Professional Investors Hold More Gold Than Most Realize

How Much Gold Are Others Holding?

Despite the negative media coverage surrounding gold, the available data presents a contrasting perspective. A closer examination reveals that only a small fraction, less than a quarter of investors, allocate less than 1% of their assets to gold. In contrast, approximately half of the respondents maintain at least 1% of their portfolio in gold, with a significant portion, about 24%, dedicating 3% or more to this precious metal.

Gold Buying Shows No Signs of Slowing

Looking ahead, things are looking even brighter for gold. Over a quarter of respondents plan to increase their gold holdings in the next 12 to 18 months. This is more than double the number who said they plan to reduce their exposure to gold.

The World Gold Council summed it up well: “North American investors seem likely to increase their allocations to gold over the year ahead. We recently flagged that gold is historically under-owned in the U.S., signaling the potential for headroom and supporting a positive outlook for gold ownership.”

Should You Consider Holding More Gold?

So why are investors like you holding gold? It’s all about diversification and hedging against inflation. Many believe that gold reduces portfolio risk. A solid 46 percent of the sample said that gold’s role as a “proven diversifier, especially in periods of financial turmoil and economic uncertainty,” is a top reason for holding it.

Clearing Up Gross Misconceptions About Gold Returns

But there’s a misconception out there. Sixty percent of respondents think gold delivers lackluster returns compared to other asset classes. In reality, gold has outperformed most asset classes over the last 25 years, with an average annual return of 8 percent—outshining equities.

About 21 percent of survey respondents acknowledged that gold delivers “excellent” long-term returns. Yet, nearly half of the respondents don’t fully grasp gold’s liquidity. Almost a quarter of those who don’t hold gold cited liquidity as a barrier to investing.

Gold's True Liquidity: Global Recognition

Again, the perception doesn’t match reality. The gold market is actually more liquid than several major financial markets, including the euro/yen and the Dow Jones Industrial Average. In 2023, the daily trading volume for gold averaged around $163 billion.

What makes gold so liquid is its global recognition. Whether you’re in Europe, Asia, or South America, gold is seen as a store of value. You’ll never be without a buyer if you want to sell gold.

The Bottom Line

So, even though there are misconceptions about gold, and despite the generally negative messaging in the financial media, most professional investors in North America recognize the value of holding at least some gold in their portfolios. Like you, they understand its importance in diversification and its strength as a safeguard against economic uncertainty.