swiss precious metal accounts comparison

Swiss Precious Metal Account Guide

Bank accounts based on precious metals instead of fiat currencies are offered by many Swiss banks. Get informed about the costs and benefits of precious metal accounts in this guide.

Gold and other precious metals have traditionally provided a safe haven from tumultuous financial markets. But holding precious metals in bullion can be a sluggish and expensive option for investors who want to be able to buy and sell their assets quickly when rates are high.

Precious metal accounts let you invest in precious metals without having to handle the administration involved in buying and selling actual physical metal. Assets are not actually physically stored at the bank. Like fiat currency account balances, precious metal account balances are held in book entry form and represent promissory notes by the bank to deliver the precious metals or their value in fiat currency upon demand.

You can obtain a detailed comparison of Swiss precious metal accounts here.

Advantages of precious metal accounts:

1. No brokerage fees. With very few exceptions, Swiss banks do not charge brokerage fees when you buy or sell precious metals in book entry form using precious metal accounts. This gives precious metal accounts an advantage over securities brokers, which typically charge brokerage fees to buy and sell precious metal claims and derivatives on your behalf. As a precious metal account holder, you can convert fiat currency to precious metal claims and vice versa at any time without paying a brokerage fee.

2. Security. Holding a precious metal account eliminates the risk of theft because you do not own actual precious metals. If you only maintain relatively small account balances, the account fees can be lower than the costs of renting a safe deposit box for the safekeeping of bullion. The precious metal deposits offered by some Swiss banks provide another alternative, allowing you to store precious metal bullion at the bank, with your claim represented by allocated certificates or unallocated certificates. However, precious metal accounts have a value added tax advantage over these deposits (more on this below).

3. Liquidity. While many banks require you to order precious metal bullion in advance and only pay you for bullion sales after the bullion has been authenticated, precious metal accounts typically do not have notice periods for the purchase, sale or withdrawal of assets. You can sell precious metals back to the bank at its going rates at any time. Some banks also allow transfers to other precious metal or custodian accounts.

4. No bullion issuing fee. Precious metal mints and banks each charge a markup on the value of precious metal bullion to cover production costs and to turn a profit. These issuing fees do not apply to assets in precious metal accounts unless you choose to withdraw precious metal in bullion instead of converting it into fiat currency (at banks which provide this option).

5. Versatility. Some accounts provide swap, forward or spot transactions, providing greater versatility and allowing you to take advantage of price fluctuations.

6. Lower exchange spreads. Banks and other precious metal merchants generally use wide buy/sell spreads for precious metal bullion. The spreads used for purchases and sales of book assets in precious metal accounts are typically much lower, so you lose less on transactions. Spreads and commissions vary between banks.

7. No VAT. In Switzerland, no value added tax (VAT) is charged for sales of gold bullion. However, platinum, palladium and silver bullion are subject to VAT. Because assets held in precious metal accounts are simply book entries and not actual precious metals, you do not pay VAT on purchases of these metals. This allows you to invest in silver, platinum and palladium at a lower cost. You only pay VAT if you withdraw your assets in physical form.

Disadvantages of precious metal accounts:

1. No online access. Many Swiss banks allow you to access basic information about your precious metal account (the account balance, for example) through their online banking portals, purchases and sales must be ordered over the telephone or at a branch office. This makes investing through precious metal accounts less convenient than investing through brokerage accounts which provide online trading platforms.

2. No interest. Unlike savings accounts for fiat currencies, no interest is earned on the balances of precious metal accounts. So, while you may (or may not) earn capital gains if the value of your precious metal claims increases, you are not guaranteed a return. If you prefer a guaranteed return, consider holding your assets in fiat currency in a high-yield savings account or investing in medium-term notes. You can use the interactive savings account comparison and medium-term note comparison to find the highest-yield options.

3. Account fees. Banks charge account maintenance fees for precious metal accounts. These fees are basically negative interest rates. Fees are levied as a percentage of the financial value of your assets, so if the value of your precious metal increases significantly, the account maintenance fee also goes up. The annual precious metal account fees charged by Swiss banks are typically similar or identical to their annual custody account fees for securities safekeeping. If you hold large amounts of precious metal (several kilograms), storing it in a bank safe deposit box may work out cheaper than holding it as a balance in a precious metal account. You can compare the annual fees of Swiss precious metal accounts using the precious metal account comparison.

4. Spreads may be uncompetitive. When you invest using a precious metal account, you are limited to opening and closing investment positions at the bank’s going bid and ask rates. You may, in some cases, be able to buy cheaper or sell higher by using affordable securities brokers instead.

5. Physical delivery fees. While some Swiss banks allow you to deposit physical precious metals into a precious metal account free of charge, you should be ready to pay fees of up to 200 francs if you choose to withdraw your precious metal from the bank in bullion.

6. You do not own your assets. Just like money placed in bank accounts, assets held in precious metal accounts only exist in book form until you withdraw them. Unlike the balances of Swiss savings accounts, Swiss precious metal account balances are not protected by the depositor protection guarantee from Esisuisse.

More information about precious metal accounts

Typically, a precious metal account is denominated by one precious metal. Most (but not all) banks offer precious metal accounts based on gold, platinum, palladium and silver. You will typically have to open a separate precious metal account for each metal you wish to invest in, and a minimum account fee will be charged for each account individually.

Swiss banks generally require you to open a fiat currency account such as a private account, savings account or business account with them in order to open precious metal accounts. This account is debited when you buy precious metal and credited when you sell. Swiss savings accounts do not normally have an annual fee, but may have limitations on withdrawals. Some Swiss banks offer private accounts with no basic account fees. If you maintain a bank account at a bank for the sole purpose of using precious metal accounts, the (possible) costs of maintaining that account should be added to the metal account fee to find the total costs of using your precious metal account(s). You can compare account costs using the interactive bank account comparisons.

Like Swiss fiat currency bank accounts, Swiss precious metal accounts are subject to automatic exchange of information agreements between Switzerland and other countries. This is not the case with precious metals stored in bank safe deposit boxes. In both cases it is your responsibility to declare precious metal assets on your tax returns if the tax authority which you fall under requires you to do so.

Are precious metal accounts worth it?

A precious metal account offers good value to individuals and businesses looking to invest in precious metal over mid-term and long-term while periods without the hassles involved in holding bullion or the brokerage fees charged by securities brokers for trades in metal derivatives. Short-term investors will likely find cheap online brokers to be a more flexible alternative for frequent trading.

If you hold gold bullion as a store of wealth, there is little value to swopping your bullion for a balance in a precious metal account. If you hold small amounts of precious metals, storing these at home is the most affordable option. Most Swiss household insurance policies cover precious metals up to a value of up to 5000 Swiss francs (combined with other cash equivalents). A handful of insurers let you extend this coverage to bank safe deposit boxes in addition to your place of residence. For large amounts of precious metal, storing physical metal in a safe deposit box may work out cheaper than a precious metal account because you pay a flat fee based on the size of the safe, rather than a percentage of the value of assets. Additional costs like private account fees (if you use a bank safe deposit box) and insurance (some private safe deposit box operators offer this) should be accounted for when comparing costs.

If you buy palladium, platinum or silver as an investment or store of value, using a precious metal account cuts out the cost of VAT. Combined with the lower spread you pay compared to buying physical bullion, this VAT benefit can balance out the possible higher costs of using a precious metal account over holding physical bullion in a vault.

Bonded warehouses provide the same tax benefits as precious metal accounts (no VAT), but for phyiscal bullion. You actually own the precious metal in question, hold allocated certificates of ownership, and can withdraw it at no extra charge (customs duties and VAT apply to silver, palladium and platinum upon withdrawal). Storage fees often include full insurance coverage. However, storage fees are well above the average precious metal account maintenance fee.

Always compare before you sign on the dotted line

The differences in the costs of precious metal accounts from different banks are huge, with the most expensive accounts having annual fees up to 5 times higher than the most affordable accounts. Some banks have very low account fees but charge brokerage fees when you buy and sell – making them a good option for long-term investments but a poor choice for frequent trading. Some banks charge account closure fees. If you plan on withdrawing your precious metal in the future, the physical withdrawal fees are also relevant.

In addition to comparing the costs of precious metal accounts with each other, it is also worth comparing them to the costs of brokerage accounts. Some Swiss brokerage accounts do not charge custodial fees for the holding of your precious metal securities, and this can balance the cost of the brokerage fees over long terms.

It is also worth noting that some foreign financial services providers and fintech companies offer gold-based accounts to residents of Switzerland. Depending on your needs, these accounts may be worth including in your comparisons when looking into precious metal accounts.

More on this topic:
Precious metal account comparison
Bank safe deposit boxes explained
Non-bank safe deposit boxes explained
Bonded warehouses explained
Online brokers compared

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