by Peter Schiff, Schiff Gold:
Have you ever thought about owning gold?
That may seem like a strange question. You’re probably thinking to yourself, “Why everybody has at least thought about investing in gold.” But that’s apparently not true – at least not in Australia. According to a poll conducted by Australia’s leading gold bullion company, 45% of Australians have never even thought about investing in physical gold.
The fact that so many people have never even thought about investing in gold explains why 85% of Australians don’t own any of the yellow metal.
While Aussies aren’t thinking about gold, overall interest in investing is on the rise in Australia. According to a survey by the Australian Security Exchange (ASX), 60% of Australians hold investments outside their pensions and the number of young investors is surging. Rates of investment from 25 to 34-year-olds grew from 24% to 39%. But while young Australians are getting into investing, they aren’t thinking about gold. In fact, the 25-34 age group is the least likely to have thought about physical gold (54% according to the survey.)
So, why haven’t more Australians considered gold? ABC Bullion speculates that one reason is mainstream advisors tend to minimize its value in a portfolio.
The ASX Survey went on to show that 60% of investors use some form of financial advice. Unfortunately, many institutional investors and financial intermediaries tend to dismiss gold as an investment, focusing on the fact that it doesn’t produce an income, and that in the short term, the gold price is volatile (much like the share market is).”
Of course, depending solely on mainstream analysts to guide your investing decisions might not be the wisest ideas. As we reported last month, monkeys actually do a better job predicting markets than mainstream pundits.
Australia has had a booming housing market over the last two decades and did not suffer the same kind of real estate crash during the Great Recession as the US market did. As the Australian survey noted, “Had the Australian property market had a crash like the US property market had, and if interest rates had been cut to zero locally, like they have been in the US, Europe and Japan, then we would expect gold demand to be higher in Australia.”
According to the survey, Aussies tend to miss one of the most fundamental investing concepts.
Regardless of why some Australians ‘never thought about it’ when it comes to gold, the real issue for Australians is a basic lack of understanding of one of the most universally-accepted components of financial strategy: diversification. The point is not that gold should supplant housing or shares, but that gold should complement other investments. It simply has too much to offer as an inflation hedge, safe-haven investment and historical store of wealth to be sidelined in the investment conversation.”