According to a recent Gallup poll, gold sprinted past all traditional paper assets this year to take second place in a nationwide vote for America’s “favorite investment.”
And the number of Americans who say they consider gold the best long-term asset has almost doubled from 15% to 26%.
Real estate has held the title of most popular investment since 2013, but now it appears to be losing ground fast — falling 11% from a record 45% of Americans naming it top investment last year, down to 34% in 2023.
Meanwhile, interest in real estate is down because “Higher interest rates over the past year have cooled the housing market, dampening consumer exuberance about real estate as an investment,” the poll reported.
And this is good for gold in part because…
As Gallup says, “Gold tends to be the beneficiary when confidence levels in both real estate and [paper assets] are down. This is typically during times of economic recession or uncertainty, as happened around the time of the Great Recession, and is happening again today.”
Gallup also says part of that economic uncertainty includes concerns over the US banking sector.
In a second poll, conducted after March’s bank failures, Gallup reports “nearly half of Americans are anxious about the safety of the money they have in accounts at banks or other financial institutions.”
This is “on par with the level of worry measured during the financial crisis in 2008…,” Gallup says.
It’s easy to see why so many Americans have shifted towards holding long-term “hard assets” like gold.
Data from the World Gold Council confirms this trend, reporting a sharp uptick in US precious metals investments. In fact, the WGC reports US investors bought 36 tons of gold bars and coins in the first quarter of this year alone.
Louise Street, a senior markets analyst at the WGC, lends her insights on this increase, saying about two-thirds of investors recognize gold as a store of value during uncertain political and economic times and believe the price of gold is on an upward trend.
Those who already own gold feel even more enthusiastic about their choice, reports the WGC — with 87% indicating they believe gold is a reliable long-term asset.
And the World Gold Council also says this increased demand for gold extends to global central banks.
As you may recall, central banks’ purchases hit a record high in 2022, and they have continued their heavy gold buying into 2023 — accumulating gold at the fastest pace on record in the first quarter, 34% higher than the last Q1 record set in 2013.
And according to the WGC’s recent Annual Central Bank Survey, central bankers say their top reasons for buying gold at such an accelerated pace include “Performance during times of crisis,” “Long-term store of value/inflation hedge” and “Effective diversifier.”
“It’s hardly surprising then that in a year scarred by geopolitical uncertainty and rampant inflation, central banks opted to continue adding gold to their coffers and at an accelerated pace,” says the WGC. “Looking ahead, we see little reason to doubt that central banks will remain positive towards gold and continue to be net purchasers in 2023.”
In fact, nearly a quarter of central banks say they plan to increase their purchases this year. And nearly 100% listed “interest rate concerns” as their top reason to hold gold.
This accelerated central bank buying, coupled with the massive increase in everyday Americans buying gold and yet unseen economic challenges could push gold’s price to new highs.
Richard Gardner, CEO of Modulus Global, agrees and says recent economic uncertainty “makes it likely that the economy won’t rebound in the near term.” Which, he says, “bodes well for gold.”
What do experts say about the recent economic uncertainty and gold demand?
Forbes says “Gold is on the precipice of hitting its highest price on record as investors turn to the safe-haven asset amid a rocky macroeconomic environment, and analysts believe the precious metal could have much more room to run…”
Strategists for the Wells Fargo Investment Institute predict gold could rise to near $2,500 in 2024.
And CMC Markets analysts believe a possible Fed pivot will send “gold prices up to between $2,500 and $2,600 per troy ounce.”
Of course, nobody knows for sure what gold or any asset will do next.
But as growing concerns over possible fallout from the recent debt-ceiling negotiations ripple through the economy, Forbes says it could also “bolster gold prospects.”
Bottom line:
Official poll results from trusted sources match the sentiments our Gold Specialists hear from concerned Americans every day: In this “rocky macroeconomic environment,” an increasing number of people seeking a confident path to diversification choose physical gold.
