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Value of gold holding soars 41% over last decade as cash savings decline

·Contributor
·2-min read
Gold remains a safe haven. Photo: Yuriko Nakao/Reuters
Gold remains a safe haven. Photo: Yuriko Nakao/Reuters

The value of gold holdings has climbed 41% over the last 10 years as the real value of cash ISAs have fallen 2% over the same period, new research has shown.

The study from gold-based payments system Glint Pay Services highlighted that the collapse in the value of cash and the knock-on impact on consumer purchasing power is down to rising inflation, continued government-backed quantitative easing and increased public borrowing.

In the recent budget, chancellor Rishi Sunak announced that total borrowing during the COVID-19 pandemic would hit £407bn, a sum not seen in peace time, by the end of the current financial year in April.

The cash has gone towards protecting businesses, supporting jobs, and bolstering the NHS and public health response to the virus.

READ MORE: UK government borrows another £8.8bn in January

Interest rates also had an effect on where people put their money. Rates have hit historical lows in the midst of the health crisis.

In February, the Bank of England told bank chief executives to be ready for negative interest rates within six months after almost a year of flirting with the policy. Rate setters cut the UK’s interest rate to 0.1% last year, leaving them little downward room to manoeuvre.

Glint said that with the prospect of the introduction of negative interest rates and with inflation predicted to rise further, the declining value of cash and consumer purchasing power is set to continue.

“Negative interest rates could have a further catastrophic impact on consumer finances if consumers are forced to pay fees to hold their savings in banks,” it said.

WATCH: What are negative interest rates?

According to research from AJ Bell, the real value of £10,000 in a Cash ISA 10 years ago has declined to be worth just £9,770 today, while cash savings accounts have also dropped 21% over the last decade.

“The devaluation of global government-backed currencies hits consumers and savers hardest. Governments can essentially print more money or scale up borrowing, whilst the average consumer loses out,” said Jason Cozens, founder and chief executive of Glint.

“Once again, they are punished for trusting in cash as its value has collapsed over the last decade.”

He added: “Unfortunately, most consumers remain unaware that there are alternative ways to store your capital and protect your purchasing power.”

“Whilst we believe that gold is the fairest and most reliable currency on the planet, the price can rise and fall which can impact purchasing power. However, these short-term fluctuations are often much less extreme than cryptocurrencies and these figures suggest that gold is a much more reliable and valuable alternative compared to cash.”

WATCH: Should I pay off debt or save money during the coronavirus pandemic?

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