If Cash is the New King then does that make Gold the Sleeping Emperor?

An interesting study reveals what people of different income demographics are doing with their money.

So there is this in-depth report called the “Survey of Affluence and Wealth in America” that American Express publishes every year. Each year's version will usually have slight differences than the last in regards to what the report is targeting exactly or how it presents that data. In the 2012 version, there is a clear distinction between multiple categories of income levels - namely, differences between the top 1%, the 10% and then everyone else (aka the 90% or 99%).

I won't bore you with the grueling details, so even better, I'll give you the "Cliff Notes" on it. Here are some highlights:

Firstly, incomes for the top 1% increased by 6% in 2011, which was actually slightly lower than everyone else. This should offer a tiny bit of satisfaction in the face of what many have coined, "The rich getting richer, while the poor get poorer." Of course we shouldn't rest for one second and assume that this trend will continue this year, but perhaps some 'safer diversification'can prolong this statistic...

Secondly, investing dollars has gone down from 71% to 39% of a portfolio. This should come as no surprise as the micro-economic impacts on the average adult American have not been very positive. We've got less to invest with, which of course again means that we should probably get 'smarter' about what to invest in...

Thirdly, whereas in 2007 savings was only 12% among the top 1%, it is now much higher - at 34%. Hmmmm. So despite available investing dollars decreasing drastically for everyone, the 1% are still allocating more towards their savings - smart move. It follows logically that the non-1%'s should probably take a cue from the rich and start putting more into their savings too...

Fourthly, even after the recession ended, savings has stayed high overall, unlike the 1981 recession when consumers spent aggressively (and back then, passive income tax rates dropped from 70% to 20%).

Fifthly, there will be almost $6 trillion in personal savings accounts by the end of 2012 and another $3 to $4 trillion will be floating in cash among businesses. With all accounts receiving about 0.3% interest, one would think that there will be little to no complaints.

Let's pause for a second. I know that I just spit a lot of numbers and figures at you with no actual pictures to balance out your absorption of this material, so here is some additional valuable information presented in graphical charts format:

The key things that I want you to direct your eyes toward, are the green and red arrows. Notice how the percentage of savings going to personal savings/money market accounts has gone up from 29% to 61% between 2007 and this year so far? Wow. That's a LOT of faith in the U.S. Dollar - perhaps a little too much faith. Then, take a look at how the percentage invested in financial products and markets has gone down from 71% to 39% between the two years. NOW, notice how precious metals has NOT been covered. It's a giant elephant standing in the room and yet it has not been included in the mix.

No matter. Knowing this flaw, we can thus still utilize this information to observe how cash savings are different 'between' the different income brackets:

As printed in bold, we can see that 60% of the extremely wealthy are putting 25% or more of their income into savings! Now HONESTLY, if you are in the 90% crowd and not making millions each year, can you really afford to put over 25% of your income into savings? Most of you will probably say, "No" because that 25% has to go into actual necessities that you HAVE to buy.

So what is the next best thing?

Well first off, getting 0.3% is probably the most unsexiest thing you have ever heard of. Frankly, I would be surprised if you weren't discouraged from putting anything into any form of savings at all.

So how then does one get more than 0.3% a year without risking his or her entire nest egg? Aside from the obvious initial step of not putting all of your eggs in one extremely risky basket or one overly conservative 0.3% basket, you might want to start taking a look at precious metals and locking in low prices after prices drop in reaction to the recent Greek tragedy that almost everyone knew was coming, but still felt the need to 'react' further to, after the obvious and predictable consequences fully manifested themselves this week.

I don't mean to poke fun at you if you were in this boat, but moving on to the next step into the future, I think it wise that you really take a look at being more intelligent with your savings investments, considering the fact that, unlike the extremely-privileged, you probably can't set aside 25% of each and every paycheck...

Be safe, be wealthy and above all else, be happy.

- Mitch

Sponsored by Leland National Gold Exchange ***** Legal Disclaimer: The author has made every effort to ensure accuracy of information provided, however, Leland National Gold Exchange, nor any other affiliate website, nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Leland National Gold and all of its affiliates, agents and associative entities do not accept responsibility or culpability for losses and/or damages arising from the use of this publication.