Let’s say you want to keep some of your money outside of the banking system.
And there are plenty of good reasons to do that.
In a world where more and more finance, investing and day-to-day transactions are conducted digitally, we would do well to be concerned about the security of our money.
In a digital world our bank balances can disappear overnight, high jacked by the bank, cyber criminals or our own government.
This is money we can’t touch. It’s just there as a number on our smart phones or computers, until it isn’t. To feel secure we need to trust in a system we don’t even understand.
At the same time, this money is losing value every day. Since the Federal Reserve was created about 100 years ago, its duty has been to preserve the value of the dollar. It hasn’t done a very good job. Over that same period the value of the each dollar in your pocket has fallen by over 90%.
So…our paper cash and digital cash are losing value all the time, and are untouchable. It’s not real wealth, it’s just the promise of money. And those promises are made by people we really can’t trust at all.
Little wonder then that people look to ways in which they can keep at least part of their wealth outside of the banking system altogether.
To do that, you need to convert cash into something tangible.
The most commonly owned tangible asset is a house. It’s real. You can sell it and convert it back into cash if you want, given a little time. But… it’s expensive to maintain, and it certainly isn’t portable.
Other people invest in paintings. This isn’t for everyone. Paintings that hold their value and hold the promise of increasing in value tend to be very expensive. And there are considerable costs involved in keeping your paintings protected and insured.
Are paintings portable? Well, they are more portable than your house, but they certainly won’t fit in your pocket.
That leaves us with gems – like diamonds – silver, and various other precious metals and gold.
To my mind gold comes out on top, for a number of reasons.
First, its value means you can store and carry a great deal of money very easily. It is totally portable. The same can’t be said for silver. If you want to leave the country with $100,000 in silver, you’ll need to get yourself a large shipping crate.
Next, gold’s value is known and agreed on, to the last gram, the world over. Your one-ounce gold coin is worth the same in Dubai as it is in New York. You can’t say the same for a diamond, where its value includes subjective factors and may vary according to who is valuing it.
When it comes to owning real money – as a tangible, portable asset – nothing beats gold.
And at a time when uncertainty abounds, with central banks reeling and running out of options, worldwide, I’d say there is a pretty strong argument for putting more of your money into tangible assets.
Real money you can hold in your hand. Gold.