Saving in gold is a practice that has endured through the ages and across cultures. Gold savings are often seen as a safe haven, particularly in times of economic uncertainty. Gold savings are also often appreciated for their disconnection from the banking system, which is regularly threatened by various crises. However, the appeal of gold varies according to population category, profession and country, with different levels of gold reserves.  

By 2024, investment in coins and bars will account for more than 25% of global demand for gold. But who should save in gold? And when and why save in gold? This article explores the different ways of saving in gold, depending on your country, age, income and profession.  

ARTICLE SUMMARY : 

• Why save in gold?
• The financial characteristics of gold
• How much is saved in gold?
• Saving in gold varies with age
• Saving by profession
• Gold reserves by country
• Who are the reluctant savers?

Why save in gold? 

There are several reasons for saving in gold: 

• A desire to get out of the banking system without keeping banknotes that would lose value in the long term.  
• A desire to diversify one's wealth by holding an asset for which there is no counterparty (with no risk of bankruptcy). Gold can also be seen as a good way of growing your assets without any particular technical difficulties.  
• Saving in gold is also a way of holding a ‘tangible’ asset that symbolises both the idea of a family inheritance and a safe haven for ‘protection’.  

According to a 2019 survey by the World Gold Council, ‘gold is a common investment choice - it is the third most regularly purchased investment, with 46% of individual investors worldwide opting for gold products, just behind savings accounts (78%) and life insurance (54%). When it comes to jewellery, the survey shows that 56% of consumers have bought fine gold jewellery, compared with 34% who have bought platinum jewellery’. 

In addition, ‘a third (38%) of retail investors have never bought gold in the past but are open to the possibility’. Gold also enjoys a high level of confidence among retail investors. In fact, 67% of investors consider gold to be an effective protection against inflation and currency fluctuations, and 61% of them have more confidence in gold than in fiat currencies.  

The financial characteristics of gold 

Gold has unique financial characteristics that correspond more or less to the investor's profile. Unlike other assets, gold is not subject to the risk of bankruptcy. What's more, gold offers a good return (around 7% a year since 1970) while being relatively unstable (with volatility often between 10% and 15%). As a result, gold is often recommended as a core asset in a portfolio. Most managers agree that a portfolio holding of between 5% and 15% in gold is advisable.  

However, gold also has a number of disadvantages, such as a lack of return and the need for secure storage. Unlike a property investment, which pays rent, or a share, which pays a dividend, gold provides no return.  

Gold should therefore ideally be aimed at : 

• PEOPLE WHO DO NOT NEED TO EARN A DIRECT INCOME FROM THEIR INVESTMENT. The lack of yield limits potential buyers to investors with sufficient cash in their portfolios.  
• PEOPLE ABLE TO INVEST OVER A LONGER TIME HORIZON to benefit from cumulative performance. 
• PEOPLE LOOKING TO DIVERSIFY THEIR PORTFOLIO with a tangible asset and thus neutralise part of their capital.  

As a result, gold may seem less relevant for people with less wealth or a need for immediate income. However, collector's items offer exposure to gold for as little as a few hundred euros, and the benefits of saving in gold are often overlooked... 

What proportion of savings is in gold? 

In France in 2020, household financial assets (excluding interest-rate products) represented just 13% of total assets. In this same category, we can estimate that gold savings probably represented a few percent at most. On the other hand, the wealth of the French remains largely exposed to property, with more than 60% of assets represented.  

Source : epargne-des-menages.pdf

Saving in gold varies with age 

Age is a determining factor in savings habits. As age advances, the capacity to save increases. According to the Banque de France, people aged between 30 and 39 save an average of 8.9% of their gross disposable income, or €2,345 a year. This rate rises to 11.3% (€3,239) for 40-49 year-olds, then to 17.8% (€5,893) for 50-59 year-olds. People aged 60-69 have a savings rate of 17.9%, equivalent to €5,935 a year. Older people therefore save almost twice as much as younger people.  

Source : epargne-des-menages.pdf

This savings differential is reflected in the demand for gold. Older people, looking for secure investments to safeguard their assets, are more inclined to invest in gold. But contrary to popular belief, investing young can also have its advantages. Holding gold over a long period means better returns, and gold savings are accessible from as little as a few hundred euros. 

Saving by profession 

Socio-professional categories also influence savings behaviour. Self-employed people, such as tradespeople and shopkeepers, have higher savings rates than employees. This difference can be explained by the need for these professions to protect themselves against professional hazards and the absence of certain social protection schemes. This behaviour can also be reflected in investments such as gold, which can serve as a safe investment.  

In France, the rate of home savings varies according to the socio-professional category (CSP) of the reference person in the household. For example, around 60% of households where the reference person is a farmer hold a home savings plan (PEL). Although these figures relate to home savings, they illustrate potential trends in gold savings: self-employed professionals may be looking for tangible, secure investments such as gold. 

So, above all, saving shows a desire to prepare for the future and, to a certain extent, to secure it through assets such as gold. Gold is a way for many households to combine savings with long-term security.  

Gold reserves by country 

Contrary to the idea that gold stocks are mainly held by central banks, most gold stocks in the world are in fact held privately. Moreover, the countries holding the most gold per capita are Switzerland, Italy, Germany and France, followed by the United States. This holding of gold is the result of both historical and cultural heritage.  

This ranking in gold ownership is reflected in savings rates, which vary significantly from one country to another. In 2020, France had a gross savings rate of 20.6% of disposable income, while Switzerland had a net savings rate of 22.1%. A high savings rate, as is the case in many European countries, is therefore conducive to investing in gold.  

TOP 10 COUNTRIES WITH THE LARGEST OFFICIAL GOLD RESERVES - 2024 Source: Central Banks Gold Reserves by Country | World Gold Council 

Despite this, some countries have shown a higher propensity to save in gold for cultural reasons. In India, for example, gold occupies a central place in the culture and economy, serving as both jewellery and a store of value. In fact, Indian households hold one of the largest gold reserves in the world.  

In China, too, gold is traditionally seen as a safe investment, and demand has risen with the country's economic growth. In Western countries, saving in gold is often associated with periods of economic uncertainty or high inflation. Investors turn to gold to diversify their portfolios and protect themselves against fluctuations in the financial markets. 

Who are the reluctant investors? 

Although gold enjoys a high level of credibility among its holders, a fringe of potential investors express a degree of mistrust. Among those who have never bought gold but are considering doing so, 48% of potential investors and 28% of jewellery buyers cite lack of confidence as a major obstacle. This mistrust can be explained by several factors: fear of counterfeiting (falsified coins and ingots), doubts about the purity of the products or scepticism about certain retailers.  

It should also be pointed out that access to gold is concentrated mainly in the big cities, where shops are more liquid. Similarly, people living on the outskirts of towns or in rural areas have virtually no close access to gold. This lack of gold trading means that part of the population is neither accustomed to saving in gold, nor able to do so.  

Contrary to popular belief, the perception of millennials is similar to that of older generations. However, generation Z, which is even younger, has specific reservations, which are particularly evident in the Chinese jewellery market. In China, only 40% of potential buyers aged 18 to 24 think that gold is a good medium, compared with 88% of those aged 55 to 65. This difference highlights a change in perception, which could be explained by changing tastes and cultural references. Where some fear the replacement of gold by cryptocurrencies, differences nevertheless persist. The gold industry therefore needs to modernise its approach to appeal to this young, dynamic audience. 

But gold suffers above all from a lack of understanding. Two-thirds (66%) of potential buyers say they do not have sufficient knowledge to invest in gold. To fill this gap, it is crucial to step up communication through information campaigns on television, the press and social networks. Education about the benefits of gold needs to be stepped up to demonstrate its protective role in wealth management.  

Conclusion 

Saving in gold is widespread throughout the world and across most population groups. Yet it is far from dominating the financial scene. Gold does, however, offer a number of advantages: diversification, security, inheritance, etc. Saving in gold seems to be aimed primarily at households that already have sufficient assets.  

However, gold is accessible to all savings levels, all ages and all professions. It meets a need to secure the future. However, access to gold is not the same throughout the country, and unfamiliarity with the metal creates a glass ceiling for some people.  

Clearly, saving in gold is influenced by a multitude of factors, from the age and profession of individuals to cultural and economic considerations specific to each country. Overall trends suggest that gold remains an important component of the savings strategy for many people around the world.... And despite many preconceived ideas, gold is everywhere!