Generation Gold

The facts about trends in gold around the world

The World Gold Council has recently published a detailed, global survey into gold market. It provides some hugely valuable insights into what, how, why and where people buy gold. It also looks at trends in retail investment and luxury goods in general.

Overall, gold is seen as a safe, durable, traditional store of value. As an investment, retail investors buy it to protect wealth and deliver a long term return. Jewellery buyers may buy for simply for the beauty and appeal of other item, or from sentiment, or even as a reward for success

Here’s a snapshot.

Gold in Brief

Gold is mainstream: nearly half of retail investors and fashion and lifestyle consumers have bought gold at some point.

Gold is trusted: it is a symbol of safety and security. Most investors as well as fashion and lifestyle consumers trust gold more than currencies.

75% of investors in India trust gold more than currencies; in China it’s 69%, in the USA 60% and in Germany 57%.

Gold has a strong emotional resonance: people prize gold for more than merely ts inherent value. Investors and jewellery buyers both feel that gold links to happy memories and can bring good luck.

51% of investors globally feel gold brings good luck.

Gold’s appeal endures across generations: 34% of 18-34 year olds have invested in gold over the past year. And 46% of them stated they would invest in gold in the future.

However, it’s also worth noting that only 26% of Gen Z bought gold in the last year. And in China that figure is down to 18%.

The Drivers  of Global Demand

The reasons why people buy gold vary greatly depending on attitudes and motives at the time of purchases. But, some factors do stand out.

Demand is linked to income: consumers’ demand for gold increases with their income. That applies to retail investors and fashion and lifestyle consumers in all markets.

 Perceptions of risk and price trends trigger investment desire. In fact, there are three key stimuli which prompt investment. 44% of investors have bought gold to manage risk; either to add diversity to their portfolio or to move from high to low risk bands. 31% bought gold on the recommendation of a financial advisor or friend (So, marketing and communications work!). And 29% of investors bought gold because they perceived the price was low or on an upward trajectory.

Jewellery purchases are largely about emotional moments; life’s key milestones. Anniversaries, Valentine’s day and religious festivals are all times when gold jewellery sales increase. There are interesting cultural variations: Anniversaries are top in China, while in India they are matched by weddings. In the US, gold jewellery is most often bought for a birthday.

Gold investors are extremely loyal. Indeed they are more loyal than investors in other asset classes. 64% of those who have invested in gold in the past –  in jewellery, or bars and coins or ETFs – state that they definitely buy again in future.

Gold’s Potential for Growth.

In fact, there is very significant potential to grow the market for gold. 38% of those in the World Gold Council survey stated that they had never invested in gold, but were open to doing so in the future.

In retail investment, the opportunity in mature gold markets like India and China is smaller than Russia, for example, where retail investment market development has been affected by the high rate of VAT. In the jewellery and luxury goods sector, the opportunity in mature gold markets like India and China is smaller than in the US, which does not have as strong a historical/cultural sentiment to gold.

And what holds people back from investing or purchasing in gold?

In the retail investment sector, 48% of those considering gold cited lack of trust as a barrier to investment. 28% are fearful of buying fake gold, 21% are concerned about the purity of the gold and and 14% do not trust the businesses who are selling the gold.

The key seems to be raising awareness. 66% of potential new gold investors don’t know enough about gold, or how to buy it, or think it is not affordable. Factors here include unfamiliarity with buying and selling gold, through to a lack of knowledge of what drives the gold price. 52% of those considering buying gold jewellery felt they could buy cheaper jewellery, or that is was difficult to purchase, or that they did not know anyone who wore gold jewellery.