Commodities

Golden rule: Why younger investors are drawn to gold

Published

6 months ago

July 18, 2024

By Chris Taylor

NEW YORK (Reuters) – What asset class do millennials and Gen Z investors both want to own?

Here is an answer you may not have guessed: Gold.

Among wealthy investors under the age of 43, 45% own gold as a physical asset, and another 45% are interested in holding it, according to a recent study by Bank of America Private Bank.

Those are far higher percentages than other age groups.

Usually this demographic is not interested in assets like gold, cash or Treasuries, because they are considered to be “boring,” says Liz Young Thomas, head of investment strategy for digital financial services firm SoFi (NASDAQ:).

“As Treasury yields rise, cash is paying a high interest rate, and gold is rising along with it. We are seeing returns we normally don’t see in such a short period of time,” Thomas says. “Naturally, when assets have strong returns, younger audiences start to perk up.”

This confirms another study by money managers State Street (NYSE:), which finds that millennials have the highest allocation to gold in their portfolios, at 17%, far outpacing both boomers and Gen X at 10%.

So what is going on? Why are younger investors so intrigued by a somewhat stodgy asset that has been around for thousands of years?

Part of gold’s renewed buzz is its healthy spot price, which as of this writing is above $2,400 per ounce.

It is also increasingly on the shelves in popular retail environments, which boosts visibility. Big-box chain Costco (NASDAQ:) started selling 1-oz gold bars last fall and has been doing a brisk trade of up to $200 million monthly, according to Wells Fargo estimates.

Since younger investors’ interest has been piqued, what golden rules should they keep in mind? A few thoughts from the experts:

OWNING PHYSICAL GOLD CAN BE TRICKY

Part of the appeal of gold is that it is tangible. If the world’s financial system happens to go haywire, or currencies collapse, at least you would have something real to hold onto.

“I have found with my millennial clients that as they get wealthier, they are more interested in investing in directly-held, self-custodied gold,” says Eric Amzalag, a financial planner in Canoga Park, California, whose clients tend to use online precious metals retailer APMEX. That is because investment goals often shift from growth to capital preservation, Amzalag adds.

With physical gold you have unique challenges like: finding a reputable dealer who won’t take advantage of you; getting it delivered and stored securely; insuring your purchase; And then figuring out how to eventually sell it, since Costco is not about to buy that gold bar back from you.

To protect your portfolio, check out this advisory guide from the World Gold Council.

CONSIDER ETFS

An exchange-traded fund – either backed by physical gold, or one that invests in – takes away the problems of buying, storing and selling. It also makes asset exposure relatively easy.

“There are some fees associated with that, but ETFs are a nice alternative if you don’t want to actually take delivery of bullion and hold it in your basement,” says SoFi’s Thomas.

The largest such ETF, SPDR Gold Shares (NYSE:), carries an expense ratio of 0.4% and boasts one-year returns of more than 23%. A similar approach is to buy an ETF comprised of mining stocks, such as VanEck Gold Miners (GDX (NYSE:)), which includes the biggest names in the sector like Newmont Corp. and Barrick Gold (NYSE:).

DO NO GO OVERBOARD ON ALLOCATION

Gold can certainly serve a purpose in a portfolio, as an uncorrelated asset and a potential hedge against inflation or volatility. But, as a commodity, it can also be quite volatile and fall in and out of favor with investors.

As such, equities should still be the main portfolio entrée for most investors, experts say. Companies that generate sales, earn profits, pay dividends and offer potential share-price appreciation make for a more dynamic asset class with superior long-term returns.

As for gold, younger investors may keep it as a complementary side dish, says Jonathan Cameron, a financial planner in Miami.

“We work with many young professionals, and we have been including a gold ETF (about 5%) in many of our clients’ portfolios as a hedge for several years,” Cameron says. “Everyone likes this decision.”

Commodities

Oil prices steady; traders digest mixed US inventories, weak China data

Published

9 hours ago

January 9, 2025

Investing.com– Oil prices steadied Thursday as traders digested data showing an unexpected increase in US product inventories, while weak economic data from top importer China weighed.

At 05:25 ET (10:25 GMT), expiring in March gained 0.1% to $76.25 a barrel, while rose 0.1% to $73.37 a barrel.

The crude benchmarks had slumped more than 1% on Wednesday, but trading ranges, and volumes, are likely to be limited throughout Thursday with the US market closed to honor former President Jimmy Carter, ahead of a state funeral later in the session.

China inflation muted in December

Chinese inflation, as measured by the , remained unchanged in December, while the shrank for a 27th consecutive month, data showed on Thursday.

The reading pointed to limited improvement in China’s prolonged disinflationary trend, even as the government doled out its most aggressive round of stimulus measures yet through late-2024.

China is the world’s biggest oil importer, and has been a key source of anxiety for crude markets. Traders fear that weak economic growth in the country will eat into oil demand.

The country is also facing potential economic headwinds from the incoming Donald Trump administration in the US, as Trump has vowed to impose steep trade tariffs on Beijing.

US oil product inventories rise sharply

U.S. gasoline and distillate inventories grew substantially more than expected in the week to January 3, government data showed on Wednesday.

inventories grew 6.3 million barrels against expectations of 0.5 mb, while grew 6.1 mb on expectations of 0.5 mb.

Overall crude also shrank less than expected, at 0.96 mb, against expectations of 1.8 mb.

The build in product inventories marked an eighth straight week of outsized product builds, and spurred concerns that demand in the world’s biggest fuel consumer was cooling.

While cold weather in the country spurred some demand for heating, it also disrupted holiday travel in several areas.

EIA data also showed that US imports from Canada rose last week to the highest on record, ahead of incoming U.S. president Donald Trump’s plans to levy a 25% tariff on Canadian imports.

Canada has been the top source of U.S. oil imports for many years, and supplied more than half of the total U.S. crude imports in 2023.

Strength in the also weighed on crude prices, as the greenback shot back up to more than two-year highs on hawkish signals from the Federal Reserve.

A strong dollar pressures oil demand by making crude more expensive for international buyers.

(Ambar Warrick contributed to this article.)

Commodities

Trump’s possible tariffs could put downward pressure on oil prices – RBC

Published

9 hours ago

January 9, 2025

Investing.com – President-elect Donald Trump’s plan to implement sweeping import tariffs during his second term in the White House is potentially the “most bearish” policy development for the energy sector this year, according to analysts at RBC Capital Markets.

Trump, who is set to come to power in less than two weeks, has vowed to impose tariffs of as much as 10% on global imports into the US and 60% on items coming from China. He has also pledged to slap a 25% surcharge on products from Canada and Mexico.

Economists have flagged that the proposal would not only rattle global trade activity, but also threaten to reignite inflationary pressures and spark possible retaliation.

The uncertainty in markets was heightened on Wednesday after CNN reported that Trump is mulling declaring a national economic emergency in order to provide the legal underpinning for the tariffs. Earlier this week, Trump also denied a separate report that his team was mulling scaling back the levies to cover only critical goods.

In a note to clients on Thursday, analysts at RBC led by Helima Croft said that while the ultimate scope of the tariffs remains unclear, the headline duties on China could soften demand in the country and place downward pressure on oil prices. China is the world’s largest crude importer.

Business leaders with significant ties to China may advise Trump to stay away from instituting strict tariffs on the country, Croft predicted.

“We have also heard a view in Washington that President Trump could be amenable to a deal with China if Beijing offered to make large headline purchases of US goods, such as aircraft or even US [liquefied natural gas] imports,” Croft wrote.

“Beijing could also potentially seek to trade a reduction in Iranian crude imports for a tariff reprieve.”

However, Croft flagged that the overall market effect of the tariffs is still “challenging to forecast” because the Trump administration — unlike a prior round of trade tensions in 2018 — will have to weight the impact of the policies with broader macroeconomic worries “still front of mind for many in Washington”.

(Reuters contributed reporting.)

Commodities

Gold prices edge higher; demand boosted by Trump-inspired uncertainty

Published

9 hours ago

January 9, 2025

Investing.com– Gold prices edged higher Thursday, continuing the recent gains, as heightened uncertainty over a hawkish Federal Reserve and President-elect Donald Trump’s plan for trade tariffs fueled some safe haven demand.

At 06:15 ET (11:15 GMT), {68|Spot gold}} rose 0.4% to $2,683.84 an ounce, while expiring in February rose 0.3% to $2,668.60 an ounce.

Trading activity is likely to be limited Thursday, with US traders on holiday to honor former President Jimmy Carter, with a state funeral due later in the session.

Safe haven demand on economic uncertainty

Bullion prices benefited from some safe haven demand this week, as uncertainty over Trump’s trade and immigration policies dented risk appetite.

A CNN report said Trump could declare a national economic emergency to legally justify his plans to impose universal trade tariffs.

Concerns over Trump’s policies also came into focus after the of the Fed’s December meeting showed policymakers expressing some concerns over sticky inflation.

Specifically, Fed officials were growing concerned that Trump’s expansionary and protectionist policies could underpin inflation in the long term.

The minutes also largely reiterated the Fed’s plans to cut interest rates at a slower pace in 2025, after the central bank effectively halved its projected rate cuts to two from four in 2025.

Treasury yields shot up after the Fed’s minutes, as did the dollar.

Higher for longer rates bode poorly for non-yielding assets such as metals, given that they increase the opportunity cost of investing in the sector.

Other precious metals were edged higher Thursday. fell 0.1% to $983.85 an ounce, while rose 0.8% to $30.930 an ounce.

Copper rises as weak China inflation fuels stimulus hopes

Benchmark on the London Metal Exchange rose 0.7% to $9,093.0 a ton, while March rose 1.2% to $4.3115 a pound.

Chinese were flat in December, while shrank for a 27th consecutive month, indicating little improvement in disinflation.

Inflation remained weak even as Beijing doled out its most aggressive round of stimulus measures through late-2024.

But Thursday’s inflation data fueled increased bets that Beijing will do more to shore up Chinese growth, especially on the fiscal front.

(Ambar Warrick contributed to this article.)

Among industrial metals, copper prices firmed as weak inflation data from top importer China spurred bets on more stimulus measures from Beijing.

But metal markets remained under pressure from strength in the dollar, which came back in sight of over two-year highs on hawkish signals from the Fed.