Gold’s appeal still potent, but trust issues remain – World Gold Council

November 12, 2019

Johannesburg-SA (Nov 12)  Gold remains a mainstream choice for investors, with 46% of global retail investors choosing gold products, while consumers prefer gold jewellery above jewellery made from other metals, the World Gold Council (WGC) has found.

It surveyed about 18 000 people to determine the global attitude towards gold, with the feedback compiled in a new consumer research report.

The new research reveals that gold is a mainstream choice – the third most consistently bought investment, with 46% of global retail investors choosing gold products, which is just behind savings accounts (78%) and life insurance (54%).

Looking at jewellery, the survey shows that 56% of consumers have bought fine gold jewellery, compared with 34% who have bought platinum jewellery. 

Additionally, the report reveals that more than a third (38%) of retail investors and fashion enthusiasts have never bought gold in the past but are warming up to the idea.

The WGC says this shows a huge potential for the gold market to grow if untapped sources of demand can be converted.

The report finds that people have confidence in – and are loyal to – gold. More than two-thirds (67%) of all retail investors believe gold is a good safeguard against both inflation and currency fluctuations, and 61% trust gold more than fiat currencies.

“The industry should build on that confidence, while staying alert to areas where it is weaker,” the council says.

However, there are areas of mistrust. While people have confidence in gold, there is some mistrust among those that have never bought gold in the past, but are open to the idea of buying it in the future, with 48% and 28% of all potential investment and jewellery consumers, respectively, citing a lack of trust as a significant barrier.

The WGC notes that this could be mistrust around fake or counterfeit bars and coins, product purity or the trustworthiness of some retailers.

Gold can resonate more deeply among younger consumers. Millennials’ attitudes towards gold are not so different to those of older generations. But there are perceptual misgivings among the younger Gen Z audience, misgivings which are particularly pronounced in China’s jewellery market.

For example, 40% of fashion buyers aged between 18 and 24 years in China agree that gold can bring good luck compared with 88% of those aged between 55 and 65.

“Technological innovation can create a route to new audiences. We know there are some pioneering, tech-savvy players in the gold market. But the data suggests there are too few.

“Gold compares poorly to other retail investments and fashion items when looked at through the lens of digital distribution, marketing and communications,” the council states.

Global retail investors only buy 9% of gold coins and 6% of jewellery online, compared with 25% of gold-backed exchange-traded funds.

The WGC explains that there are knowledge gaps in the minds of potential gold buyers that need to be filled. Two-thirds (66%) of potential gold consumers globally say they lack the necessary knowledge to buy gold.

Greater awareness of gold needs to be created through television, print and social media; quality education is required on the benefits of owning gold; and, while it is not a mainstream issue now, the next generation of potential gold buyers need to know more about the industry’s ethical credentials.

WGC CEO David Tait says the retail gold market is healthy, with gold being considered a mainstream choice. But what really excites him is the untapped part of the market: those people who have never bought gold but are warming to the idea of doing so in the future.

“Two issues need to be addressed to engage with these potential gold buyers: trust and awareness. This market can flourish if we can build trust across the broad spectrum of gold products being sold and raise awareness around the positive role gold can play in protecting people’s wealth.”


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