Gold as the emergency fund, say what? You must be thinking I’m out of my mind, but hear me out. Generally, most personal finance bloggers and finance professionals recommend an easily accessible emergency fund of 3-6 months living cost. We have 3-6 months of emergency fund in our savings account which is earning a very low 0.5% interest right now. Gold as the emergency fund is another layer of security beyond the basic emergency fund.
As some of our readers know, I’m originally from Thailand (25+ years ago) and most Asians have a different view of gold than Americans. To Asians, gold is a hard asset that is portable and safer than a bank account to save your money. In Thailand, you can buy gold jewelry at a very small premium (5%) over the spot price. In comparison, you will pay 100% – 300% mark up in the US for a gold necklace. In Thailand, when you need money, you can easily exchange the gold necklace for cash at any gold shop.
When Asians buy gold jewelry, they are saving for a rainy day. It’s equivalent to us buying Gold Maple Leaf Coins. Thai gold jewelry pieces are generally 23 karats gold or about 96% gold. That’s more pure than the Krugerrand (22k.) I don’t like wearing jewelry and only have a gold wedding band, but I’m having second thoughts after the recent run up in gold price. If I had more gold, I could have sold some and cashed out!
I’m like most middle class Americans and think gold jewelry is gaudy. Is that true? Do you wear gold chains, gold bracelets, gold rings or other gold jewelry? I think people who are decked out in blings are such show offs. Personally, I’d rather buy gold coins and stick them in a safety deposit box. I probably would lose a gold chain in the gym or something silly like that.
Back to having gold as the emergency fund. If I live in Thailand, gold would be a great emergency fund option since it is easily liquidated. In the US, I’m going to stick with 3-6 months of living expense in the saving account. (I need to open an ING account soon.) When gold price come down a bit, I’ll to buy some gold coins for a disaster emergency fund. What do you think about this plan? Do you have any gold coins under your mattress?