A growing share of affluent Americans plan to invest in gold. Do they have the Midas touch?
More Millionaires plan to invest in gold in 2012, looking to give their portfolios that Midas touch in slow-growth, low interest rate environment, according to the most recent Millionaire Corner study on financial product ownership among wealthy investors.
The likelihood of investing in gold increases with wealth, according to our survey, conducted in the fourth quarter of 2011. Nearly two-in-five individuals with investable assets of $15 million to $25 million plan to invest in precious metals such as gold in 2012. That’s up 20 percent from last year.
Individuals with investable assets of $1 million to $5 million also show an increased interest in precious metals such as gold, though they are not as bullish on bullion as wealthier investors. The share is 17 percent for 2012, compared to 6 percent for 2011. Heightened interest in precious metals is also evident among individuals with investable assets of $100,000 up to $1 million. Fourteen percent say they are likely to invest in gold in 2012, up from 9 percent in 2011.
Are these affluent investors betting the 11-year gold rally will continue despite some recent ups and downs? Some gold bugs predict the precious metal, which closed out the year at $1,574, will peak at $2,000 an ounce.
Through March 9 of this year, gold climbed 9.2 percent, according to Bloomberg News, but prices slumped early today. Gold fell – alongside other commodities – on investors’ fears that slowing growth in China will reduce demand for raw materials, reported Bloomberg.
Gold bugs say the drop is temporary. Folks at the website Buy Gold opine, “Although the price of the yellow metal has seen its share of ups and downs in recent weeks, gold investors need not start panicking yet. Given that the precious metal is a safe haven investment, investors are bound to show continued interest in it for the foreseeable future.”
A global economic slowdown may dampen the demand for gold, according to Buy Gold, but quantitative easing in the United States and Europe increase the risks of inflation in the long term. Gold is seen as a hedge against inflation. Gold is also increasingly seen as an alternative currency to a weak American dollar.