For Whom Does Gold Glitter?

As an initial gauge of interest, we looked at visitation to websites focused on precious metals. We found that the number of unique visitors to these sites have exploded, with many experiencing double- and triple-digit percent growth.

*Source: Comscore MMX

We also took a look at these visitors’ demographic makeup. Take for example Coinflation.com, a website that acts as a precious metals news aggregator as well as an up-to-the-minute silver coinage valuator. A snapshot of their December 2011 visitation demographics shows a broad-based distribution with skews typical of investment sites: males, older, and higher household income.

Source: Comscore MMX (December 2011)

We eventually came to the question: are these visitors actually willing to invest in silver and gold, or are they just researching their options and eventually decide against it? To understand this, we applied Comscore’s proven Share of Choice technique to various investment options. As part of a prize drawing, a census-representative group of six hundred individuals were given the option of winning an equal value investment of their choice. That is, they could win their choice of:

• U.S. Corporate Stocks/Bonds (companies of their choice)
• Non-U.S. Corporate Stocks/Bonds (companies of their choice)
• Treasuries (U.S. Savings Bonds, Treasury Notes, or Treasury Bills)
• Bank Money Market or Cash Deposit (financial institution of their choice)
• Silver/Gold (physical bullion or coin).

The results are very telling, with 29 percent choosing the Silver/Gold option. With regards to gender, the ratio mirrored the above site visitation with 32 percent of men and 26 percent of women choosing the precious metals. The makeup for household income on the other hand did not show the same pattern as the website visitation data, being more similar across groupings. This may be because lower income individuals do not have the same degree of liquid investment money and so do not seek out financial information at the same rate as those with higher income.

But perhaps the most interesting distributions are those that reflect political and economic outlook. In particular, political party affiliation demonstrated a strong trend, with choice for metals among independents being near the mean, Democrats and Greens indexing below, and Republicans and Libertarians indexing well above.

Percent Choosing Silver/Gold Option
By Political Affiliation*

* Which of the following best describes your political affiliation?

Similarly, inflation expectation was a key driver. The Silver/Gold option was chosen at a substantially higher rate by those who expected prices of staples such as food, gasoline, utilities and medicine to be higher a year from now.

Percent Choosing Silver/Gold Option
By Staple Price Expectations*

* What are your expectations for the prices of staples such as food, gasoline, utilities and medicine a year from now?
Compared to today will they be:

The data also suggests that individuals are looking at precious metals for portfolio diversification. In the study, only about 4 percent of individuals indicated they currently invest in silver and gold bullion/coins; compared to 64 percent who indicated that they currently invest in one of the above options or a savings account. While the vast majority of current silver/gold owners continue to prefer that option, a quarter to a third of those holding other investments now also prefer silver/gold. So move over “gold bugs”, you now have some company.