What the gold sector has needed for years is generalist interest in the space, and one demographic in particular that has shied away from the sector is now showing unprecedented interest, according to Lobo Tiggre, principal analyst of the Independent Speculator.
“Young people today understand that there is a risk in calling something money that governments can create at will at no cost. That’s completely different than anything we’ve seen before,” Tiggre told Kitco News, noting that there has been a surge of trading activity on Robinhood, the web-based discount brokerage, in gold-backed exchange traded funds (ETFs).
The number of users on Robinhood trading the SPDR Gold Shares (GLD) ETF has climbed from just 6,000 a year ago, to 26,000 in July, 2020, according to data from robintrack.net.
“The bitcoin [craze], obviously very popular with young people, the huge run-up in 2017 caught their attention. And now along comes Robinhood that makes it free for anybody, including young people…to trade in other things. All these people, they get that there’s something wrong with paper money, and they get that trading can make you a lot of money, and they’re looking for the next bitcoin 2017,” he said.
Tiggre attributed this rush to millennial investors not wanting to miss out on the recent run-up in prices.
His comments come as gold prices hit a new multi-year high, with spot gold last trading at $1,840.90 an ounce.
“I wouldn’t buy anything today. When things are going vertical crazy like that, that’s the time to be taking profits, not buying,” he said. “Younger people, they’re not stupid. They’re smart and they see the opportunity that’s fantastic, but on average, of course by definition, they lack experience, and I think they tend to chase momentum,” he said.
Although millennial investors lack the wealth of their older investing peers, what’s significant about this trend is what this demographic represents, Tiggre noted.
“First, and foremost, is that the younger generation is, by definition, new to the space, and a class of generalist investors. These are not people that have been hoarding gold and guns out in the desert somewhere…these are young people. Many of them weren’t even alive during the last gold run-up in 1980. So, it’s really significant; it’s an entirely new audience, it’s a large audience. They may not have a lot of money yet, but they’re not children anymore,” he said.
Tiggre added that while some investors may see millennials crowding into the gold space as a contrarian indicator, the top in prices is not here yet.
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