“Why is gold better than cash?” is a question that is as common as common can get, the fact that gold was the original mode of currency prior to the introduction of paper currency has been all but forgotten. Going back to the question as to ‘why is gold better than cash’ has numerous answers, but before we get down the usual bulleted points list let us look at the paper currency first. Why do people keep money in the bank? The main reason why money is put into banks by people saving is to keep the money safe in the first place and hope to earn some interest when the money is lent out. The bank lends your money out at a risk and gives you a portion of the money that they earned from lending out the money that YOU gave them.
Gold on the other hand kept in a bank is different, the bank cannot lend your allocated gold out and you may at any point in time show up at the bank and insist on having your gold and the bank will be bound by law to return your gold. Now that we have that fact cleared up, did you know that if the bank that you are saving your money with went bankrupt, all the money that the bank holds will be shared by the creditors and the balance returned to those who invested in the bank through savings or other means on a prorated basis? Gold as Alan Greenspan once said is always accepted – BY EVERYBODY, but the same cannot be said about money because money is not ‘always accepted’.
The fact that gold cannot be conjured up as and when it is needed like money is makes the value of the precious metal stable in the markets and ‘non volatile’ as how much gold there is (estimated at around one hundred and fifty thousand tonnes) is how much gold there is – not more, not less. However during times when financial crisis takes a hold on the planet the price of gold does rise significantly, which is all the better for those who have gold stored away for a rainy day.
A man with an old tattered 10 dollar note trying to pay for his lunch can be rejected by the eatery, but if he was in possession of a gold ring – no questions asked, it will be accepted by virtually anybody – if that does not answer the question as to why gold is better than cash for storing wealth, nothing else would – in essence – Gold is and always will be gold – precious!