Red Bricks and Blue Chips… but No Gold

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 1 in 5 Australians are part of the baby boomer generation. Only 22% of all Aussies fall into the post-Second World War generation. These people combined, own over 50% of Australia’s private wealth.

Yet, a banking study report found as of December 2014, 56% of Australians had less than $10,000 in their cash savings account. Only 16% of the population had between $10–30,000 in their 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 home. 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, 1 in 10 Australian households had net worth exceeding $1.6 million. And 1% of all Australian households have a net worth over $5 million.

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


I mean, there’s 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?


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 all about Gold Coast real estate.

But nothing on private gold ownership in Australia.

In my search I discovered that it is estimated that Indians have a 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 in 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. In 1950–2004, the government forbid 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 hold 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 a 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 would hold a commemorative one ounce gold coin or two.

And that was it for solid information on gold ownership in a Western nation.

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

Gold is clearly being sold to private buyers. But there are no numbers, or anything 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 tinfoil hat wearing types like my old man, who likes to stay away from any possibility that the government might be watching him, 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 secondhand, but I believe this sums up the Aussies’ attitude. 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 Aussies.

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

Best wishes,

Shae Russell,
Editor, Strategic Intelligence

From the Port Phillip Publishing Library

Special Report: Central banks are losing control. Their efforts to prop up asset markets are failing. We’re now entering the endgame. What will the endgame look like? What are the short and long term investment implications? And how can you navigate this period of hyper central banking intervention…and emerge from the other side with a healthy portfolio? Vern Gowdie is one of the few minds in Australia with clear answers to these questions…[more]

Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Fat Tail Investment Research eight years ago, Shae has worked across a number of publications, such as Australian Small-Cap Investigator, Gold Stock Trader and Microcap Trader. She’s spent the past two years however, honing her macro analysis skills alongside Jim Rickards, showing Australians how to invest and profit form global macro trends.

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

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