Americans believe that gold is better than stocks as a long-term investment

Carla Gottgens | Bloomberg | Getty Images

Americans are bullish on gold and have fallen on stocks – perhaps to their detriment.

According to a recent Gallup study, 26 percent of Americans believed gold was the best long-term investment in 2023, nearly double the 15 percent in 2022 Opinion poll.

The stock outperformed equities: 18% of Americans ranked stocks as their top long-term investment, up from 24% a year ago, according to the survey.

It was the first time since 2013 that their perception of stocks was below that of gold. Both ranked behind real estate.

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While Americans were asked to assess sentiment over the long term, public perceptions are more oriented towards short-term fluctuations in investment performance, said Gallup, which surveyed a random sample of 1,013 adults between April 3 and 25.

And that recency error can be dangerous for investors saving for a goal like retirement that may be decades away.

“As a long-term investment [gold] is a very bad solution,” said Charlie Fitzgerald, board-certified financial planner and director of Moisand Fitzgerald Tamayo in Orlando, Florida.

“It’s more of a speculation,” he added.

In the long run, stocks beat gold

According to financial advisors, stocks generally serve as the long-term growth engine of an investment portfolio.

The S&P 500 stock index had an average annual total return of 10.43% between 1970 and 2022 according to a study analysis by Securian Asset Management. Gold returned 7.7% over the same period. (After the end of the US gold standard in 1971, the price of gold was no longer fixed, so the early 1970s was a good place to start comparing prices.)

Often viewed as a safe haven, gold prices typically rise in times of fear and economic distress. For example, gold prices soared to multi-year highs in the early days of the Covid-19 pandemic and surged after the Russian invasion of Ukraine.

The SPDR Gold Shares ETF (GLD) — an exchange-traded fund that tracks the price of gold — is up 8.6% so far in 2023 S&P 500 increased by 7.6%.

The fragile economy and the flatter interest rate path will support gold, says the strategist

Johnson, a member of the CNBC Advisory Council, has been recommending gold to clients for the past year or so.

However, it’s more of a short-term holding — a hedge for investors if both gross domestic product (a measure of US economic output) and inflation slow, as they are currently doing, Johnson said. In general, should GDP start to recover, he would recommend dumping gold and buying growth stocks instead.

“Gold is not a long-term investment,” Johnson said. “It’s not something you just put in a portfolio and keep there.” Americans believe that gold is better than stocks as a long-term investment

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