Meme Stocks vs. Gold
Meme stocks and cryptocurrency have flooded our news agenda over the last 12 months, with millennials and Gen Z taking a particular interest in this new way of investing. Meme stocks can be defined as stocks that experience a dramatic and rapid surge in demand because of social media hype and are often volatile in nature. An example of a meme stock was the GameStop phenomenon, which saw share prices increase by a whopping 400% in just one week in January 2021. The sudden spike in price was facilitated by a group of traders who drove up share prices via the social media platform Reddit.
Similar to cryptocurrencies, meme stocks have provided investors with a ‘high risk, high reward’ opportunity which has interested a younger investor. However, despite being attracted by the potential to ‘get rich quick’, it appears that the appeal of meme stocks and Bitcoin has been short-lived for many. In fact, according to new research commissioned by The Royal Mint*, 64% of young people who invested in meme stocks or cryptocurrency for the first time in the past year have already sold all, or at least some of their investment after becoming disillusioned by their performance.
Balancing Risk
The recent research also revealed that millennial and Gen Z investors are now looking to diversify their investments by adding ‘safe haven’ options such as gold to their portfolio. Over two thirds of these young people would now consider investing in precious metals following their experience with cryptocurrencies and meme stocks, declaring their motivations as gold’s history of consistent performance and its role as a store of wealth.
Fear of Missing Out
Younger people are likely to base their investing decisions on trending topics online and via social media, although they are increasingly doing their due diligence and studying the potential risks and rewards associated with different assets. Iona Bain, founder of the pioneering Young Money blog, said:
“Gold is the ultimate safe haven, with an impressive track record stretching back thousands of years. So it’s no surprise young people are turning to precious metals as a way to diversify their portfolios, invest for the long-term and hold something with tangible value. Plus, it’s no longer necessary to directly buy whole gold bars: owning fractional amounts of precious metals, stored securely by The Royal Mint, can easily provide the exposure you need at a comparatively low cost. I’m very happy to see that young people are turning their backs on our get-rich-quick culture and are becoming much more balanced, thoughtful, and informed investors in the process.”
Engagement with The Royal Mint
At The Royal Mint we have experienced a 191% increase in millennial customers over the last 12 months, with 21% of the 23,000 new customers during the period being under the age of 35.
Andrew Dickey, Director of Precious Metals at The Royal Mint, commented: “The rise of meme stocks in the late half of 2020 and early 2021 has really opened up the idea of investing to a new, younger group of people and it’s great to see a new, financially savvy generation is emerging, realising the benefit of a diverse portfolio.
“With the millennial age group, we’re finding that our DigiGold product is proving particularly popular. It offers people the chance to invest in gold that is physically held in our vault, at the touch of a button, via a smartphone or tablet.”
Introduction to DigiGold
DigiGold, from The Royal Mint, is a simple and cost-effective way to own physical gold, silver and platinum in quantities to suit all budgets. This allows investors to purchase and own fractional, monetary amounts of large gold, silver and platinum bars that are stored securely within The Vault®, The Royal Mint’s state-of-the-art facility in South Wales.
Unlike precious metal coins or bars, DigiGold enables buyers to purchase gold, silver and platinum based on value rather than weight. Customers can invest from as little as £25, making it ideal for first-time investors or those who want to invest regularly. Investors own their DigiGold investment and have a legal title to it, with The Royal Mint acting as custodian only.
*The survey was conducted by Censuswide on behalf of The Royal Mint including a general population of 2,287, of which 1,171 were millennials and Gen Z.
