Bank CDs vs. Gold – Which Will Offer Better Return Moving Forward?

Many seniors today are still under the assumption that CDs at the bank are safe. Well, they are still safe today depending on which bank you hold your funds with, but the interest rates the last few years should have seniors asking the question, can I do better with my money elsewhere? Seniors could have fared better the last 10 years with a little bit of diversification into an asset that has over 5,000 years as a safe haven and can never go to zero in value. That asset is gold.

Historic Lows For Interest Rates

We are at historic lows for interest rates and many savers aren’t happy with the small return they receive on their bank CDs. Even the Jumbo CD rate has come down to where it’s almost better to keep your money under your mattress than pay the price for gas to go visit your bank every time your CD matures. But savers could have taken advantage of a little diversification and still received income from their CDs but also capture some growth of their funds. That growth could have come from a diversification into gold.

Price Of Gold Has Moved Up 10 Straight Years

The price of gold has gone up for 10 years straight, going on 11 and you are still not invested. The Federal Reserve is doing all they can to keep interest rates low and it is at the expense of the interest rate you reveive on your CDs. Take a look at the comparison of CDs and gold below the last 10 years. It is clear that a diversification into gold would have put you in the drivers seat and actually given you more funds to take income from today.

Gold Vs. CD Compounded Return Last 10 Years

What Does The Future Hold For Gold?

The real question to answer here is not what the future holds for gold, but what is the reality that our government, Congress and the Fed will take the necessary steps in righting the sinking ship our economy is on. Added to that, is whether or not the nations top banks can find a counterparty to the over $4 trillion of sub-investment grade derivatives coming due in the next 5 years.

Higher interest rates would kill an already depressed economy. Even with interest rates as low as they are, the U.S. economy is at a standstill. Unemployment is not increasing and it seems the lifeboats are being lowered as we speak.

Unfortunately, the powers that make our economic decisions won’t be able to stop the U.S. economic ship from sinking and the banks will not find a counterparty to their risky assets, except for the Fed who already has a messed up balance sheet. This is why you own gold. It is insurance against the inevitable. It also is the asset that has gone up each year for the past 10 years running.

You’ll notice in the chart above that the last price I put for gold, $1,388.50 was the price on January 1, 2011. Gold is over $1,600 an ounce as of this writing and will finish it’s 11th straight year of higher prices.

What Type Of Gold Do You Buy?

The best type of gold to buy are the one ounce American Eagle Gold Bullion Coins. I only recommend the one ounce gold coin as it offers investors the most gold for their money. The other sizes of American Eagle Gold Bullion Coins are ½ ounce, ¼ ounce and 1/10 ounce, but have a higher premium and don’t make sense to own because of this higher cost. If one wanted to use smaller denominated coins for barter, they should use 90% silver coins. These are the pre-1965 quarters and dimes that were once in circulation in the U.S.

The American Eagle Gold Bullion coin itself weighs a little more than one ounce (1.091 Troy ounces), but contains one full ounce of gold.  These coins are the best value for gold investors because they are highly recognizable and are easily liquidated if cash is needed.


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About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534


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