Gold outside the monetary system
Until 1971 gold stood behind the world's currencies; when the United States closed the gold window the peg disappeared and the metal shifted from a monetary base to a private reserve. The logic that keeps gold in portfolios today took shape then: it depends on no one and is no one's liability. Free ports grew out of a different need — storing goods in transit without duty; the Geneva Freeport has operated since 1888. Over time the demand for secure storage of valuables turned them into depositories for art, wine and precious metals: Singapore's Le Freeport opened in 2010, Luxembourg's in 2014.
Concept
Physical precious metals — gold and silver — remain a classic way to hold capital outside the financial system: they have no issuer that can fail and no counterparty credit risk. But gold can be owned in several different ways, and the form of storage decides what you actually own and which risks you carry.
Allocated and Unallocated
Allocated storage means specific bars assigned to one owner and segregated by serial number; the metal is legally yours and sits off the bank's balance sheet, so the custodian's insolvency does not reach it. Unallocated (pooled) storage is cheaper and easier to trade, but it is only a claim on the institution: the bank owes you a quantity of metal and you carry its credit risk. For preserving capital, allocated is the usual choice.
Quality Standard
The professional market runs on the LBMA Good Delivery standard: bars, their fineness and their provenance meet a single set of requirements, and valuation follows LBMA prices. This ensures liquidity — a bar from an accredited refiner is accepted at any major vault. The LBMA requires refiners to follow its Responsible Gold Guidance — responsible-sourcing rules that screen out metal from conflict zones and dubious sources; failure to adhere leads to removal from the Good Delivery List.
Freeports
A freeport is a customs warehouse inside a free-trade zone where goods are stored with import duty and VAT suspended until they leave the zone. For precious metals, art and wine this removes import tax for the duration of storage. For investment gold the relief in the EU and the UK goes beyond customs deferral: supplies of bars of at least 995 fineness are VAT-exempt as such — in the EU the regime was introduced by Directive 98/80/EC (now Articles 344–356 of Directive 2006/112/EC), and in the UK it operates under VAT Notice 701/21. The main centres are Switzerland (the Geneva Freeport), Singapore (Le Freeport) and Luxembourg; Switzerland also remains the world's leading centre for gold refining.
Non-bank vaults: Vienna
Alongside the customs model sits non-bank storage on a smaller scale — private depository vaults. Vienna's example is Coburg Tresor inside Palais Coburg: over four thousand individual boxes, round-the-clock access on a personal card, PIN and physical key, with a robotic system delivering the box. The format fits where metal or other valuables have to be kept off a bank's balance sheet and outside a customs procedure.
The legal frame differs from a bank's in kind, not degree. This is a contract of safekeeping, not a deposit: the operator supplies a locked container and answers for its physical security, but never becomes the client's debtor and never puts the contents to work. FMA and ECB supervision reaches credit institutions, not a safe-deposit box, so the banking Einlagensicherung — the €100,000 deposit guarantee — does not apply to a box's contents. The holder's protection reduces to the insurance policy and the contract terms.
The parameters to check before placing anything:
- insurance. The rent includes cover for the contents up to €35,000; an extended policy raises the limit to a maximum of €1.5 million. Before placing high-value items, agree the limit, the evidence of value required and the exclusions under the policy actually in force;
- weight limit. The total weight of a box's contents must not exceed 20 kg — for precious metals that ceiling binds well before the box runs out of volume;
- joint rental. Every joint renter signs the contract and has access; termination requires all renters to take part;
- death of a renter. A joint rental may continue after one renter dies; for a sole box the heir or executor must produce the court document the operator prescribes. Access for an heir therefore opens through the applicable jurisdiction's succession procedure, not through the safekeeping contract.
The historical benchmark for comparison is Vienna's Das Safe in Palais Auersperg, running since 1984 on a left-luggage principle: insurance of roughly €36,000 and, in its day, no mandatory identification. That regime has since shrunk under the CRS, beneficial-ownership registers and the EU's 2024 anti-money-laundering package: anonymous rental is now expressly excluded. A private safe solves the problem of physical security, not of tax invisibility: the perimeter is set by the owner's residence and the provenance of the assets, and the vault's address is secondary.
Singapore and Switzerland
Singapore strengthened its position by exempting investment precious metals from GST from October 2012; even after the GST rate rose to 9% in 2024, investment-grade metal — gold of at least 99.5%, silver of at least 99.9%, platinum of at least 99% — stays outside the tax. Together with Le Freeport this restored the city's role as a hub for physical gold trading. Switzerland has traditionally not charged VAT on investment gold and remains a leading refining centre: a notable share of the world's metal flow passes through its plants.
Costs
Physical metal carries its own cost: storage and insurance fees, the bid-ask spread, and a premium over spot for small bars and coins. Precious metals are therefore held as insurance and a store of value, not as a source of current income. Tax on the way out belongs on the same list: in many countries bullion and coins fall into the collectibles category with its own rate of gain — see the country map.
Who holds metal and why
The main buyers of physical gold today are central banks. In 2022–2024 they took more than 1,000 tonnes a year off the market, a record since the 1950s; in 2025 the pace slowed to roughly 863 tonnes but stayed well above the 2010s average (around 470 tonnes). The turn toward metal was accelerated by the 2022 freeze of the Bank of Russia's reserves: some 300 billion dollars of reserves, the bulk of them immobilised in European settlement infrastructure — Euroclear above all — showed that currency reserves held in accounts are vulnerable to a political decision, while physical metal in one's own vault is not. More detail is in the review of capital relocation from Russia.
The same logic works at the level of private capital: a physical-metal allocation serves as insurance against systemic risk and produces no current income — it is held for portfolio resilience, which is typical of family office strategies. State practice is telling too: in 2013–2017 the Bundesbank moved part of its gold from New York and Paris to Frankfurt to keep a larger share of the reserve under direct control.
What's changing
A combination of central-bank demand, geopolitical risk and inflows into exchange-traded funds pushed gold to record highs: by mid-2026 an ounce costs around 4,200 dollars against roughly 2,000 dollars in 2023. The storage environment is changing too: the secrecy that free ports were known for is giving way to transparency — mandatory inventories, provenance checks and automatic exchange of data under CRS. Digital formats have appeared — tokenised claims on specific bars; legally they revive the original question of whether you own the metal or an issuer's liability.
Q/A
Does allocated storage remove the custodian’s insolvency risk?
It reduces it, but the allocated label alone is not enough. Under the LBMA model, specific bars are assigned to the account and there is no credit claim against the operator; the legal outcome still depends on the contract, bar list, actual segregation, audits, insurance, withdrawal mechanics and local insolvency law.
Does LBMA Good Delivery guarantee clean title to a bar?
No. Good Delivery confirms bar specifications and the refiner’s admission to the professional chain, while Responsible Sourcing addresses provenance checks at refining level. It is neither a title register nor a warranty against third-party claims: the sale documents, ownership chain and withdrawal right still require separate review.
Can metal stay in a freeport permanently free of VAT and duty?
No. A freeport normally suspends import VAT and duty while the goods remain under the customs procedure. Charges arise if the metal is released for free circulation under the applicable rules; re-export or another special procedure may be available instead. The benefit is deferral, not a universal permanent exemption.
Is every gold bar exempt from Singapore GST?
No. The exemption is limited to qualifying investment precious metals and does not cover every product form. For bars, ingots or wafers, IRAS requires, among other conditions, gold fineness of at least 99.5%, silver of 99.9% and platinum of 99%, together with the prescribed form and refiner-recognition requirements.
Is every vaulted bar reported through the CRS?
No. The CRS reports Financial Accounts maintained by Reporting Financial Institutions; it is not a worldwide inventory of vaulted property. A metal account or ownership structure may fall within scope depending on the institution and contract, while standalone physical storage is not automatically a reportable account. AML and local reporting remain separate.