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Gen Z has a problem with gold: WGC Study

In terms of investment demand, Gen Z consumers are less likely to invest for the long term, factors which in turn impact their demand for gold, says the WGC report
  • The Gen Z attitude stands in contrast to their immediate seniors, the millennials
  • Photo: MintPremium
    Photo: Mint

    A multi-country World Gold Council study that covered 18,000 respondents highlighted the issues that members of Gen Z (those born between 1996-2010) have with the precious metal. The report highlights challenges around style and lack of an emotional connection with gold among the world’s youngest cohort of consumers. In terms of investment demand, the report notes that Generation Z consumers are less likely to invest for the long term or to worry about the impact of a financial crash on their savings, factors which in turn impact their demand for gold. The report covered retail investors in 6 major gold markets - USA, China, India, Germany, Canada and Russia. For its jewellery section, it covered 3 of those markets - USA, China and India.

    Generation Z are individuals born between 1996 and 2010 and hence constitute the youngest cohort of consumers in the world’s gold market. The WGC report notes that there are perceptual misgivings among Generation Z individuals about gold. The issues are twofold - Generation Z does not place gold high up as a fashion/style item and it does not have an emotional connection with gold unlike previous generations. In the eyes of Generation Z, ‘gold can be perceived as brash or showy’, the report said. Also, they are not as loyal to gold’s heritage as their parents or grandparents might be or have been.

    The Generation Z attitude stands in contrast to their immediate seniors, the millennials. “In many ways, they (millennials) still regard gold as relevant to their lives. Across a number of data points our survey shows millennials’ attitudes towards gold are not significantly different to those of older generations," says the WGC report.

    In terms of geography, the WGC report locates the locus of the problem among China’s young consumers, particularly in the jewellery market. In contrast, the report notes that “Indian Gen Z buying behaviour and purchase intentions are not notably different from those of older consumers. But younger jewellery buyers display a weaker emotional connection to gold jewellery relative to their elders and if no targeted efforts are made to strengthen those emotional ties to gold jewellery, it is possible that India could follow China’s lead," the report adds. The WGC report showed that 36% of those Indians who are above 39 years of age expressed an intention to buy gold jewellery in the next 12 months. This percentage declined a little to 33% among millennials and then starkly to 24% among Generation Z Indians.

    The WGC report also ascribes a third reason for Gen Z’s lack of enthusiasm for gold. “ In general, they are more likely to want to see exponential growth from their investments, less likely to invest for the long-term, and less likely than the average retail investor to worry about the impact of a financial crash on their savings," it says. The report also notes the popularity of Cryptocurrencies among Generation Z. A startling 22% of Generation Z respondents saw cryptocurrencies as an asset for getting short term returns. However reassuringly for the gold industry, the majority of Generation Z members (56%) agreed with the statement, ‘I trust gold more than the currencies of countries.’ This proportion was the same as respondents in the far older 55-65 year age group.

    Neil Borate
    Neil heads the personal finance team at Mint. A former colleague called them 'money nerds' and that's what they are. They cover topics like mutual funds, taxation and retirement, all to improve your chances of building wealth. Neil graduated with a degree in law and economics. He passed the CFA Level I exam and began his writing career at Value Research, a mutual fund research firm in 2016. He joined the personal finance team Mint in 2019. Everyday, the Mint Money Team tackles personal finance questions such as where to invest and where to borrow, through articles, charts and reader queries. They also have a daily podcast - 'Why Not Mint Money' and an annual ranking of mutual funds - the Mint 20.
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    Updated: 13 Nov 2019, 08:13 PM IST
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