Having access to cash is one of the most basic ways of maintaining financial security and freedom. I mean, if you don’t have money to spend, then your financial plan kind of missed the point.
Having the ability to have cash guarantees that you’ll have the ability to purchase goods and services. It sounds basic, but few people have cash on hand these days, and it’s something that needs to be said.
I’ve written about where to store your cash before over at my wealth management blog. But in this article, we’re going to take a little different approach: can you store cash with gold? And if you can, should you even do so? Read on:
The Problem With Savings Accounts
Saving cash is almost always done through banks, savings accounts, CDs — that sort of thing. But is that really a good idea? Most people automatically assume that storing money in a bank is perfectly safe, and there’s no need to worry about the bank collapsing, or not being able to get your cash out. That’s a mistake:
- The FDIC is Broke. The FDIC is going bankrupt. No, seriously. It actually had negative cash on hand in September of 2009. I’ll write more about how the FDIC is bankrupt in the future. Remember, these are the guys that insure banks. If they’re broke, then if banks go under, you might lose everything.
- The Government is Broke. If the FDIC is broke, and banks start collapsing, then the last hope is that the government will begin bailing out the banks. The only problem with this, is that the government can’t bail out the banks — just bailing out two or three cost over a trillion dollars in 2007. If the entire system begins to go down, there’s no way the US could bail the system out — that amount of money would swamp the economy, and the economy goes down anyway. Oops.
- Banks Are Over-Leveraged. Banks are in debt up to their eyeballs. More debt exists than money exists. This is bad. This is a major insecurity — it’s like a game of financial dominoes, and the possibility of a major chain-reaction of financial collapse is possible. And because of the FDIC issues, that means your cash is at risk of suddenly disappearing along with the bank.
- You’re Not in Control. The government can confiscate your money, can freeze your ability to make transactions, and in a worst case scenario, will have tons of information on how likely you are to survive a things getting bad. That’s too much information too easily available.
These are the problems with storing cash in bank accounts, savings accounts, checking accounts, CDs, and other similar methods of bank deposits. So should you store your wealth in gold? Before we talk about why you should store at least a little in gold and silver assets.
The Problem With Storing Cash in Gold
No investment or financial move is perfect. There are issues with every action you’ll ever take with your money. Gold and silver are no exception:
- Speculation. On some level, buying gold and silver requires a little speculation. You obviously aren’t going to buy $10k in gold and silver if you think the prices are about to drop. This is a risk, of course.
- Liquidation. It might take a few days to liquidate your gold and silver into a currency you can use at the grocery store. This might not be true, however, if things get really bad, obviously. Gold is gold.
- Doomsday. This is the reason most people don’t invest in gold and silver. They don’t think doomsday is going to happen, so you don’t need to prepare for the fall of civilization.
Concluding Thoughts
Just because it’s unlikely that the entire system will collapse doesn’t mean you shouldn’t prepare for it. Preparing for the possible-yet-unlikely is why we wear seat belts, buy insurance, and other things.
That’s why I suggest everyone to have gold in their investing portfolio. It only makes sense from a security standpoint, and, after all, gold is one of the safest investments you can ever make — gold has never lost all value.
Tags: gold, how to invest, savings account, store cash