Gold Vs. Cash in the Bank

Financial opinions differ from firm to firm, and your strategy will most certainly depend on your age, but today I’m speaking to the people who are approaching retirement who have 401(k), IRA, or other pensions holding equities, bonds, and cash. 

Should you invest in gold?

More importantly, is this the time to do so?  How much should you convert from your IRA or 401(k) to gold?  I’ve been covering alternative retirement investments for 14 years and this guide answers all of those questions, and more.

Choosing between cash vs. gold has been a debated discussion, but there is not a single person who can argue that holding something detached from the dollar, without counter-party risk, is a solid way to diversify your portfolio.  I’m 5-10 years from retirement, and I’ve been keeping about 15% of my retirement savings in precious metals for a while now.

This is the ONLY way to hedge vs. inflation and the plummeting US Dollar.  Keeping a percentage (I’ve had advisors suggest 5-20% of your portfolio worth) diversified into gold and silver will carry my portfolio during tough economic times, and should we hit a huge crisis, rocket up in value.  The best part, is that although our markets are no doubt RAGING right now, gold continues to hit all time highs.  Central Banks are buying gold in record numbers, so why not add some?

This is what’s called a Gold IRA Transfer, and this process is down by precious metals companies to help you convert some of your existing retirement and invest it in gold (or even silver.)  It can be an IRA, 401(k), pension, or any other type of retirement account.

I went through this process and chose Goldco to handle this transaction.  (I surveyed dozens of companies before making this decision.)  You can request a free gold investing kit and get a free consultation from them by submitting your information using the links below.  American Hartford Gold is also a very solid option and they are the best option if you want to acquire bullion outside of your retirement account.

If you have the minimum $25,000 to invest in gold in your IRA, 401(k), PSP, or other qualified retirement, fill out the form for Goldco.  If you want to buy bullion for your own storage outside your IRA, select American Hartford Gold.

The Best Gold IRA Companies

Best for Investors of All Levels ($25,000 Minimum)
Best for Direct Bullion Purchases ($5,000 Minimum)
5.0
4.7
  • Perfect for "newbie" precious metals investors
  • Qualified accounts can receive up to 10% in FREE silver
  • Highest price buy back guarantee
  • Rollover your retirement account into a Gold IRA, or buy precious metals directly
  • A+ BBB Rating, AAA Rating from Business Consumers
  • 5-Star reviews on Trustpilot, Trustlink, Google Reviews, Consumer Affairs
  • Always FREE shipping
  • Exclusively recommended by Bill O'Reilly, Rick Harrison, Mayor Giuliani and others
  • Lowest price guarantee & no buy-back fees
  • Featured on Newsmax, RSBN, Epoch Times and Fox News
  • Over $1 billion in precious metals delivered with thousands of satisfied clients
  • Offers up to $10,000 in FREE silver
  • A+ rating with the BBB & thousands of positive reviews from customers
Best for Investors of All Levels ($25,000 Minimum)
5.0
  • Perfect for "newbie" precious metals investors
  • Qualified accounts can receive up to 10% in FREE silver
  • Highest price buy back guarantee
  • Rollover your retirement account into a Gold IRA, or buy precious metals directly
  • A+ BBB Rating, AAA Rating from Business Consumers
  • 5-Star reviews on Trustpilot, Trustlink, Google Reviews, Consumer Affairs
  • Always FREE shipping
Best for Direct Bullion Purchases ($5,000 Minimum)
4.7
  • Exclusively recommended by Bill O'Reilly, Rick Harrison, Mayor Giuliani and others
  • Lowest price guarantee & no buy-back fees
  • Featured on Newsmax, RSBN, Epoch Times and Fox News
  • Over $1 billion in precious metals delivered with thousands of satisfied clients
  • Offers up to $10,000 in FREE silver
  • A+ rating with the BBB & thousands of positive reviews from customers

 

How Do Cash And Gold Compare?

Now let’s get into why this makes sense and why many sharp investors are making this move ahead of what will be the most important election in history.

Cash and gold have to be compared on the following factors:

  • Liquidity
  • Risk Factors
  • Inflation Hedge
  • Durability

Gold vs. Cash

1. Liquidity

Liquidity is how we rate assets in the ability to quickly convert to cash to satisfy immediate needs.  Here’s how gold and cash compare in terms of liquidity:

Cash

It’s no doubt the most accepted legal tender in the wold.  “Cash is King” is said for a reason!  It makes the economy go around.  Whether in your hand on checking account it can be used to pay bills and purchase goods.  Cash is the most liquid type of accepted payment.  HOWEVER – it does come with risks.  Easy access to cash can lead to impulse purchases for instant gratification.  When you have cash in hand, you may be more prone to spending it.

Gold

Now gold has a more deliberate liquidity cash.  In particular, selling gold takes a few steps such as purity verification, sourcing a buyer, negotiation, and settling funds.  In a case of emergency, this makes gold less liquid when compared to cash.  However, if you own certified gold bars and coins, you’ll be able to liquidate them within a day or two.  If you work with Goldco, you have the guarantee of a buyback program, meaning if you set up your gold IRA with them, you’ll also be able to sell it back to them in a seamless transaction.  You won’t have to find a buyer or deal with any hassle.  You can sell if the gold goes up in value, when it’s time to withdraw retirement funds, or whenever you simply want to transition to another investment.

The Verdict: Cash

In fairness, cash is more liquid than gold. 

Investing in gold favors people who are investing for the long term, anticipating a downturn in the market, or fearing recession.  Patience is rewarded handsomely for gold investors – for this reason my longview investment strategy has me holding it in my retirement account versus at home or in safe deposit box at the bank.

Let’s get into the other three comparisons to show why in the end, holding gold is a very wise choice in my opinion as well as in the opinions of billionaire investors like John Paulson, Ray Dalio, and Lord Jacob Rothschild who are heavily invested in gold.

Perth Mint Gold Minted Bars

2. Risk Factors

Each investment we make has a risk factor.  Even holding paper currency has a risk factor, as we’ve all seen with inflation.  Here’s how gold and cash compare in terms of risk:

Cash

When you hold money in hand or in a bank account you carry risks with cash. Most people don’t think about this, but we have the risk of defaults, bank collapses, inflation, and even confiscation.  Even physical cash kept at home runs the risk of theft, natural disasters, or misplacement.  While cash invested in banks has little risks other than bank collapses, which happened frequently in 2023, and are most likely on the horizon in 2024 in the regional bank sector, fiat currency has counterparty risks.  Remember what happened to our dollar when we started printing money?  Yet still, our national debt continues to climb.

Banks also oversee the inflows and outflows of your money.  They tack on ungodly fees and can block payments at their own discretion.  They call this “fraud prevention.”

Gold

This unique asset class is time tested, on the other hand.  Gold has limited counterparty risk and direct ownership of physical gold can insulate you from bank failures and hyperinflation.  While there is volatility in gold prices at times, it’s maintained purchasing power GLOBALLY and has been traded since the beginning of time.  My gold IRA company of choice securely stores my gold in a vault in Texas for only $100 per year.

The Verdict: Gold

Gold is the best way to diversify your portfolio.  Financial minds like John Paulson, the world’s largest gold investor, and Robert Kiyosaki have massive net worths and they advocate for gold daily.  This is the best hedge against institutional risk and geo-political turmoil.  The Central Bank is buying gold in record numbers.  Do they know something we don’t?  Perhaps.  But they buy gold to protect themselves.  Why don’t most Americans?

3. Inflation Hedge

We’ve all seen it since the pandemic – INFLATION.  This erodes the purchasing power that cash provides, so we need to diversify into asset classes that maintain value over time.  Especially during economic uncertainty and turbulent global markets.  Here’s now gold and cash compare in terms of dealing with inflation:

Cash

The biggest loser in inflationary times is cash.  It’s extremely vulnerable to high inflation and drastically reduces purchasing power.  Hyperinflation has terrorized people’s life savings.  People who saved a certain amount for retirement and are now seeing the cost of living shoot up are wishing they had bought gold 15 years ago as they now can’t live the retirement they carefully mapped out many years ago due to inflation and it’s effect on the US Dollar.

Gold

You can go back centuries and see the track record of gold and how it’s maintained it’s purchasing power.  It APPRECIATES during inflationary periods as savvy investors turn to gold as a safe haven.  The limited amount of supply and high production cost gives intrinsic value to gold.  Gold mines don’t just pop up out of the ground when demand goes up.  This makes it the top inflation hedge over the long run and is the exact reason I invested in gold.

The Verdict: Gold

Cash simply can not match the time-tested hedge against inflation that gold offers.

4. Durability

How your investment will withstand the test of time is what we call durability.  Here’s another comparison of gold and cash in terms of durability.

Cash

Paper currency deteriorates and has awful durability.  It often needs to be replaced.  Physical coins can chip, bend, and erode.  Their face value goes down when this occurs.  The actual lifespan of cash is less than 10 years on average before it needs to be replaced.  Nowadays, physical cash is not used as much as society goes to debit cards an phone payments, but there’s still a percentage of business being done in cash so that has to be factored in.

Gold

Nothing shines brighter than gold when it comes to durability.  It won’t corrode or be destroyed over time.  Gold dates back thousands of years and has actual use cases in jewelry and machinery.  (As does silver, which has more use cases.)  These precious metals are virtually indestructible and even when melted down have significant value.  Try burning a $100 bill and see what it’s worth after.  Gold is something that can easily be passe down for generations.

The Verdict: Gold

On a global scale, gold is much more durable, and therefore, usable, vs. paper currency.

Gold Vs. Cash Purchasing Power Over Time

In closing, this is probably the best example I can share with you about why you need exposure to gold in your retirement portfolio.

Let’s say you deposited or put away $100,000 in 2000.

Today it is only worth about $74,000.

If you purchased $100,000 of gold in 2000, today it is worth over $530,000.

Since 2000, the dollar has lost over 27% of its purchasing power, while gold gained an astonishing 530%.

To me, that is absolutely MIND BOGGLING. 

It was the nail in the coffin for me, and why I decided to protect my retirement portfolio by investing in precious metals with just a small percent of my IRA.

If you are nearing retirement or even in retirement with significant retirement savings, can you afford a market crash of 20, 30, 40%, or more?

I don’t even let that bother me, knowing that if that happens, like it did in 2008 and the following years, my precious metals holdings will SURGE.

This chart shows when savvy buyers saw a market top in 2006 and started buying gold.  Look at the returns in the years the economy TANKED.  At the same time, by March of 2009, the DOW lost 54% and took a full four years to make those gains back.  People sitting on gold didn’t feel it.  I certainly did.  I wasn’t invested in metals until just after that.

Gold Chart 2006 - 2011
Tim Schmidt

About 

Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started IRA Investing to share his expertise in using his Self-Directed IRA for alternative investments. His views on retirement investing have been highlighted in USA Today, Business Insider, Tech Times, and more. He invested with Goldco.