(Kitco News) – Gold has seen rising interest in 2024 as the yellow metal surged to new record highs amid a backdrop of sticky inflation and concerns about a recession, highlighting the precious metal's safe-haven status.
As Brad Chastain, director of education at U.S. Money Reserve, noted, “Today, gold remains a key part of consumer portfolios because it holds its purchasing power even when other assets, such as stocks or real estate, may falter.”
“The onset of the COVID-19 pandemic in 2020 triggered a surge in gold prices as consumers sought refuge from the volatility of stock markets,” he said. “Gold prices reached record highs in August 2020, surpassing $2,000 per ounce for the first time. And now in 2024, gold prices have surged again to new record highs, driven by several factors, including looming interest rate cuts, heightened geopolitical risks, and increased central bank buying.”
The results of a poll released by Gallup in May showed that gold ranked third on the list of assets Americans see as the best long-term investments, behind only real estate and stocks. This suggests that it has successfully rehabilitated its reputation as an underperformer after nearly a decade of trading below its all-time high established in 2011.
As shown in the chart above, 36% of respondents chose real estate as their top choice, followed by stocks or mutual funds (22%), gold (18%), and savings accounts or CDs (13%). “Relatively few Americans believe bonds (4%) or cryptocurrency (3%) are the best long-term investments,” Gallup found.
With the 2024 U.S. Presidential election dominating headlines, Gallup noted a stark difference in the opinion of gold between the leading political parties.
“Currently, 27% of Republicans pick gold as the best investment, compared with 7% of Democrats and 18% of independents,” the report said. “Last year, a trend-high 38% of Republicans named gold, compared with 12% of Democrats and 27% of independents.
In each year of the trend except 2013, Republicans have been significantly more likely than Democrats to say gold is the best investment. However, the gap between Republicans and Democrats has widened significantly since 2020,” after the election of President Joe Biden.
While stocks enjoyed a bump in the standings after a strong year that pushed the major indices to record highs, some have suggested that the appearance of a double-top formation on the charts for the major indices indicates that a major correction approaching.
S&P500
Double top
A low-volume rise is a telltale sign.
Deep valley below the double top meets criteria.
Beware of large red candles, as they signal confirmation of the reversal.
We await. pic.twitter.com/SFfyC6GYuF— The Great Martis (@great_martis) August 26, 2024
For this reason, some expect gold to see another surge in interest, and with the economy seemingly on shaky ground, the yellow metal could climb back to the top of the list as the premier choice for investors, just as it did in 2011 and 2012 when real estate and stocks were in the doldrums.
“Despite the growing interest in newer asset types like cryptocurrencies, gold’s reputation as a stable and secure asset continues to resonate with a sizable portion of the population, particularly in certain parts of the U.S.,” Chastain said. “While the same Gallup poll indicates that gold’s reputation as a reliable asset varies by income and political affiliation, interest in gold also varies regionally.”
Data collected from Google Trends over the past five years shows that residents in the western half of the U.S., “particularly in the Mountain West and Alaska, show a much higher interest in gold relative to stocks when compared to residents in the eastern half of the U.S.” he noted.
“In states like Alaska, internet searches for terms containing ‘gold prices’ outpaced searches for terms containing ‘stock prices’ by a factor of more than three,” Chastain said. “This high level of interest can be attributed to the state’s rich history of gold mining and its economy, which relies heavily on natural resources.”
“Similarly, states such as Montana, Nevada, and New Mexico also demonstrate a strong inclination toward gold as a financial asset, with approximately twice as many gold-related searches as stock-related searches in recent years,” he added.
“In contrast, states in the eastern part of the country show a lower interest in gold relative to stocks. For example, residents in Virginia search for stock prices nearly twice as often as gold prices,” Chastain noted. “Similar trends show in Delaware, Rhode Island, and Connecticut.”
Comparing the above map of the U.S. to a map of the current electoral makeup confirms a higher level of interest in Republican-leaning states.
2024 Road to 270 map. Source: CNN
This suggests that the image of Republicans as being more conservative regarding fiscal matters holds true, although challenging economic times have led to an increased interest in gold across the political spectrum.
“Despite lower interest in gold relative to stocks in eastern states, it’s important to note that gold-related searches still grew in 44 states when comparing search data from 2024 to 2019,” Chastain noted. “Gold-related searches relative to stock-related searches grew by more than 10 percentage points nationally over this five-year period.”
That said, there also appears to be an income component in the level of interest in gold, as many consistently red states appeared near the bottom of the list in Google searches.
Overall, the relative interest in gold prices for the U.S. as a whole came out to 49% compared to 51% for stocks, suggesting that the yellow metal has enjoyed a rising stature in the eyes of American investors. Since 2019, there has been an 11% increase in gold price searches in the country as a whole.
