Many clients purchasing physical gold from us use wealth originating from their bank accounts. Low paying interest rates that can’t keep up with inflation coupled with escalating counter-party bank risk present the much asked question: should I purchase gold or leave my cash in the bank?
WHERE DO WE KEEP OUR CASH?
We entrust banks to be custodians of our wealth in exchange for interest. Banks can then use our money to lend to people looking to borrow. It’s a useful system and of course banks are necessary for unavoidable transfers – electricity, rent or a mortgage. We have to use banks and cash in order to pay for these things. Using banks is therefore unavoidable.
In light of global economic factors, as well as the challenges we face closer to home, the banking system has taken sensible steps such as increasing the circulation of money in terms of the number of notes printed, as well as engaged in quantitative easing and other factors. Bank accounts are stimulated for better or worse by interest rates, which are affected by various unpredictable social factors.
A bank note is a promissory note that transfers wealth from one entity to another. Holding onto cash lacks the immediate security afforded by banks, yet is often chosen by individuals looking to safeguard their wealth. Locked in a safe or vault, it won’t accumulate any interest, but it’s also protected from a bank collapsing due to an economic downturn.
Systemic risk is built into the banking system, and if your bank were to collapse a saver is only covered by up to £85,000 per bank, and there’s no guarantee that this or future governments will bail banks out.
Cash is also often used instead of credit by individuals looking to keep a more direct track of their spending. For example, Germany remains one of the most cash-intensive advanced economies in the world, and it is speculated that this is largely due to spending habits and an attitude towards budgeting.
As a physical asset with established value that consistently climbs, gold has a host of benefits that make it the investment platform of choice to a number of individuals and organisations. Gold’s scarcity and rate of discovery have allowed it to become a universally accepted currency and material asset.
Whether secured in an official capacity in a vault under the guidance of experts or secured on your own premises, physical gold is a way to remove your wealth from circulation and effectively lock it into a commodity whose value will rise as its mining reserves worldwide diminish.
Furthermore, even the most trying of circumstance in today’s modern world won’t pressurise gold’s value as it would perhaps threaten to collapse an unprepared banking institution. If anything, such circumstances only serve to increase gold’s worth due to its solid reputation as a safe haven investment.
GOLD VS CASH
Nobody is suggesting that one’s wealth should be entirely removed from the banking system and instead placed into its counterpart value in gold. Even with the precious metal being as easily liquidated as it is, cash and banks are essential for accessing and transferring your money for daily transactions.
However, as part of a long term strategy, as much as a guarantee of total security away from fluctuations in tax, inflation and currency degradation, physical gold investment is excellent as part of a balanced portfolio. It is far and away the top performing asset of the 21st century, demonstrating 300% growth and rising as new surprises in modern politics and economics buffet more traditional markets.
In London, numerous homeowners who have sold their properties have invested the profit margins from that into gold bullion, assuring themselves a financial cushion secluded from the movements and volatility of the banking system.
INTEREST AND SAVINGS
What’s more, interest rates are becoming less favourable to savers (paying as little as 1%) and inflation is set to hit 4%, making savings far less profitable than they have been before. Banks are being added to UK watch lists all the time as new factors leave them under stress, and while deposit protection schemes exist they are limited.
Physical cash isn’t subject to counterparty risk but is still subject to inflation. In 1920, £20 and 1oz of gold were worth exactly the same, and could afford the same amount of goods and services – a Savile Row suit. Now, in 2017, 1oz of physical gold is worth more than £1,000, and £20 won’t even buy you a decent necktie. Physical gold has maintained its purchasing power far better than cash, and with inflation set to rise the disparity between gold and cash will increase.
Physical gold and silver is as liquid as cash in a bank account, but with the steady increases in the price of gold driven by scarcity and investment demand gold is a better earner than bank investment. This is especially true during financial crises.
While both bitcoins and gold have seen impressive growth in recent years, gold’s advantages are clear. As a physical asset that is universally known and highly regarded, its appeal remains greater than any digital alternative.
Gold’s safe haven investment remains during the course of the current economic uncertainty. Elements of change such as Article 50, political leadership in the USA and UK, as well as market growth factors in forthcoming superpowers such as India and China will see more and more investing in gold to protect their wealth.
Furthermore, investment in gold ensures that you have wealth accumulated that is free of taxation, with a guaranteed legacy you can take forward with you. While both gold and bitcoins present opportunities to grow your success, even technology’s wildest advances can never completely overshadow the prestige and security offered by physical gold
HOW TO BUY GOLD & SILVER
Our Simple 4-step process makes physical gold and silver buying easy.
Q & A
One of our dedicated specialists will work with you to answer any questions you have. We will provide you with factual information (benefits / drawbacks) of all available products. The length of this conversation is down to you and is an opportunity to ask us as many questions as possible. Please note we are not permitted to provide any financial advice. If you require advice we suggest you speak to a financial advisor.
When you feel confident that you’ve had all your questions answered, you will be asked to complete a purchase order, which is your instruction to purchase metals.
In order to lock in the price and complete your order, you must then make a payment, via bank transfer or personal cheque. We no longer accept any payments over the phone / card payments.
STORAGE AND DELIVERY
We can either deliver your gold directly to you, via our insured delivery service, or you can choose to have your gold safely stored, in a London Bullion Market Association (LBMA) vault, where your physical metals are allocated in your name and with full insurance provided.