Before Donald Trump became President of the United States of America, he struck a deal that defied the norm: when APMEX Chief Executive Michael Haynes moved into Trump’s 40 Wall Street property as a tenant, the former paid the latter with a security deposit of three gold bars. This was during the time when Trump expressed concern over the country’s dollar rate. He saw how vulnerable the currency was due to factors like inflation. Given this news, it seems that gold may be more preferable than cash — and the following can explain why:
Gold is Produced while Money is Printed
Gold instils discipline on the owner because it is not easy to produce. Unlike cash, which the government can print upon request, gold takes several years to form as it undergoes a long production process, from mining to minting of gold bars. The problem with printing a surplus of cash is that can decrease the value of the currency in terms of goods and services.
The Bank Owns the Cash
Investors retain ownership of the allocated gold should they decide to deposit it in an institution. Getting the gold delivered is easy. They simply need to visit the bank and request for the deposited gold in the vault. Thus, people can purchase gold bars at the current price in stores like Atkinsons Bullion, insure it and then deposit it without any worries.
Cash on deposit, on the other hand, does not truly belong to the investor. The bank owns the money and, if it ever goes bankrupt, then all cash on deposit in the bank would be shared among its creditors. Also, if everyone in the country requested all their cash from the bank at the same time, then there would not be enough time to provide people with enough physical cash.
Gold is more Secure
Investors holding gold will receive exact identification numbers — bar, purity and manufacturer, specifically — of each gold bar in their possession. In addition, the owner may insure the gold and even have it set apart from other gold in the vault.
With these reasons, it is easy to see why some people would prefer gold to cash. While some still consider cash as king, gold will still be around as people continue to accept this precious metal as a form of payment.