WSJ Your Money Briefing - Volatile Markets Are Creating a New Generation of Gold Bugs

Episode Date: April 4, 2025

Rattled investors are once again looking to gold as a safe haven, but the strategy isn’t without its drawbacks. Wall Street Journal reporters Oyin Adedoyin and Owen Tucker-Smith join host Jacob Passy to discuss the growing interest in buying gold. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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Hey, your Money Briefing listeners. This is Jacob Pasey. Here at YMB, we're all about bringing you important personal finance and career news. We're working on making some changes to our personal finance content, and we want to hear from you. Our question today is, what would be the ideal length of the show?

If you're listening on Spotify, look for our poll under the episode description, or you can send us an email to ymb at wsj.com. That's ymb at wsj.com. Now on to the show. Here's your Money Briefing for Friday, April 4th. I'm Jacob Passe for The Wall Street Journal. There's a new generation of investors flocking to gold lately. It's a reaction to the market volatility that has emerged during President Trump's

second term. People are looking for safe havens for their assets amid stock market downturns like the one we saw on Thursday in response to Trump's tariff announcement. We saw that investors are pouring a lot of money into these funds. They poured a net 11.4 billion into fiscal gold ETFs since the start of February, according to Morningstar. And these funds are on pace to net the most monthly inflows in March since July 2020, during the height of the pandemic.

That's WSJ reporter Oyin Adedoyin. We'll talk to her and WSJ reporter Owen Tucker-Smith about investors' renewed interest in gold after the break. The World's Fastest Market President Trump's policies have rattled stock markets in recent weeks. That has prompted a new generation of investors to consider gold as an alternative. And longtime gold enthusiasts are reaping the benefits. Wall Street Journal reporters Oyin Atedoyin and Owen Tucker Smith join me. So Oyin, what types of people are investing in gold nowadays? Well, have you ever heard of a gold bug?

Yes. Well, you know, I learned what that was for the first time reporting this story because a lot more people are gold bugs today. So the Merriam-Webster dictionary actually describes a gold bug as a person who invests in or hoards gold. And we're seeing a lot more people fit that category lately. We're seeing everyone from first-time buyers seeking a stable investment amid Trump's policies, but we're also seeing long-time gold devotees

increasing their holdings as well. And Owen, what's attracting people to invest in gold these days as opposed to in the past? Well, a lot of investors that we spoke to are nervous about how President Trump's policies are impacting the stock market. And they see gold as a more stable investment that isn't so tied to the day-to-day ups and downs of stocks that are tied to the trade war and other kind of volatile aspects of this administration. And how do investors profit from gold? How does that work?

Investors don't necessarily profit from gold. It's a long term asset. So you kind of profit from it for as long as you hold gold. It's not like stocks where you can get interest income or dividends. It just steadily grows over time. So investors are holding on to physical gold and waiting for the price of that to appreciate. Have we seen this trend towards investing in gold happen before? Yeah we certainly have. Sometimes that we heard about are during the dot com bubble when the 2008 financial crisis

hit and also during COVID. The thing that all these things have in common is that there's a lot of uncertainty. The US stock market usually wasn't doing well and investors wanted to have something physical that could comfort them because they had it, they could touch it, and it felt like the wealth would stay there even when the rest of the economy was really uncertain. So how does one actually invest in gold? Are people literally buying gold bars? So there's two main ways to invest in gold. One is yes, you can buy gold bars, you can keep them in a safe at a bank, and that's

what one of the people that we talk to is doing. And people often like that because it's physical, it's tangible, they can touch it, and it doesn't feel tied to the whims of the stock market. But for many people who don't want to have the hassle of owning all of these really expensive possessions, you can also buy a fund, an ETF or a mutual fund on some sort of website like Fidelity, and those are backed by physical gold, but they're a sort of more convenient way to purchase it So you can add gold to your portfolio in the same way that you would add another fund to your portfolio But it's actually tied to the price of gold

And we saw that investors are pouring a lot of money into these funds that Owen is mentioning They poured and that 11.4 billion into physical gold ETFs since the start of February, according to Morningstar. And these funds are on pace to net the most monthly inflows in March since July 2020, during the height of the pandemic. So you can really see this increased trend in not only buying physical gold at a place like Costco, which started selling them in 2023, but also investing in gold-backed investments. Another thing that we've noticed in these flows to gold ETFs is that people pour billions into these ETFs on the days that gold hits records. So there's a certain FOMO element of it where people

are seeing that the price of gold is hitting record highs and they want in. And a gold ETF is sort of an easy way to feel like you're part of the moment. So on that note, what's been happening to the price of gold? Has it gone up recently? The price of gold has been increasing pretty steadily recently. Actually, just Monday, gold rose nearly 20%, breaking price records and turning its best quarterly gain

since 1986. So we're really seeing kind of this steep increase in the value of gold right now. And it could keep going and going. Just last week, Bank of America said that they think that gold could reach $3,500 in the next two years. That's assuming that the Trump related uncertainty continues to make investors rally around the precious metal. Of course, this all depends on what the next few months look like for the Trump administration.

What are the drawbacks, if any, to this strategy of buying gold as a hedge? Gold can be a risky investment. Like we said earlier, gold doesn't give you necessarily returns. And the price of gold also tends to fluctuate. We spoke with a financial advisor who mainly speaks with clients who are between 25 and 45. And she's been saying that those clients have been reaching out to her asking about gold, whether they should invest.

And she actually recommends that people don't invest in gold and that they instead stay the course with their long-term investment strategies because the cost of buying a bunch of gold and having the price fluctuate dramatically is just too much. Yeah. One thing that we hear overall in terms of this uncertain period for the markets is that there are plenty of investors who want to do something to make them feel more secure about their situation, whether it's gold or European equities or other commodities.

And then there's a whole camp of investors and portfolio managers who advise against what they'll call emotional investing, or trying to do something to make yourself feel better when in reality it's best to just wait it out. So those people might be more hesitant to advise their clients to go all in on gold just because these couple months have felt nerve wracking for investors. That was WSJ reporters Oyan Adedoyan and Owen Tucker-Smith. And that's it for your money briefing.

Tomorrow we'll have our weekly markets wrap up, What's News in Markets. And then we'll be back on Sunday with the second installment of our three-part series, Buying a Home in 2025, Navigating the Crunch. This episode was produced by Ariana Oss-Peru. I'm your host Jacob Pasey. Additional support this week from Pierre Bien-Aime and Anthony Bansi. Jessica Fenton and Michael Laval wrote our theme music. Our supervising producer is Melanie Roy. Aisha Al-Muslim is our development producer. Scott Salloway and Chris Zinsley are our deputy editors.

And Philana Patterson is The Wall Street Journal's head of news audio. Thanks for listening.