Gold Loses Luster in U.S. as Investment; Real Estate Gains
Economy

Gold Loses Luster in U.S. as Investment; Real Estate Gains

by Dennis Jacobe, Chief Economist

Twenty-four percent see gold as best investment, down from 34% in 2011

PRINCETON, NJ -- Even prior to the recent plunge in the price of gold, fewer Americans rated gold as the best long-term investment -- with 24% saying so in April, down from 28% a year ago and 34% in August 2011. Real estate now essentially ties gold as the best investment, with 25% choosing it, up from 20% in April 2012 and 19% in August 2011. Stocks/Mutual funds are the third-most-valued investment, at 22%.

Americans' Perceived Best Investment, 2011-2013 Trend

These findings are from Gallup's April 4-7, 2013, update of its annual Economy and Personal Finance poll. Respondents were asked to select the best long-term investment from among five investment groupings. Gold was the clear winner as the best investment in 2012 as well as 2011 -- soaring above stocks and real estate. Now, as the U.S. stock market has soared and the real estate market shows signs of improving, gold has lost some of its luster in Americans' eyes, although it remains tied for the best investment. Savings accounts and CDs, at 16%, rank as the fourth most-valued investment, while bonds rank fifth, at 9%.

Gold Still Glimmers as Best Investment Among Men and Older Americans

Gold ranks higher as a long-term investment among men than among women, and among those aged 50 or older than among younger Americans. There are few differences by income or political party -- as Republicans' slightly higher preference for gold last year dissipated this year. Upper-income Americans are more likely than their lower- and middle-income counterparts to choose real estate or stocks as the best investment. Bonds do no better than tie for the least popular long-term investment across all subgroups.

Perceived Best Investment, by Subgroup, April 2013

Real estate has made a comeback in terms of Americans' perceived best investment, likely in reaction to the course of the real estate market. Back in July 2002 -- before Gallup began including gold as one of the options for this question -- 50% of Americans said real estate was the best investment, followed by stocks at 18%. By April 2008, shortly after the recession began, the percentage saying real estate was the best investment had dropped to 27%, with savings accounts surging to 29% as the top investment.

Implications

For many Americans, gold represents a way to hedge against the declining value of global currencies and financial instability. Given the financial crisis, the way central banks around the world are flooding the international economy with money, and the gains many gold investors have enjoyed during recent years, it may not be surprising that one in four Americans continue to see it as the best long-term investment.

Still, gold has become a more complicated investment in recent years. For one thing, central banks around the world are buying and selling gold for a variety of reasons. Also, some investors are talking about gold as an alternative currency, and actually taking possession of gold can be challenging.

Most importantly, gold seems to have taken on a market psychology of its own that makes it difficult for the average investor to use it as a traditional investing safe haven, which may be another reason why Americans' interest in it has waned. Additionally, stocks have been booming and real estate has been recovering in recent months, likely contributing to the decline in gold's perceived investment status.

Whatever the reasons for the plunge in gold prices over recent months, it comes even as fewer Americans view gold as their best long-term investment. At the same time, more Americans rate real estate as best. This suggests that these investment preference shifts may continue in the months ahead.

Survey Methods

Results for this Gallup poll are based on telephone interviews conducted April 4-7, 2013, with a random sample of 1,005 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±4 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample of national adults includes a minimum quota of 50% cellphone respondents and 50% landline respondents, with additional minimum quotas by region. Landline telephone numbers are chosen at random among listed telephone numbers. Cellphone numbers are selected using random digit dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted to correct for unequal selection probability, nonresponse, and double coverage of landline and cell users in the two sampling frames. They are also weighted to match the national demographics of gender, age, race, Hispanic ethnicity, education, region, population density, and phone status (cellphone only/landline only/both, cellphone mostly, and having an unlisted landline number). Demographic weighting targets are based on the March 2012 Current Population Survey figures for the aged 18 and older U.S. population. Phone status targets are based on the July-December 2011 National Health Interview Survey. Population density targets are based on the 2010 census. All reported margins of sampling error include the computed design effects for weighting.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

View methodology, full question results, and trend data.

For more details on Gallup's polling methodology, visit www.gallup.com.

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