Arnold is the "bank" of Ironwood Village, keeping things for the players whose inventory is too small. He also keeps gold for players, though it is unknown if this has a purpose other than an achievement, as no gold cap has been observed.
Considering his rather laid back conversations, he seems to do his job as a hobby rather than as a paid profession. It is unknown how exactly he keeps the items safe, not that they need to be guarded.
"You won't find safer storage anywhere." ~ chat start
"Don't worry, all your weird junk is safe." ~ chat end
"Sometimes, people store things and never come back for them. I hate those people." ~ chat end
"I swear, people give me the strangest things to store." ~ chat end
"Your stuff will be safe from everything, even dragons." ~ chat end
"I've never lost an item. No matter what it is, it's safe with me." ~ chat end