According to a recent Gallup poll, the sentiment among Americans toward gold as a long-term investment has significantly increased. In 2023, 26% of Americans believed that gold is the best long-term investment, nearly doubling the 15% who held this view in 2022. In contrast, the popularity of stocks as a long-term holding has declined. Only 18% of Americans ranked stocks as their top long-term investment, a decrease from the 24% recorded in the previous year. This is the first time since 2013 that Americans ranked stocks lower than gold, with both assets trailing behind real estate in terms of preference.
According to Gallup, when Americans were questioned about their outlook for the future, their opinions were largely influenced by short-term fluctuations in investment returns. Gallup conducted a survey of 1,013 adults from April 3 to April 25. This tendency to give more weight to recent events can pose a risk for investors who are saving for long-term goals, such as retirement, which may still be many years away.
Charlie Fitzgerald, a certified financial planner and principal of Moisand Fitzgerald Tamayo in Orlando, Florida, expressed his view that gold is not a suitable option for long-term investment. He believes that it is more akin to speculation rather than a reliable solution.
Stocks outperform gold over the extended period of time.
According to financial advisors, stocks are typically seen as the primary driver of long-term growth in an investment portfolio.
An analysis by Securian Asset Management found that the S&P 500 Index, which represents stocks, had an average annual total return of 10.43% between 1970 and 2022. In comparison, gold had a return of 7.7% over the same period. Gold is often considered a safe haven and tends to increase in value during times of fear and economic uncertainty. For instance, gold prices reached multiyear highs at the beginning of the Covid-19 pandemic and spiked following Russia’s invasion of Ukraine.
As of now, the SPDR Gold Shares ETF (GLD), which tracks gold prices, has seen an increase of 8.6% in 2023. On the other hand, the S&P 500 has risen by 7.6%.
Investors have shown interest in gold due to recent turmoil in the banking sector and the Federal Reserve’s aggressive interest rate hikes aimed at curbing high inflation. The central bank expects the United States to experience a mild recession later this year. Furthermore, 2022 marked a particularly challenging year for Wall Street, with the S&P 500 experiencing its worst performance since 2008, dropping by over 19%.
U.S. bonds also faced their worst year in history. The United States is currently facing the possibility of not being able to meet its financial obligations within weeks due to a debt-ceiling standoff. This situation, if it occurs, would be unprecedented and likely lead to economic chaos.
Ivory Johnson, a CFP and founder of Delancey Wealth Management in Washington, stated that gold’s current success is attributable to the current economic conditions.
