Gold or cash savings? Different jobs, not an either-or choice

A better question

Many people ask whether it is better to save in gold or in cash. A more useful question is: what is this money for, and when will I need it? Money for next month's bills, an emergency fund and ten-year savings all have different needs.

Money in a bank savings account

• Easy to use: can be withdrawn or transferred quickly for spending.
• Fixed nominal value: for example, RM1,000 stays RM1,000, plus any interest or returns.
• Interest or returns: BNM explains that the Overnight Policy Rate (OPR) influences deposit rates, i.e. the returns on savings. The actual rate depends on the product and the bank.
• PIDM protection: eligible deposits are protected up to RM250,000 per depositor per member bank.
• The drawback: BNM states that high inflation erodes the purchasing power of savings. If prices rise faster than the interest you earn, your money buys less.

Gold, for example through GAP

• Can be bought bit by bit: from RM100, or multiples of RM50, or 1 gram (GAP terms, clause 1.8).
• No interest or dividend: the WGC notes gold provides no regular income, so any benefit depends on the price rising.
• Price moves: the ringgit value changes with the gold price and the exchange rate.
• Exit costs: the spread when selling back, and a Gold Premium if you withdraw physical gold.
• Diversification: according to the WGC, gold behaves differently from stocks and bonds, so some people hold it as part of long-term savings.
• No PIDM protection: gold-related products or accounts are not covered by deposit insurance.

At a glance

	Money in a savings account	Gold (GAP)
Immediate use	High	Must be sold first; money credited 1–2 business days after confirmation
Value in ringgit	Fixed (nominal)	Goes up and down
Interest / returns	Yes, depends on product	None
PIDM protection	Yes, for eligible deposits, up to RM250,000	No
Exit costs	Usually low	Spread; Gold Premium if physical
Inflation risk	Purchasing power can erode	Not guaranteed to beat inflation in every period

Dividing up the jobs

1. Daily spending and bills: money in the bank.
2. Emergency fund: cash, three to six months of expenses per BNM's guide.
3. Short-term goals (less than a few years away): better kept in a form whose value doesn't move.
4. Long-term savings from spare money: this is where gold can be considered as one part, alongside other options.

There is no gold percentage that suits everyone. BNM Museum material recommends advice from licensed financial advisers for a more complete plan.

Risks and costs

• Gold price risk: Public Gold's terms state there is no guaranteed profit and losses can happen.
• Spread and Gold Premium: costs when selling back or withdrawing physical gold (GAP terms, clause 2.3).
• Cancellation charges: clauses 1.17, 2.7 and 3.7.
• Cash savings risk: purchasing power can be eroded by inflation, especially if interest rates are below inflation.

Quick FAQ

Does money in the bank always lose out to inflation?

Not necessarily. It depends on how the interest or returns you earn compare with inflation over the period. Money in the bank is still essential for spending and emergencies.

Is gold better than ordinary savings?

It depends on the purpose. For money you may need right away, ordinary savings fit better. For part of long-term savings, some people choose gold while accepting the price risk.

What percentage of my savings should be in gold?

There is no universal figure. It depends on your income, commitments, time horizon and how comfortable you are seeing values fall. Consider advice from a licensed financial adviser.

Why isn't gold protected by PIDM?

PIDM protects eligible deposits at member banks. According to PIDM, gold-related investment products or accounts are not included in that protection.