When Retail Investors Return, Gold Will Shine Brighter Than Ever

Published on: February 11, 2024
Author: Caroline Kong

Over the past year, the price of gold was buoyed by expectations of a Fed rate cut, strong central bank purchases, and safe-haven demand due to geopolitical conflicts, breaking to record highs by the end of the year. However, retail investment demand for the precious metal has been lukewarm, acting as a detrimental factor dragging down gold prices as they continue to rise.

Looking ahead to 2024, a number of industry insiders and analysts have expressed their views on when retail investors will return to the gold market, with Jay Martin, president and CEO of Cambridge House International, stating that when the macro picture changes, people will change their minds and starting to buy assets that make the most sense.

He noted that he was encouraged by the number of children under the age of 18 who attended Vancouver Resource Investment Conference (VRIC) this year, as young people are beginning to take a real interest in hard assets.

Speaking at the recent VRIC panel meetings, Incrementum Managing Partner Ronnie Stoeferle said gold can bring a similar level of trust to young investors, offering a reasonable way to trade goods and services, more than any other currency in the world, and for a longer period of time than any other currency in the world.

He points out that Costco (NASDAQ:COST) is selling gold and the the reality is they can’t keep it in stock, which shows that there is still a demand for gold in the market. It’s just that some retail investors are still unfamiliar with some of the companies that have quality gold projects, and don’t know much about the potential of resource projects in some mining jurisdictions.

Stoeferle says gold is now in a position to break out. He sees the price of gold rising to $2,500 an ounce in the next six to eight months. Obviously, gold works best in recessions, gold can be used as a dollar hedge, gold works in times of negative real interest rates, and gold performs very strongly in times of turmoil. He believes that it makes sense for everyone to hold 10, 15 or 20 per cent in gold in times of uncertainty.

Experts say that investors should consider the amount of risk they are willing to take when deciding how to invest in gold. Junior gold companies are riskier but have the opportunity for higher returns, while larger gold companies are less risky but also have less room for growth. There are also more stable physical products or gold-backed ETFs, which vary in cost and risk.

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