Is Gold Better than a Savings Account?

With savings accounts offering far less than the rate of inflation, it may be worth considering gold as an investment due to its stability and robust nature.

Is Gold Better than a Savings Account?

For many people who want to put some money aside and start saving their hard-earned cash, a bank account designed for savings can often seem like the most popular, most sensible, and the safest option. However, is putting your savings into a bank account always the smartest, or even the safest choice? Saving money with gold might not be the go-to option, and it can seem like it might be more of a risk – but is this always true? If you want to save your money and are weighing up your options, then it might be worth considering saving in gold as an alternative.  

Currently, the Bank of England’s Monetary Policy Committee has decided to maintain the interest rate of 0.1% which is the lowest interest rate in over three hundred years of the bank’s history. And it’s unlikely that interest rates will be rising any time soon due to the massive, increasing amount of national and corporate debt.  

Choosing How to Save Your Money

Purchasing gold might not be the first thing that springs to mind when you think about saving some money. Most of us will go online, compare some bank accounts, and apply to open the one that we like the look of best. However, with the current economic crisis, the threat of negative interest rates, interest rates dropping across the board for savings and the rate of inflation, it might be worth looking into alternative options. Gold tends to hold its value much better compared to the UK pound and other fiat currencies as there is a finite amount of it, and it cannot be created easily. Keep reading to find out more about why switching to saving in gold might be a wise idea, and some of the main benefits of gold over a savings account.  

Lowest Savings Rates on Record

The UK’s average saving interest rates have fallen to the lowest on record, according to experts. On average, rates across all popular and traditional savings account products — particularly easy access savings accounts and easy access ISAs — have fallen and may be only set to fall further. In 2020, the average interest rate for an easy access ISA was just 0.32%, and even lower for a general easy access savings account at 0.22%.  

Not only are savings account interest rates at a low point, but some accounts have 0% interest rates on savings. Many banks have been announcing in the past few years that they are no longer going to be paying any interest on certain savings accounts.  

Could You End Up Paying to Save?

If you’re weighing up your options when it comes to gold vs savings account, or are considering a gold savings account, then it might be worth bearing in mind that negative interest rates are on the horizon. This has been hinted at by the Bank of England as something that might be introduced should the UK economy continue to struggle. Banks in Switzerland, Japan, Sweden, and the Eurozone have already introduced negative interest rates.  

While in theory, negative interest rates might be helpful to boost the economy, the reality is that if commercial banks end up having to pay negative interest rates to central banks, this cost will be passed on to customers. As a result, paying a monthly or annual fee to the bank to simply save your money in an account may become the norm, as is the case with a lot of current accounts today.  

How Safe are Bank Accounts for Savings?

There is always some level of risk involved with saving your money in a bank account. Any bank is at risk of failing, and the chance of this happening to your bank is even more likely at the moment with the current economic crisis.  

We are living in uncertain times, and the financial pressures on the banks are huge. This could lead to some banks going into insolvency and bank bail-ins are becoming a bigger treat. When you have your savings deposited in a bank, this essentially makes you an unsecured creditor of the bank, putting your savings at risk of being seized.  

Financial Services Compensation Scheme

If you have your savings in a UK bank that is covered by the FSCS, then your savings will also be covered. The FSCS will cover up to £85,000 of any savings that you hold in a UK bank. However, if you have a larger amount of savings in the account, anything extra will not be covered. Along with this, some experts believe that the FSCS only has enough money to cover just one percent of the total amount of money saved in UK bank accounts today.  

Gold is Money

When you use a bank account to store your savings, you are putting all your wealth, time worked, and trust in fiat currency. However, fiat currencies are all based on and completely reliant on credit. Fiat currency is a government promise to pay the face value of coins and notes and is based on the customers’ confidence in the government to ensure that a robust economy is maintained, allowing you to retrieve your wealth at any point in the future.  

However, the wealth is always being eroded over time when it comes to fiat currency. On the other hand, physical gold is cash, and has long been a reliable and strong value store.  

Currency vs Gold

Currency was once backed by gold, which is a real asset. It was possible for people to convert their paper currency into the equivalent gold value. It was known as the gold standard, and was a promise made by the Bank of England and the U.S. government.  

However, the Bretton Woods system was ended in 1971 when Richard Nixon ended the promise to convert the U.S. dollar to gold, making all major currencies around the world enter into the full fiat currency system, including the UK pound.  

Today, there are no countries that peg their currency to gold. As a result of this, governments and central banks around the world are able to print as much fiat currency as they want, leading to:


Inflation will simply chip and eat away at fiat currency. If you look at the inflation rate of the UK pound from the year 1960 all the way to 2020, it’s a massive more than 1800%. If you were to buy an item in 1960 for £1, the same item in 2020 would cost the equivalent of almost £20.  

Benefits of Saving in Gold

Whether you are looking into a gold purchase plan such as a monthly gold purchase plan or want to convert some or all of your savings into gold, there are several benefits of doing so. Some of the main advantages of saving your money in gold rather than in a savings account include:

Gold is Private

Gold is a much more private way to preserve your wealth, depending on how much of it you buy. Physical gold bullions are one of the very few private investment options that are available today. There is technically no reason for anybody to know how much gold you have. On the contrary, bank accounts are much more public, and governments can easily track your account, freeze it and more.  

Gold is Globally Accepted

Across the world, gold is well-accepted as a solid value store. It is a universally accepted payment and a very valuable asset that you can convert to the local currency no matter where you are in the world or use in transactions.  

Gold is easy to Convert to Fiat Currency

If you require fiat currency, gold is a liquid asset that can easily be traded on an open market and exchanged back into any fiat currency wherever you wish.  

Gold Never Goes to Zero

The price of gold might fluctuate, rising and falling in line with demand and supply and the market dynamics. However, the inherent value of gold will never drop to zero, as unlike fiat currency, it cannot be created out of nothing. Gold has a unique value as there is a finite supply of it. And the production process to get just one ounce of gold will require a lot of time and effort. Since there is a high cost to explore, produce, refine, deliver, and secure the gold, this adds more inherent value to it.  

Gold Maintains Purchasing Power

Purchasing power is the number of services or goods that one unit of currency is able to buy. Since the value of gold has a much higher rate compared to the value of the UK pound sterling, the U.S. dollar, and most of the fiat currencies around the world, it can increase your purchasing power. Compared to gold, all major currencies around the world have depreciated over time.  

With the banks under a huge amount of pressure, a large national debt and a very real possibility of negative interest rates in the near future, many savers are not getting much from their savings account, and are taking on increasing risk. On the other hand, those who save their wealth in physical gold have seen the price of gold increasing in value.