(Kitco News) – Gold has been among the best-performing commodities in 2024 as it set multiple all-time highs, most recently last week’s rally above $2,500 per ounce in the futures market. The fact that these gains have occurred without significant buying from North American retail investors has made the rally even more remarkable. But growing fear over a potential recession, combined with easier-than-ever access to bullion products, may change that.
Interest in gold investment is skyrocketing in the English-speaking world, according to a new analysis from Finbold published Tuesday.
“Finbold’s research found that between July 31 and pre-market on August 6, interest in the ‘buy gold’ search term rocketed 63.93% from 61 to 100 on Google Trends,” wrote Andreja Stojanovic. “The figure is also substantially higher than at any other time during the period under review, which covers the 90 days between May 6 and August 6, 2024.”
The heightened interest in gold is being driven by panic over the possibility of a U.S. recession, which spiked following last Friday’s disappointing nonfarm payrolls report.
According to the analysis, some areas of the United States are more excited about buying bullion than others.
“While the beginning of August sent interest in buying gold rocketing across the US, nowhere is the search trend more pronounced than Hawaii,” they wrote. “In fact, on Google Trends’ scale, search interest in Hawaii stood at 100 at the time of publication. It is closely followed by the second-newest state, Alaska, at 95, and Wyoming, at 90.” West Virginia, Nevada, Washington, New Jersey, Arizona, and Missouri also showed a high level of interest in jumping on the bullion bandwagon, with California rounding out the top ten.
“On the other hand, investors and traders in Vermont appear the least interested in buying the commodity amidst the ongoing recessionary panic,” Stojanovic noted. “Maine, Montana, South Dakota, and New Hampshire are no keener, with all reading less than 60 on Trends.”
Retail demand for gold is likely to rise further after Monday’s sharp market downturn, which wiped 2 trillion dollars in value from U.S. exchanges. Gold has performed quite well under the circumstances, with the prevailing view of analysts that the only reason the yellow metal declined at all was because traders needed to liquidate their best-performing assets to cover margin calls on their collapsing equity positions. Once equity markets stabilized, gold prices rebounded right back above $2,400 per ounce.
Costco gold sales were already surging
There are other indications that U.S. retail demand for gold has room to grow. A recent survey of Costco members conducted by the World Gold Council (WGC) and first published by Kitco News shows that the retail giant’s bullion buyers are younger and more diverse than many would imagine, and they also prefer gold over cryptocurrencies.
In May, the retailer published its third quarter results for the fiscal year, announcing a 9.1% increase in net sales to $57.39 billion, up from $52.60 billion last year, including a 20.7% jump in online sales. “Total e-commerce sales growth in the quarter was led by gold and silver bullions, gift cards and appliances,” Costco Chief Financial Officer Gary Millerchip told investors during the May 30 conference call.
In early August, the WCG presented the findings of a survey of 4394 respondents in the United States conducted between May 17 to 22, 2024. The respondents were a nationally representative sample of men and women between the ages of 18 and 75.
They discovered that over a quarter of respondents had invested in gold in the past five years. This means that gold investment was similar in popularity to stocks, but the yellow metal was chosen significantly more than cryptocurrencies.
Also, 30% of men had invested in gold during the preceding five years, compared to 23% of women, but men were twice as likely as women – 25% vs 11% – to have invested in crypto.
As far as the age breakdown of investors, the survey showed that 25- to 39-year-olds were the most likely to have invested in gold within the past five years. While this age bracket was also the most likely to have invested in cryptocurrencies, a significantly greater proportion had invested in gold – 48% of 35-39-year olds, and 30% of 40-44-year olds had invested in gold, versus 26% and 17%, respectively, buying crypto.
“36% of gold investors have also invested in cryptocurrencies compared to 11% of non-gold investors,” the WGC noted. “This supports findings from our previous research that gold investors have broader portfolios.”
The survey also revealed that gold investors were both wealthier and more educated than respondents who hadn’t bought gold, and a larger proportion of the gold investors belonged to a minority ethnic group compared to those who had not invested in gold.
Will new demand meet easy supply?
The spike in Google searches for gold may be more likely to translate into increased sales, based on the Costco survey findings, as the knowledge that Costco sells gold appeared to increase respondents’ interest in gold bars as an investment: 41% of respondents said they were more interested in investing in gold bars in the future. “[T]his suggests that increasing awareness could be valuable,” the WGC wrote.
“Interest was higher amongst those who were already aware of Costco selling gold (49%), but even among those previously unaware, 39% claim to be more interested after discovering from the survey that Costco sells gold bars,” the presentation noted. “It even seems to enhance interest among gold investors [who had invested in the past five years], with 76% saying they were more interested.”
If the spike in online interest represents real retail demand, and if this new demand finds the easy supply of Costco’s bullion products, the gold market may be in a position to grow its investor base significantly, especially if the United States tilts into recession.
