Red Bricks and Blue Chips… But No Gold

Cropped image of businessman protecting stacked coins on grass

Here’s an interesting statistic for you.

In 2014, more than half of all Australian households — 54% to be precise — had two cars. That probably doesn’t surprise you, though.

So I’ve got another one.

A whopping one in five Australians is part of the baby boomer generation. 22% of all Aussies fall into the post-Second World War generation. Combined, these people own over 50% of Australia’s private wealth.

Yet a banking study report found that, as of December 2014, 56% of Australians had less than $10,000 in savings. Only 16% of the population had between $10,000 and $30,000 in savings. So we’re clearly not as cashed up as we like to think.

But that’s OK, because we’ve got bricks. Lots of them.

The 2011 Aussie census says that 67% of us own our homes — either outright or with a mortgage. But only 7.9% of Australian households own an investment property.

Wait, wait, there are more numbers…

As of 2014, one in 10 Australian households had a net worth exceeding $1.6 million. And 1% of all Australian households have a net worth of over $5 million.

Before I wrap the statistic overload, only 34% of Aussies — 6.7 million people — own shares directly. That figure is bumped up to 38% if you include indirect share ownerships — like through a superfund.


I mean, there are not a lot of savings floating around. But we have houses! And some shares. Some of us even have a paper net worth of $1.6 million!

Based on this very small data snapshot, we’re wealthy.

Sure, on average, we’ve got no cash. But with all investments tied up in red bricks and blue chips, what does that matter?


Investment Portfolios with Physical Gold Holdings

When I started writing Money Morning today, I wasn’t looking for data on how many cars we own, how many Aussies use rhyming slang, or how many of us wander down the health food aisle at the supermarket. In case you were wondering, the answers are 44% and 54% respectively.

No. I was on the hunt for hard data that showed the number of Aussies with physical private gold holdings.

I can tell you, herding cats would have been easier. What I often found when ‘gold’ was typed in alongside the words ‘Australian’ and ‘investment’ was information about Queensland’s Gold Coast.

But nothing on private gold ownership in Australia.

In my search I discovered that it is estimated that Indians have combined private gold holdings of 20,000 tonnes in jewellery, coins and gold bars. To put this figure in perspective, that’s two and a half times the amount of gold reportedly stored at Fort Knox in the US.

China’s another country that has been gobbling up gold in record numbers. The official statistics for the Middle Kingdom come in at 1,797 tonnes. Jim Rickards — the strategist behind Strategic Intelligence — estimates China’s gold holdings are much closer to 4,000 tonnes.

Nonetheless, Chinese citizens have been on a gold buying spree — actively encouraged by the government through TV commercials I might add. From 1950–2004, the government forbade private citizens to hold gold. When that was removed, private buyers rushed into the gold market.

While there isn’t any hard data on the level of private ownership in China, data from the Census and Statistics Department in Hong Kong says gold imports to China have risen 700% since 2010.

That’s in stark contrast to the rest of the world.

At a rough guess, the Western world combined holds only 3% of its wealth in gold. To be honest, when I first read this estimate, I didn’t think it was right. So a few more hours were wasted trying to pin down the number of Western countries with strong private gold ownership.

The closet I came was a YouTube video guessing that 1–2% of Americans own physical gold. But it then went on to say that it wouldn’t make up a large portion of their wealth. Again, another guess from the clip was that most Americans hold a commemorative one ounce gold coin or two.

And that was it for solid information on gold ownership in the Western world.

Perhaps more perplexing is the financial report from Australia’s Perth Mint released last year. The report stated that 5.08 million gold and silver coins, medallions and minted bars were sold during the 2015 financial year.

Gold is clearly being sold to private buyers. But there are no numbers, or anything else other than a few small blogs about personal gold stashes.

I’m not advocating a gold ledger or record keeping of who buys the shiny stuff. But if that much gold was being sold to Australians for investment purposes, there’d be some digital breadcrumbs. Unless buyers are the tin-foil hat wearing types — like my old man, that like to stay away from all things where the government might be watching you — this gold was sold…and disappeared.

The problem is, I don’t think bullion disappeared into the hands of Aussie investors.

I heard this story second hand, but I believe it sums up the attitude of Aussies. A Malaysian executive once said to his Aussie counterpart: ‘Buying gold is not actually spending, it is just buying another currency.

Gold is money. But the West just doesn’t get it. Sure, the Perth Mint is selling it, as are many other bullion dealers across the country. But I find it hard to believe it’s making its way into the personal wealth of Aussie households.

Western nations have spent the past 25 years being driven into paper investments, particularly Australians. We stick our money in our houses, and into a handful of blue chip stocks we view as safe.

As clichéd as it sounds, a new era for gold is coming. And Eastern countries will be prepared. It’s time Aussie investors take the leap, ditching the bricks and mortar and paper trades for the shiny stuff.


Shae Russell,
For The Daily Reckoning

Shae Russell

Shae Russell

Shae is editor of the Australian version of Jim Rickards’ acclaimed Strategic Intelligence newsletter. Jim is a best-selling author…a trusted friend of the CIA, the Federal Reserve and the world banking system. He also helped the US Department of Defense through its first-ever currency war games scenario. With Jim’s insights and analysis, Shae brings you investment tips and recommendations to help you create and preserve wealth through the coming monetary collapse.

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