When the bank goes bust there's insurance on your deposits. If the amount stored is greater than that insurance you may want to invest the difference.
And gold is practically hard to work with and barely functions as an inflation hedge (point 1) over reasonable time periods (your lifetime).
Usually it covers only limited amount, not full deposit. In US it seems to be generous $250 000 but in other countries it is much lower (e.g. just about $20 000 here).
> gold is practically hard to work with and barely functions as an inflation hedge
And deposit interest rates are often below inflation in developed countries.
And, yet, it's not an everyday occurrence that some US regulated financial institution loses all customer deposits...
It also addresses the bankruptcy problem with government loss protection + regulation on net reserves (which worked and are tweaked as multiple overlapping failure conditions are tested, last in 2008).
This is nonsense. FDIC insurance is adequate for most people and you can open multiple bank accounts without any issues to expand your coverage limit. Stop giving people bad advice.
And everything you said about banks is an issue with gold. Most people don't have a vault at home they are storing gold in... they are simply buying a certificate that says they own gold in someone else's vault--which has all the same issues as banks and exchanges.
As I understand, investing is a risk because you can lose everything and nobody will compensate you. Investments are not covered by FDIC insurance or similar systems in other countries.
But as for gold, your gold will stay with you unless the government decides to confiscate it.
You're infinitely more likely to get robbed than the bank is to fail or the S&P500 is to go to zero. Also, as I said most people invest in gold indirectly and they hold a certificate that says they hold X amount of gold. Idiots store gold at their property and the exchange rates for buying/selling make this by far one of the worst strategies.
Except it's not. It's trivially easy. Any exchange (or person/entity) can mint a coin, and FTX collapsed in-part because they were backed by their own coin.
- the government can print more money and devaluate your savings (it's like a form of tax one cannot avoid). But it is difficult to "print" more cryptocurrency.
- the government can put limits on amount of money one can withdraw from a bank account. So you legally have the money but cannot use it.
- the bank can refuse to deal with you under AML acts without need to prove anything. But nobody will ban you from mining and exchanging crypto.
- the bank can go bankrupt
The most reliable way to keep your savings safe seems to be to store it as gold. However, there are usually high taxes for buying/selling gold (because why let people store their savings safely) and often governments outright ban gold (folks from US are probably familiar with such situations [1]).
[1] https://en.wikipedia.org/wiki/Executive_Order_6102