Millennials, Gold and a 335% Gain
Millennials have a lot of people confused.
Countless articles offer advice for those presented with the scenario of engaging Millennials in the workplace. Moreover, major corporations like Mastercard are tripping over themselves to understand the mind of a Millennial. However, there’s one simple, overarching truth that everyone is missing; Millennials are people, and people like to feel secure. Before long we might begin to see Millennials seek security in their finances by embracing gold for its enduring characteristic as a safe haven asset.
Part of the value for Millennials who seek gold as an investment comes from their lengthy time horizon. With an extended period of growth, compounding can build returns over decades. Additionally, interest rates may also offer benefits to gold investors. The chief market strategist and head of research at the World Gold Council explained this phenomenon in an interview. He remarked that if global economies, “are unable to tolerate higher interest rates, then I suspect that interest rates won’t be going up for very long and that, I suspect, will be good for gold.” Of course, if interest rates rise those holding gold might see a deterioration in the value of their holdings. Even in this scenario of rising rates, however, there are reasons for Millennials to make gold part of their portfolio.
In the same interview, experts discussed the importance of considering the long-term. With so many decades of working years ahead, Millennials need to look beyond the hot equities market of today. That is, while stocks are rising fast now, there’s no reason to believe they will sustain this acceleration given outsized valuations. Gold, in contrast, is finite in its supply offering considerable upside potential for those disciplined enough to adopt a long-term strategy. Gold has returned an astounding 335% over the previous 30 years. Moreover, during a long enough period gold outpaces many other investments. For example, over a 45-year duration, history has shown that gold has outpaced both stocks and bonds.
Millennials, by definition, are young. They’re also plentiful; Millennials are the largest generation this country has ever seen, and they’re starting to save. Therefore, this generation should be considering how choices today will pan out over lengthy spans like 45 years. While many were young during the financial collapse of 2008/2009, they remember the tumultuous years and have resolved to evade the anguish of such financial burdens. Additionally, they remember the fraud and dishonesty of those who helped cause the mess. Gold does not require that the investor trust a CEO or a financial officer.
Gold helps ease fears arising from turbulent equity markets because the metal has a historically low correlation with stocks. Gold offers similar protections against inflation and currency devaluation. In the coming years, the financial world is bound to experience more change as new global conditions arise and new investment products emerge. Gold creates a stabilizing force over the long-term amid these inevitable shifts.
Millennials, like all other investors want stability and a strong rate of return. Gold provides both.