Gold Prices Remain High Despite Recent Pullback
Gold prices reached a record high of $4,381 on 20th October, prompting some investors to secure profits in the following days, which led to a market correction. Despite this pullback, interest in the precious metal remains robust. Prices are holding firm near the $4,000 mark, indicating continued strong support at a historically high level.
Expert Vows to ‘Continue to Hold’ Gold
Reflecting this bullish sentiment, John Merrill, founder and CIO of Tanglewood Total Wealth Management, remarked in a recent Kitco News interview that he sees no reason to take profits. The expert revealed that gold constitutes approximately 12 percent of his total portfolio, an overweight position against his 10 percent target allocation. “We will continue to hold our gold,” Merrill stated, noting that any rebalancing would be assessed at the end of the year. He affirmed that gold will always play a long-term role in his investments: “We will own gold. I do not know what the percentage will be in 20 years, but we will own gold because it is irreplaceable.”
A Hedge Against Currency and Catastrophe
According to Merrill, the most significant driver for gold demand is rising global government debt. Investors are seeking to protect their assets as fiat currencies worldwide lose purchasing power. This escalating debt also poses substantial risks to long-term government bonds, which have long been viewed as safe havens, forcing investors to turn to the yellow metal for security. “We began to realise this in 2023—that there were new drivers for gold,” Merrill said. “We had never looked at gold as an inflation hedge… but it is a catastrophe hedge. And now it is not just a catastrophe hedge, it is also a currency hedge.” He added that the weaponisation of the US dollar against Russia and intensifying global trade wars have undermined confidence in the dollar as the world’s reserve currency, leaving gold as the primary alternative.
Generation Z Turns to a Tangible Asset
This renewed focus on gold extends beyond institutional experts to a new generation of investors. Young people, often grouped as Generation Z, are increasingly looking to gold rather than highly volatile assets like cryptocurrencies. In a world defined by digital volatility, physical gold offers a tangible alternative—an asset that can be held, stored securely, and sold based on a global benchmark price. It is seen as a stabilising counterbalance in an uncertain market, with a long-term upward price trend despite occasional setbacks.
Digital Plans and Ethical Priorities
Generation Z invests differently than previous generations. Many favour regular, small saving contributions over large, single investments. Digital investment apps and online gold savings plans have simplified entry, allowing them to leverage the cost-average effect to mitigate price fluctuations. Furthermore, responsible investing is a key priority. For many young investors, factors like provenance, mining conditions, and sustainability are as important as the price. Certifications, such as Fairmined or the London Bullion Market Association’s (LBMA) Responsible Sourcing Programme, provide assurance that the gold is ethically sourced or recycled.
The ‘Finfluencer’ Effect: Motivation and Risk
Discussions about money have moved from bank branches to social media channels. On platforms like TikTok, YouTube, and Instagram, “finfluencers” demonstrate investment strategies, including gold purchases. While hashtags like #FinancialFreedom make the topic more accessible, this trend introduces risk, as not all content is independent or verified. A 2023 study by the CFA Institute and the FINRA Investor Education Foundation confirmed that social media significantly impacts the investment decisions of Gen Z. While these platforms can serve as inspiration, they cannot replace fundamental research using reputable sources.
Starting Out with a Small Budget
A large amount of starting capital is no longer necessary to invest in gold. Savings plans are available from as little as €25 per month, allowing for regular purchases to achieve an average price over time. Direct purchases of small denominations, such as 1-gram bars or small coins, are also popular for their flexibility. However, investors should be aware that these smaller items carry a higher price per gram, often with a premium of 10-15%.
Storage, Security, and Asset Distinction
Secure storage should be considered from the outset. Options range from bank safe deposit boxes (costing approximately €50-€200 annually in Germany) to insured, high-security vaults offered by dealers (costing 0.3-1.5% of the asset value per year). New investors must also distinguish between jewellery and investment-grade gold. Jewellery is typically made from alloys (e.g., 58.5% or 75% gold) and includes significant costs for design and branding. Investment gold (bullion) must have a high purity (e.g., 99.5% or higher) and its value is based purely on weight and the current spot price. For Generation Z, the distinction is clear: jewellery is for personal expression, while investment gold is for financial security.
