Security and protection motives underpin strong physical gold demand


A recent NY Times article closed with this quote from Morgan Stanley Private Wealth Management senior VP Katerina Simonetti: “There is a psychological component in owning gold that goes back for centuries…It’s an asset that gives peace of mind to investors. It just makes investors feel safe and secure.”

Ms Simonetti is bang on. Our consumer research data shows that, globally, almost two thirds of retail investors say that owning gold makes them feel secure over the long term.1 Still more see it as a good safeguard against inflation and currency fluctuations – a fact that is increasingly relevant in the current environment. As Ninety One’s Global Gold Strategist, George Cheveley, asserts, “..inflation expectations have risen so fast this year…”


Global retail investors view gold as long-term security that helps protect against inflation

% of those surveyed that agreed with each statement
As of August 2019. Results from a quantitative survey carried out by Hall & Partners of 12,371 men and women across six countries: India, China, Germany, the US, Canada and Russia. The online survey captured the responses of active retail investors – classified as people who had made at least one investment in the past 12 months, excluding those who had only added money to a savings account and had only ever invested in a defined list of non-core investment products. Fieldwork took place in Q2 and Q3 2019.
Results are responses to the question ‘Please indicate how strongly you agree or disagree with each of the statements below.’ Respondents selected from the following five-point scale: strongly agree; somewhat agree; neither agree or disagree; somewhat disagree; strongly disagree.
Base: total sample (12,371)
Source: Hall & Partners, World Gold Council


Which helps explain recent rocketing demand for gold coins in the US. As we report in our recent Gold Market commentary, Q1 sales of gold Eagle coins, at more than 400,000 oz (12.5t, US$720mn), were the third highest on record for the first quarter. And the Perth Mint report similarly impressive sales so far this year, with a record 330,000 oz of gold sold in the first quarter – with manufacturing pivoting towards ‘products that are hot in the US right now’ according to General Manager Minted Products, Neil Vance.

While rising interest rates have dominated gold’s performance so far this year, the inflationary expectations that have fuelled those rate rises may be behind much of the strength in physical demand. Our consumer research data confirms that gold’s role in a portfolio is primarily viewed as being for wealth protection or to provide above-inflation returns.


Global retail investors see gold’s main role as wealth protection and providing real returns

Notes as per previous chart.
Results are individual responses to the question ‘How would you describe the main role of this investment?’ Respondents selected one option for each investment product that they owned (including for each different type of gold product).
Base sample: number of responses (7,540)
Source: Hall & Partners, World Gold Council


And this is far from being a US-specific phenomenon: 85% of retail investors across six global markets identified these as being gold’s main role. Building inflationary pressures may also continue to fan the flames of robust physical demand noted in China and India throughout January and February. Keep an eye out for our forthcoming issue of Gold Demand Trends, which will give detailed coverage of the size and scale of gold demand – and supply – in Q1 2021.



1Correct as at August 2019