85 per cent of professional US investors report gold allocations

Over the last five years, the number of financial professionals in the US holding gold in their portfolios under their management has risen 23 per cent and now stands at 85 per cent. In 2019, it was 76 per cent and in 2018 only 69 per cent. These are the findings of a representative survey among professional investors in North America conducted by the World Gold Council among investment advisors, asset managers and major institutional investors. So, what is behind the sharp rise in recent years?

Professional investors’ rating of gold similar to that of central banks

When asked about their motives for their first-time investment in gold or increase of their gold allocation, most financial professionals emphasised the classic functions of the precious metal as an inflation hedge and portfolio stabiliser with a risk-reducing effect. According to the survey results, the strong negative correlation to the US dollar is also one of the main reasons to invest in gold. However, most professional investors only hold a limited amount of gold: merely 24 per cent said they had three or more per cent of their total investment portfolio invested in gold, while just over half had only one per cent of their assets under management invested in gold. The main reasons for the sharp rise in the number of gold investors among financial professionals: increased market uncertainty due to inflation and higher key interest rates, as well as geopolitical crises.

Contribution of gold to portfolio performance receives little attention

Only 20 per cent see gold as an excellent, profitable long-term investment. A further 20 per cent are neutral on this aspect and 60 per cent of respondents consider the performance of gold as rather poor. These numbers are quite surprising considering the actual long-term performance of the precious metal in the US. Over the last 20 years, the price per ounce of gold has risen by a good 600 per cent from US$385 in June 2004 to US$2,327 today (as of end of June 2024), and within the last 50 years from US$175 in June 1974 to today by as much as 1,330 per cent.