Americans believe that gold is superior to stocks as a long-term investment

  • The share of Americans who believe gold is the best long-term investment has nearly doubled in 2023, to 26%, according to a recent Gallup poll.
  • The share of those who prefer shares fell to 18%.
  • However, stocks are the best source of wealth over long horizons, according to financial advisors.
  • Gold is often seen as a safe haven in times of fear.
  • The US is currently absorbing the fallout from rising interest rates and the recent banking turmoil, while eyeing the possibility of a recession and a high-stakes debt ceiling showdown.

Carla Gotgens | bloomberg | Getty Images

Americans are bullish on gold and stocks have soured – perhaps to their detriment.

Twenty-six percent of Americans rated gold the best long-term investment in 2023, nearly double the 15 percent who thought so in 2022, according to a recent Gallup magazine. vote.

Share outnumbered stock: 18% of Americans rated stocks as their biggest long-term holding, down from 24% last year, according to the survey.

It was the first time since 2013 that they had a lower perception of equities than gold. Both are ranked behind real estate.

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While Americans were asked to gauge sentiment about the long term, public perception is guided more by short-term fluctuations in investment performance, said Gallup, which polled a random sample of 1,013 adults between April 3 and 25.

And this recency bias can be dangerous for investors who save for a goal like retirement, which can take decades.

As a long term investment, [gold] “A very poor solution,” said Charlie Fitzgerald, a certified financial planner and principal of Moisand Fitzgerald Tamayo in Orlando, Florida.

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“It’s more like speculation,” he added.

Financial advisors said that stocks generally serve as a long-term growth engine for an investment portfolio.

The S&P 500 stock index generated an average annual total return of 10.43% between 1970 and 2022, according to analysis By Securian Asset Management. Gold has returned 7.7% over the same period. (After the US gold standard ended in 1971, the price of gold was no longer fixed, making the early 1970s a good starting point for price comparison.)

The price of gold, often viewed as a safe haven, usually jumps during times of fear and economic malaise. For example, gold prices rose to multi-year highs in the early days of the Covid-19 pandemic, and soared after Russia invaded Ukraine.

The SPDR Gold Shares ETF (GLD) — an exchange-traded fund that tracks gold prices — is up 8.6% so far in 2023. The S&P 500 is up 7.6%.

Investors’ enthusiasm for gold comes amid recent turmoil in the banking sector and with the Federal Reserve aggressively raising interest rates since early last year, to put a stop to soaring inflation. The Federal Reserve, the US central bank, expects the country to slide into a mild recession later this year.

Meanwhile, 2022 was Wall Street’s worst performance since 2008, with the S&P 500 down more than 19%. US bonds had their worst year in history.

A debt ceiling standoff means the US is also staring at the possibility of being unable to pay its bills within weeks – which would be a first in the country’s history and likely to lead to economic chaos.

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“Gold is doing really well right now because of the current economic situation,” said Ivory Johnson, a CFP and founder of Washington-based Delancey Wealth Management.

Johnson, a member of CNBC’s board of advisors, has been recommending more gold to clients over the past year or so.

However, it’s more of a short-term holding — a hedge for investors when gross domestic product (a measure of US economic output) and inflation slow, as they do now, Johnson said. If GDP starts to recover, he generally recommends ditching gold and instead buying growth stocks.

“Gold is not a long-term investment,” Johnson said. “It’s not something you just put in a wallet and keep there.”

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