If you want to keep your money safe, why not just store it in a bank? Why invest in physical gold? The Pure Gold Company explains why using physical gold to protect your wealth is the safer option.
Banks began as institutions that existed to store money. They are one of the linchpins of the global economy, with the amount of interest paid to those who store money there a matter of concern for national governments and financial institutions.
In conventional wisdom, banks are the place to store cash, as well as many other financial instruments and asset classes including many kinds of bonds and equities.
Wealth stored in banks is secured by the basic mechanism of banking. Banks want more capital in order to gain more influence, and as such they’ll provide a very useful service to customers in order to gain more capital.
Storing wealth in the bank is convenient in the short term and reasonably secure from external theft, as advanced encryption protects a customer’s money, along with heavy security measures.
Meanwhile, there are many good reasons to invest in gold. There’s a finite supply of gold and the metal is in demand during political and economic uncertainty, which means that gold prices and the metal’s value will increase over a set period of time.
Gold is one of the only available forms of private investment, falling outside the influence of the financial system, the government or any banks. If properly allocated, an individual or investor’s gold reserves belong to them alone, and can be traded or sold at their discretion.
Importantly, it’s also safe from bank failures and economic downturns. Gold retains a consistent value despite other economic crises, partly thanks to its rarity and partly thanks to its reputation as a safe haven.
Gold also comes with numerous tax benefits both during purchasing and in other contexts like inheritance. Unlike cash stored in a bank, gold’s value rises with inflation in line with other products and commodities. Gold’s value has also out-performed inflation for the past 10 years, making it a superior alternative in terms of financial gain.
Investing in gold also helps you avoid the risks of having all your wealth stored in a single form. Diversification is the best way to ride out economic strife and recessions, especially when when it involves utilising mediums like gold.
BANKS VERSUS GOLD
If it comes down to putting your wealth in a bank or investing it in physical gold, it’s worth your time and effort to take the extra step to invest in the precious metal. While banks underpin the entire financial system and sell themselves as secure, as we’ve seen in recent years that’s often not the case. Banks are worryingly prone to failure.
Many banks have breached their capital adequacy ratios in the past (the levels of capital they should maintain to be able to survive losses and avoid losing depositors’ funds). Capital adequacy ratios are crucial to making sure that banks avoid failure.
Should a bank fail, its depositors are to be compensated under EU laws – which may no longer apply once Britain leaves the UK. In addition, compensation can be slow and difficult to reclaim, and if the economy degrades sufficiently it may be impossible.
Are such bank failures possible? As the 2008 recession taught us, “too big to fail” is a fallacy, and banks operate in such a tightly interconnected network that even one going bust can affect the others around it.
Recently, with interest low and risk high, banks are struggling across Europe. Italy has an impending banking crisis bubbling below the surface, Santander has had to rescue Spain’s Banco Popular from collapse and Deutsche Bank saw a significant crisis in 2016 it has yet to recover from.
One of gold’s key advantages is that it can be purchased to sit entirely outside the banking system, letting you sleep soundly knowing that your money is protected from banking crises and financial crashes.
Why place your wealth in the hands of a financial institution that may well use it for poor decisions that send it bust, when you can instead give up short-term gain in interest in favour of long-term stability through gold investment?
Contact The Pure Gold Company today for more information on purchasing investment-grade gold for personal or financial use. We can offer assistance and advice throughout the purchasing process, as well as advice on storing and securing your physical gold and how to invest wisely to ensure your portfolio is balanced and ready for anything.