How About a Fort
Knox of Your Own?
By Paul Sullivan
The New York Times
Wednesday, November 14,
The last time the
world as we knew it seemed likely
to end, Dan Tapiero thought about buying gold.
He didn't tell his
wife; they didn't talk about things like that. In fact he didn't
tell anyone for a while. He just tried to figure out how he was going to buy physical gold as the financial markets collapsed at the end of 2008.
Mining stocks were
not for him, and neither was buying gold on the futures
exchange. That was financial
gold, meaning it existed on account statements but was not
tangible. He wanted the real thing,
gold in the form of bullion
that he could hold in his palms, smudge
with his thumbs.
But Mr. Tapiero, a
portfolio manager at several hedge funds over the last two decades, realized quite quickly that it was
harder to fulfill his desire than he
had thought. When he called
up one bank he patronized in his day job, he learned
it had a minimum purchase amount of $20 million worth of physical gold. Even at that
amount, he could not have access to it; it would
have to stay at the bank.
didn't want to buy that much,
but he wanted to buy more than a bag of gold
coins, or a bar or two. Most of all, he wanted to know that it would
be stored some place safe where he could
get to it even if all of the banks suddenly closed for a while. "There was concern at that
time that the system was frozen and you didn't really know whether you were
going to be able to have access to your money or to your assets," Mr. Tapiero said. "And I started thinking, OK, well, I'd like to own
something that isn't a number on a flashing screen.”
Investing in physical
gold has had an image problem
of late. After the financial crisis, it was seen
by many mainstream advisers as something that crackpots coveted. They would buy it,
store in their basements,
and know that their wealth was secure
if the world -- or at least the prevailing
financial and political systems -- ended.
This was easy to mock,
and many people did. What, after all, would you buy
with your gold if the
world came to an end?
was the group that saw gold as a speculative bet, as something that would rise
in value as fear about the global economy sunk in. That was less of a crackpot idea: the price of gold went from around $700 an ounce when Mr. Tapiero began buying it in the fall of 2008 to more than $1,900 an ounce last summer. It is now trading around
$1,700 an ounce.
Mr. Tapiero did not buy his
bullion because he thought the world was ending. "And if it did end," he said, "I don't know that gold would be that
important -- it might be radioactive.”
He also made clear that he does
not keep it at his home in Greenwich, Conn.
"It might not be safe," he said, "if someone holds you at
gunpoint and they say, 'Show me your safe' and you open it up and all your gold is there."
gold -- now about 25 percent of his
net worth, he said, declining to quantify it further
-- is kept in various professionally managed vaults. We met at one in Midtown
The vault was in an unassuming, brick office building with
a completely plain, even dingy lobby. The offices of the vaulting
company, which asked not to be named as a condition for granting
me entry, had rows of nondescript cubicles that gave no sign beyond the company logo of what might be
going on there.
As for the vault itself, it looked secure
from the outside. But
once past the thick door, it felt
completely utilitarian, even a bit grim,
particularly for what it held for its
undisclosed number of
Mr. Tapiero eyed the rows of 100-ounce bars
-- each about the size of an iPhone and worth about $170,000 -- and estimated
there was $4 billion worth of gold at current prices stacked on metal shelves that looked as if they were built in the 1970s. That amount of gold would fit in the
back of any sport utility vehicle.
The vault company did not share the identities of other customers. But suspicion that there was interest
in owning this kind of physical gold led Mr. Tapiero and a friend,
Steven Feldman, to form a
company, Gold Bullion
International, in 2009. It allows
people to buy bullion but
also to have access to it and, if they want, have it delivered to their home or anywhere else. Their customers range from chief executives
and entrepreneurs to housewives and grandparents buying for their grandchildren.
Mr. Tapiero described their challenge as,
"How do we start a company that can provide physical
gold -- have it delivered,
but also have it stored outside the banking system -- to the retail
was that gold had been misunderstood in the
United States in a way that
it had not been in the rest of the world. He attributed
this to the inability of individuals to own gold for some 40 years, after President Franklin D.
Roosevelt in 1933 ordered
any American holding more than
$100 worth of gold to exchange if for $20.67 an ounce. He did this to prevent individuals from hoarding gold during the Great Depression, and the restriction wasn't
lifted until the 1970s.
Mr. Tapiero thinks people came to misjudge gold was the bull market in stocks from 1982 to
2007, which made owning
an asset that just sits there,
like gold, unattractive.
Mr. Tapiero said that today
gold was a legitimate investment that should be
part of any diversified
portfolio, because it is a hedge against
a global economic slowdown
and the inflation that many
believe will occur when economies
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