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Gold’s spectacular, decade-long run, coupled with the sovereign-debt crisis in Europe, an uncertain outlook for the U.S. dollar, and worries of worldwide recession, has tapped a new vein of investors in their 20s and 30s.
The popularity of gold among young investors speaks to the metal’s impressive role as a storer of wealth — and says a great deal about a generation that has seen its share of stock market booms-and-busts, a housing market collapse, and, over the past few weeks, government debt of Greece and Italy trading at yields more akin to junk bonds.
Generation Au
Accordingly, many of these gold buyers have little faith in equities and, unlike older investors, are more inclined to consider alternative investments. Others seek tangible, hard assets as a counterweight to stocks, bonds and cash in the aftermath of the 2008 U.S. financial crisis.
“It was only a matter of time,” said Divnain Malik, head of retail sales at Gold Bullion International, a seller of physical gold in New York. While around half of his clients are baby boomers and more established gold investors, the “younger demographic seems to be catching on.”
Indeed, the 25-to-35 year-old age bracket is the firm’s fastest growing segment of buyers, he said. Over the past two months, about half of the hundreds of new accounts opened at his firm were from people in their 20s and 30s, he noted, adding that younger investors are increasingly sophisticated, do not want to repeat others’ mistakes, and are protective of their investments.
Said Malik: For them, “it’s not about the risk in gold, it’s the risk anywhere else.”
Gold’s strong track record, of course, is clearly a big draw. Gold has enjoyed a string of nominal record highs for the better part of two years, as investors have fretted about currency debasement, potential for inflation, and unbridled government spending.
Recently, though, the deepening of the euro-zone crisis has skewed gold’s generally inverse relationship with stocks, with gold losing some of its allure as a safe haven. Some large investors, pressured by steep tumbles in global equity markets, have sought refuge only in cash.
But gold is still comfortably ahead this year. For example, SPDR Gold Shares GLD +0.02% , an exchange-traded fund that is a proxy for the metal, was up 23% for the year through Nov. 10, according to investment researcher Morningstar Inc.
Wizards of oz
For U.S. investors, there’s a sense with gold of better late than never. Unlike Europeans and Asians, Americans don’t have a long tradition of owning gold.
Yet contrary to stereotype, most U.S. gold investors are not guns-and-bunker renegades, hoarding physical gold to fend off the collapse of civilization. Read more: Gold and bonds are all that's left.
Demographic studies on precious-metals investing done in the 1970s and 1980s actually showed a large percentage of college-educated buyers, with only a small portion owning gold for “doomsday scenarios,” said Jeffrey Christian, managing director of CPM Group in New York.
Studies in the 1990s offered similar findings, he added, and also detected rising participation of women in gold investing, consistent with broader trends of women taking the lead in family investing decisions.
These days, young buyers’ interest in gold is hampered by the metal’s high price, Christian said.Student loans, the financial pressures of a young family and other obligations, leave little money for investing or speculation, he noted. An ounce of gold currently fetches around $1,800.
Yet despite such obstacles, the financial crisis three years ago was severe enough to make the younger generation re-evaluate their investments, Christian said.
Kurt Brouwer, chairman of Brouwer & Janachowski, LLC in Tiburon, Calif., and a contributor to MarketWatch’s Trading Deck commentary, added that he’s noticed greater interest in gold across all age brackets.
“Anytime you have something doing well people get interested in it,” he said. Read more: Gold shares may begin to lead.
Click to Play
Economists cut odds of U.S. recession
The odds of recession have fallen in the U.S., according to economists in the latest Wall Street Journal forecasting survey, but a middling expansion could be derailed by events taking shape in Europe. Phil Izzo has details on The News Hub.
With clients who are thinking about gold, Brouwer walks through three main avenues of investing, depending on an investor’s beliefs.
If you want to speculate, a good alternative is to buy one of the several exchange-traded funds backed by gold. It’s easier and more liquid, he said.
Gold mining companies is another alternative, since these stocks “have not soared nearly so much as gold” futures, Brouwer said. Read more: The trouble with gold miner stocks.
http://www.marketwatch.com/story/new-gold-bugs-are-young-and-restless-2011-11-11?dist=afterbell%3Flink%3DMW-FB
The popularity of gold among young investors speaks to the metal’s impressive role as a storer of wealth — and says a great deal about a generation that has seen its share of stock market booms-and-busts, a housing market collapse, and, over the past few weeks, government debt of Greece and Italy trading at yields more akin to junk bonds.
Generation Au
Accordingly, many of these gold buyers have little faith in equities and, unlike older investors, are more inclined to consider alternative investments. Others seek tangible, hard assets as a counterweight to stocks, bonds and cash in the aftermath of the 2008 U.S. financial crisis.
“It was only a matter of time,” said Divnain Malik, head of retail sales at Gold Bullion International, a seller of physical gold in New York. While around half of his clients are baby boomers and more established gold investors, the “younger demographic seems to be catching on.”
Indeed, the 25-to-35 year-old age bracket is the firm’s fastest growing segment of buyers, he said. Over the past two months, about half of the hundreds of new accounts opened at his firm were from people in their 20s and 30s, he noted, adding that younger investors are increasingly sophisticated, do not want to repeat others’ mistakes, and are protective of their investments.
Said Malik: For them, “it’s not about the risk in gold, it’s the risk anywhere else.”
Gold’s strong track record, of course, is clearly a big draw. Gold has enjoyed a string of nominal record highs for the better part of two years, as investors have fretted about currency debasement, potential for inflation, and unbridled government spending.
Recently, though, the deepening of the euro-zone crisis has skewed gold’s generally inverse relationship with stocks, with gold losing some of its allure as a safe haven. Some large investors, pressured by steep tumbles in global equity markets, have sought refuge only in cash.
But gold is still comfortably ahead this year. For example, SPDR Gold Shares GLD +0.02% , an exchange-traded fund that is a proxy for the metal, was up 23% for the year through Nov. 10, according to investment researcher Morningstar Inc.
Wizards of oz
For U.S. investors, there’s a sense with gold of better late than never. Unlike Europeans and Asians, Americans don’t have a long tradition of owning gold.
Yet contrary to stereotype, most U.S. gold investors are not guns-and-bunker renegades, hoarding physical gold to fend off the collapse of civilization. Read more: Gold and bonds are all that's left.
Demographic studies on precious-metals investing done in the 1970s and 1980s actually showed a large percentage of college-educated buyers, with only a small portion owning gold for “doomsday scenarios,” said Jeffrey Christian, managing director of CPM Group in New York.
Studies in the 1990s offered similar findings, he added, and also detected rising participation of women in gold investing, consistent with broader trends of women taking the lead in family investing decisions.
These days, young buyers’ interest in gold is hampered by the metal’s high price, Christian said.Student loans, the financial pressures of a young family and other obligations, leave little money for investing or speculation, he noted. An ounce of gold currently fetches around $1,800.
Yet despite such obstacles, the financial crisis three years ago was severe enough to make the younger generation re-evaluate their investments, Christian said.
Kurt Brouwer, chairman of Brouwer & Janachowski, LLC in Tiburon, Calif., and a contributor to MarketWatch’s Trading Deck commentary, added that he’s noticed greater interest in gold across all age brackets.
“Anytime you have something doing well people get interested in it,” he said. Read more: Gold shares may begin to lead.
Click to Play
Economists cut odds of U.S. recession
The odds of recession have fallen in the U.S., according to economists in the latest Wall Street Journal forecasting survey, but a middling expansion could be derailed by events taking shape in Europe. Phil Izzo has details on The News Hub.
With clients who are thinking about gold, Brouwer walks through three main avenues of investing, depending on an investor’s beliefs.
If you want to speculate, a good alternative is to buy one of the several exchange-traded funds backed by gold. It’s easier and more liquid, he said.
Gold mining companies is another alternative, since these stocks “have not soared nearly so much as gold” futures, Brouwer said. Read more: The trouble with gold miner stocks.
http://www.marketwatch.com/story/new-gold-bugs-are-young-and-restless-2011-11-11?dist=afterbell%3Flink%3DMW-FB
