your insight.

I suspect you are correct that eventually even vaults would be claimed by the Powers That Be. However, do you not think it plausible that the wealthy would hide their wealth in vaults while the average man who keeps his wealth in the bank is fleeced (first, anyway)?

It was my assumption that, at least for a short time, storing large amounts of cash (upwards of $100k) in a vault may provide more flexibility than the bank. In the event of a bank run, people would be lining up to get what little they can from the banks while the wealthy would be cleaning out their vaults. Seems like a better option for only a small fee.

I recognize the value in keeping money close to your chest, but surely you and Nicole must recognize the risks involved in having six figures worth of cash in your home…

Again, this strategy is only meant to give me a short window to gain access to my cash that most bank depositors will not have in a Cyprus-like event or systemic banking collapse. But perhaps I’m off the mark here on this one?

Any additional thoughts/suggestions you could provide would be greatly appreciated.

[skipbreakfast]

I think private vaults certainly have their place in diversifying your savings against risk. The key for me is diversify liquid holdings wherever possible. I wouldn’t trust all of my savings in a vault, just as I would not trust all of my savings being in any one place anywhere.

Vaults do get robbed. Vaults do get robbed by insiders/operators–or so I’m told. I can’t refer you to any historical accounts of such crimes, but it definitely stands to reason that vault operators can get desperate and greedy, like anyone else. In a systemic collapse, I don’t think vaults will be exempt from plundering. Perhaps they’d offer you more time to withdraw your savings than a bank holiday, though.

Insurance is only worth something if the system is still intact and functional. If it even gets precarious, I wouldn’t trust insurers to compensate you for a vault loss.

The critical thing to remember is that risk is everywhere. And vaults won’t be immune to theft or confiscation. Neither is your mattress though. So I agree that private vaults are one more way to spread some of your risk around.

[Variable81]

Skip,

My thoughts exactly.
Just like CDIC insurance on my bank accounts, I only expect it to be effective should one bank collapse due to mismanagement / fraud. In a systemic collapse, as Nicole has said many times before, it won’t be worth the paper it’s printed on.

Insurance on the vault would, in my mind, be the same. If the vaulting company (which in this case is also a huge security company that provides armed guards and armoured truck services) were to go belly up and all else stayed the same, I would expect for the insurance to kick in.

The moment the system starts to fall apart however, it’s off to the vault to get everything out. Figure it would be better (safer?) to stand in line at a vault than at a bank?

Cheers.

[gurusid]

Hi V81,

The thing is, is if TSHF big stylee what use is any of this cash going to be? As Dmitir Orlov succinctly puts it in one of his posts:

Friday, April 01, 2011
Financial Totalitarianism

A particularly annoying question I am often asked and have come to hate is: “How do I invest my money for it to survive financial, political and commercial collapse?” The short answer is: “Nohow. Money will not survive collapse; not yours, not anyone else’s.” But that answer is not acceptable, because accepting it would require a profound loss of faith—faith in money, a profound Götterdämmerung for a civilization based on the worship of money.

You would be far better off spending it now to at least build some sort of resilience: move to a property with some land, learn how to grow food/raise livestock, get the property as low maintenance as possible in terms of needing heat and power by for instance super insulating and fitting things like solar hot water and standalone PV with battery storage. Build up a local network of both knowledge (like R.J.Garner’s The Grafters Handbook) and knowledgeable people who are aware of the score. All this takes money, and is in my view money well spent (if you have it). If you’re still into vaults then build your own in the basement to protect these things, along with a good supply of vodka, that again as Dmitri shows supplants cash as legal tender – or Jack Daniels. Keep it quite too, or you might need an AK47 to defend it.

But the best course of action is to get out of the money delusion and find yourself another measure of value, this will prepare you psychologically before its too late…

L,
Sid.

[Variable81]

Gurusid,

Thanks for the response.
I agree that in a Mad Max style collapse money wouldn’t be worth much, if anything. But I try to avoid assuming the collapse will be that bad… even if it goes get to that point I would assume it would be gradual and not overnight, thus a window to spend that cash should hope full exist.

That being said I agree with all your advice on preparing now.
I’m doing everything I can to get my hands on supplies, hard goods, knowledge, etc.

The land is a problem at the moment – hoping the Canadian housing market will soften up very soon. And as for social networks, its basically only immediate family as everyone else who I talk to about this kind of stuff thinks I’m nuts!

Cheers.

[skipbreakfast]

I tend to side a bit more with your outlook, Variable. While I think collapse can and probably will get just as bad as Orlov (and even TAE) ultimately predicts, I think TAE has a very wise strategy for the “in between” period that I certainly expect. And in that “in between” period, money will be more valuable than ever. That is to say, a deflationary collapse will be with us for a few years if not decades. Even a couple years is too long a period to be without money. After all, at the moment money buys food and I don’t know anyone growing enough to entirely feed themselves without money.

It’s a question of timing, and timing can be dangerous. As Stoneleigh has said all along, some people will be able to tolerate more risk and try to time their prepping purchases (land, equipment, power independence) when prices collapse further, as they inevitably will. For some, especially those with either very little money or much too much of it, spending now to prepare may be the only option, as self-sufficiency will be the most reliable survival strategy in ALL eventualities. But short of being a multi-millionaire, I agree with Variable that it doesn’t make much sense for me to buy Canadian land at these exorbitant Ponzi bubble prices, if that would erase all my savings/liquidity.

Just as I would advocate using a private vault service to spread risk around, I advocate having some money right to the bitter end, no matter that said money might become toilet paper. Along with fostering self-sufficiency for yourself and community, strategically preserving your money hedges other risks. It is still the most nimble of resources to get yourself out of a jam. And I also happen to believe money will be one of the last things to go, as central economies like the U.S. will ensure that their control is intact as long as possible, and that depends on money. That raises the question of which currencies to hold in your locale, as some currencies will retain their purchasing power longer than others.

Frankly, if the strategy is to simply buy land now no matter what, I see no difference between the hyper-inflationist’s collapse scenario and the deflationist one . In both cases, one is left broke, and that is not the point of preparing for deflation. I fear the variables are too many, even while the big-picture outcome is looking increasingly certain–therefore, liquid, diversified money, in the strongest currencies possible, under your own control, allows for a better chance of adapting to the volatile changes on the horizon.

Everyone’s situation is different. If you have children and jobs and already own a house, your strategy might not be the same as a person with none of those things already. I see great benefit in keeping options open as long as possible (via retaining purchasing power), but I’m also very flexible and adaptable in that I can move anywhere on a moment’s notice.

I wouldn’t want to buy and build my homestead in the wrong place for me. If I hate my neighbours or the taxes in the region become draconian, I’d have to leave anyway. Even in apocalypse I want to have some options to lead the life that best suits me under the circumstances. And I know the life that best suits me isn’t the one that best suits most people. I’m willing to tolerate more risk in order to ensure I can find/create those circumstances when it makes more sense for me to do so.

I put a huge premium on mobility and adaptability in these precarious times. I will only buy a property I can afford to walk away from and start anew somewhere else. And at current Ponzi prices, I could not walk away from most of these properties.

[Variable81]

@skipbreakfast,

Wow, been a year and I didn’t even seen your very insightful comments!

“I put a huge premium on mobility and adaptability in these precarious times. I will only buy a property I can afford to walk away from and start anew somewhere else. And at current Ponzi prices, I could not walk away from most of these properties.”

Agree wholeheartedly with this.
Plus the fact that I’m now starting to freak out about methane levels in the Northern Hemisphere, mobility and adaptability could literally be the difference between life and death…

Speaking of which, if anyone has a link to Nicole’s view on Near-Term Extinction (NTE) theories, it would be appreciated (if memory serves correctly, I think she’s not in agreement with the likes of what Guy McPherson is spouting all over YouTube, dastardly ruffian that he is… but I think what I read was more about a spat between Nicole and Guy than the actual reasons why NTE theories are unsound…)

Cheers,
Variable

[Author]

Posts