Gold Prices Soar – Does It Outperform Cash Savings?
With gold prices surging over the past year, many investors are questioning whether gold is a better store of value than cash. While cash savings offer security, inflation and low interest rates are eroding purchasing power. So, if you had £1,000 to invest, should you buy gold bullion or stick with a high-interest savings account?
Gold’s Recent Performance: A Safe Haven in Turbulent Times
Gold has outperformed most asset classes in 2025, driven by:
-
Geopolitical tensions
-
Economic uncertainty
-
Declining confidence in the US dollar
Tom Stevenson, Investment Director at Fidelity International, explains:
“Gold’s safe-haven appeal, liquidity, and reserve status have made it a top choice for investors seeking alternatives to dollar-denominated assets.”
Gold vs Cash: A £1,000 Investment Compared
Research from The Gold Bullion Company reveals stark differences:
| Investment | Value After 1 Year (Apr 2024 – Apr 2025) | Profit |
|---|---|---|
| Best Cash ISA (4.10% AER) | £1,041 | £41 |
| Gold Investment (After 3% Fees) | £1,319.40 | £249.82 |
Gold delivered 144% higher returns than the best savings account.
Long-Term Comparison: Gold vs Savings Over 10 Years
Looking at a 10-year horizon, gold’s advantage is even clearer:
-
£1,000 in a savings account (2015-2025): £1,180.84 (£180.84 profit)
-
£1,000 in gold (2015-2025): £2,978 (£1,978 profit)
Gold generated 11x more profit than cash savings.
The Downsides of Gold
Despite its strong returns, gold has drawbacks:
✔ Storage costs (~0.65% per year + VAT)
✔ Price volatility (No guaranteed returns)
✔ Liquidity (Selling may take time)
Rick Kanda, MD at The Gold Bullion Company, advises:
“Gold is a strong hedge but should be part of a diversified portfolio, not your only asset.”
The Problem With Cash Savings
While cash is safe and liquid, challenges include:
-
Inflation erosion (3.4% CPI vs ~5% best savings rates)
-
Tax on interest (Depending on income bracket)
-
Withdrawal restrictions (Some accounts penalize access)
Expert Verdict: Which is Better?
-
Short-term security? → Cash (Emergency funds first)
-
Long-term wealth preservation? → Gold (Beats inflation over time)
Final Advice:
-
Keep 3-6 months’ expenses in cash for emergencies.
-
Consider allocating 5-15% of investments to gold for diversification.
