The World’s Ultra-Rich Scramble To Find Safe-Deposit Boxes Ahead Of The Next Crash

Friday, November 22, 2019
By Paul Martin

by Tyler Durden
Fri, 11/22/2019

Last week we reported that according to a new analysis by UBS Wealth Management, the wealthiest investors around the world are preparing for a “significant” market crash by the end of next year.

And while that may be fine and good – after all, virtually no finance professional thinks the current, longest bull market on record, will continue beyond next year’s election – one question quickly emerged: if the world’s 0.001% are indeed liquidating in anticipation of a generational crash, just what are they converting their assets into? After all, if the crash is great enough, not a single risk asset will retain its value, while a DM sovereign collapse could promptly render paper money is worthless, as for gold retaining its value, yes maybe, but only if one owns far more lead to defend it.

The answer is to be found at 46 Park Lane, a few blocks from Grosvenor Square in Mayfair, which initially resembles a private club with wood-paneled walls and an ornate fireplace dating back to Britain’s Victorian era. But down a flight of stairs is one of the most secure rooms in London.

Built by IBV International Vaults, the steel-walled vault is scheduled to open next month and will cater almost exclusively to those billionaires looking for a place to stash their most prized possessions now that they have liquidated most of their assets.

“We’re getting calls every week about a room available for 2.5 million pounds ($3.2 million) a year,” Sean Hoey, managing director of IBV London, told Bloomberg referring to an apartment-size vault space. Ironically, the firm which also has 550 safe-deposit boxes on site and room for about 450 more, is betting on London’s reputation as a “safe haven,” even with Brexit… even if London turns into a socialist paradise under Labour’s Corbyn.

Socialist UK or not, there is an unprecedented scramble by the ultra-rich to park their hard assets in a safe room in a safe city somewhere in the world. From London to Switzerland to the U.S., the rich are looking to store precious metals, cash and cryptocurrency. It has allowed IBV to open 6 locations already, with many more likely coming. For some, it’s the threat of a global recession. Others are avoiding bank deposits as negative interest rates force lenders to charge for holding cash. Many are concerned about natural disasters.

“We’ve seen extraordinary demand for safe-deposit boxes ever since we started offering them in 2015, and that demand has really gone up since the late summer,” said Ludwig Karl, a spokesman for Swiss Gold Safe Ltd., which operates high-security alpine vaults. “Most people say they are planning for difficult economic circumstances.”

The common denominator? Nobody wants to be connected to the system – or have their “net worth” represented by 1s and 0s in some cloud server – when the financial system comes crashing down at some point in the not too distant future; instead billionaires want to store their hard assets in a some place that nobody else can reach.

Sure enough, as we noted last week, a majority of wealthy investors are stockpiling cash in anticipation of a sharp market drop before the end of next year, with the founder of the world’s biggest hedge fund, Ray Dalio, not helping the global mood when he captured the prevailing anxiety last month after he warned the global economy is under threat from an explosive mix of ineffective monetary policy, a widening wealth gap and climate change.

There is a similar scramble for the services offered by Sincona Trading AG, a precious-metals dealer with more than 1,000 safe-deposit boxes for rent in central Zurich. Three years ago, it had scores of empty boxes but now it’s renting about five a day, said Benoit Schoeni, a managing director. “There has been an extreme demand,” he said. “It won’t take too long until we’re full up.”

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