World Gold Council offers report on investing trends
- Published: Nov 30, 2020, 3 PM
Concerns over counterfeit gold products and a lack of trust in gold as a safe investment were revealed in a survey of investors in the United States and Canada.
The World Gold Council published its findings in a 48-page report from online interviews conducted with 4,041 investors — 2,029 in the United States and 2,012 in Canada.
“Reassurance was identified as the second most important driver for gold investments (19 percent in the US and 17 percent in Canada), and there is work to do if considerers [those contemplating gold investment] in the U.S. are to be convinced that they can be better protected from counterfeit gold,” according to the WGC report. “Potential investors in both markets would benefit from more information about the purity of gold and how it is valued.”
Among the U.S. investors, gold ranks in the top five most commonly owned investments. But in both markets, four in 10 investors say they would consider investing in gold having never done so before.
“American retail investors tend to be more confident investors, focused on long-term objectives, with more diversified portfolios,” according to the WGC report. “And gold falls in their top five most commonly-owned portfolio investments.
“In Canada, despite the country’s huge mineral wealth, confidence was lower among the respondents: our survey showed that Canadians are more nervous about what the future may bring. They tend to be more risk averse; holding fewer portfolio products on average, they do not regard gold as mainstream.”
In the United States, of those investors surveyed, three in 10 respondents currently own gold and four in 10 have never bought gold, but are open to the opportunity.
In Canada, 42 percent of the investors queried said they would consider making their first ever investment in gold.
Investors ages 55 to 65 in both countries appear to know little about gold and do not feel confident enough to invest.
“They seldom see gold in the media, their peers do not talk about it and they do not know anyone who invests in it,” according to the WGC findings. “Although they are open to gold, without a reference point and the necessary information to support their decision making, they can see no route forward.”
To reach target markets, more education is needed about product types, how to buy gold, how the precious metals fit within their respective portfolios and how gold is valued, according to the WGC report.
More than one-third of overall investments in the United States are conducted exclusively online, with cryptocurrencies leading the products. Most prominent among the gold investment products are exchange-traded funds, according to the WGC report.
Canadians are concerned about gold mining and its effects on the environment.
“The gold mining industry must convince investors that it takes seriously its responsibilities regarding environment, social and governance standards, with a focus on the communities that surround a mine site,” according to the WGC report.
On average, American investors reserve 24 percent of their income, but portfolio diversity is limited.
Savings accounts and life insurance are the top investment choices, with gold averaging fifth if five or more options are secured.
U.S. investors are likely to think long term, willing to take risks but looking for options to protect their assets.
Investors in Canada dedicate only 17 percent of their income to investments, with savings and life insurance at the top, followed by government-backed investment funds, with gold much further down the list.
The full 48-page report can be accessed on the WGC website, www.gold.org.
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