The question is asked by Simon Mikhailovich, a Russian émigré and entrepreneur who is in the business of selling a certain kind of safety. His New York City–based Bullion Reserve has wealthy families as clients. On their behalf his firm buys gold bricks from refineries, has them picked up by Loomis armored trucks and delivers them to guarded warehouses located on two continents.

For this worrywart it won’t do to buy shares of a precious-metals fund and then leave those shares in the custody of a bank. That bank is part of a fragile web in which wealth is represented by electronic blips. A lot of things could destroy the web: hackers, a loss of faith in government as a protector of wealth, a liquidity crisis, an electromagnetic pulse.

Mikhailovich, 63, has been preoccupied with risk for most of his career, first with an insurance company, then with a hedge fund that speculated on debt derivatives and got stung by the Lehman failure, and now with his bullion operation.

Aren’t most financial assets backstopped? Don’t we have a Federal Deposit Insurance Corporation for bank accounts and the Securities Investor Protection Corporation for brokerage accounts? Mikhailovich scoffs. Their reserves are adequate to cover one institution, if that institution is small enough to fail. They would be overwhelmed by a system-wide failure.

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