In times of economic uncertainty, the question of where to park your savings becomes increasingly important. With global markets experiencing fluctuations and issues with persistent inflation causing the economic outlook to be even more precarious, many investors are searching for assets that can safeguard their wealth.
Among the most debated options are gold and cash. Both choices have their merits and drawbacks, but gold investing has grown in popularity in recent years — due in large part to the unique benefits it offers in any economic climate.
In turn, it can be tough to decide whether one or the other makes the most sense for your money. You can learn more about gold investing here with a free information kit.
Is it better to save gold or cash right now?
The decision between saving in gold or cash is a personal one. That said, saving gold is a very attractive option right now. Here are a few reasons why:
Unlike cash, gold is a store of wealth
Gold has maintained its value over centuries, making it a reliable store of wealth even in the face of economic downturns or other issues. That’s why many investors turn to the precious metal during uncertain times; it can reliably protect their wealth.
But you can’t rely on cash to do that in most cases. The value of cash can be influenced by geopolitical events or economic turmoil — which we’re experiencing right now. And, since these issues can influence the real value of your cash holdings, it may be smart to put some of your cash into gold, too.
Explore how gold investing could benefit you here now.
Gold, not cash, acts as a hedge against inflation
During periods of high inflation, like we’re experiencing now, the value of cash tends to erode. However, gold’s value tends to rise when inflation is persistent, effectively protecting your purchasing power.
And, considering that inflation ticked back up in July after appearing to cool in the months prior, investing in gold could make a lot more sense than keeping a ton of cash on hand, as the dollar is being devalued by inflation currently.
Gold can diversify your portfolio, but cash can’t
Including gold in your investment portfolio can help diversify risk, as it doesn’t typically move in sync with traditional financial markets. Considering that we’ve seen periods of market volatility recently, it can make sense to try and temper some of the possible risks of stocks or other traditional investments with a gold investment.
Cash can’t do that. In order to diversify your portfolio, you’d need to put that cash into another type of investment asset, and while there are certainly other low-risk investment options outside of gold, they may not offer the unique benefits that this precious metal does.
Other considerations
It’s important to note that investing in gold isn’t without its downsides. If you’re going to invest in gold, be aware of the following:
- Lack of income: Unlike other investments, gold doesn’t generate interest, dividends or rental income. It’s a store of value — and while cash may not offer those benefits either — it’s important to note before adding it to your portfolio.
- Short-term price volatility: While gold is generally seen as a safe haven, its price can still experience significant fluctuations, especially in the short term. This might not be suitable for risk-averse investors.
- Storage and transaction costs: Storing physical gold can incur costs, and buying or selling gold involves fees and spreads. These extra costs vary depending on a wide range of factors, but it’s certainly worth considering before you invest.
The bottom line
Ultimately, the decision between saving in gold or cash hinges on your unique financial circumstances and objectives. Both assets have their strengths and weaknesses, and a balanced approach might offer the best of both worlds.
However, gold can offer some unique and alluring benefits in an uncertain economic climate, like the one we’re experiencing now. And when you factor in the issue of persistent inflation, gold has even more appeal. Before you make a decision, though, be sure to do your research and make an informed choice that aligns with your financial goals.