SURVEY SAYS: Have You Seen a Gold "Rush?"

November 11, 2010 ( - Growing concerns about the world’s economies, not to mention America’s own budget deficit, have fueled a growing interest in gold as an investment...  

Or at least so the still-climbing price of the precious metal would suggest ($1410/ounce on Tuesday, and up 7% since the Federal Reserve announced its “stimulus” approach).   

Of course, this could just be another tech bubble in the making, but this week, I asked readers if they had had any participant requests to add a gold and/or commodities fund/option to your retirement plan – and what, if anything, they were considering doing in response?   

A slight plurality – 35.4% – said they had had no such request, but nearly as many – 29.2% – said they had (one reader noted, “Seriously, just had the question today”), and another 6.3% said they had had such a request, but that they already offered the option.   

Beyond that, 8.3% said they had gotten such a request, “but not a serious one”, a nearly identical 7.9% said they hadn’t gotten that request – yet, and the rest were split between who/knows and not sure. 


Those looking for our Bonus Survey Says will find it HERE.




Investment Choices 

While we were on the subject of investment choices, I asked readers what, if any, had been the MOST requested type fund option in the past year.  Topping that list was a managed account, cited by 24%, but self-directed brokerage account and gold/precious metals were close behind, with 20% each.  Target-date funds had been requested by 16% (different target-date funds by another 4%), index funds by 12%, and emerging markets stock fund by 4.0%.   

There were a fair number of “others”, including: 

  • Additional bond fund options 
  • Real estate fund 
  • A money market fund 
  • A money market fund that actually pays some interest 
  • Yield of +10%/yr guaranteed  -- (still looking for one) 
  • Environmental mutual funds 

And in the more “whimsical” category, were the following responses:  

I can't say that I've had a single employee request a fund option. 

None - they are happy with those we have 

Most of our associates are having a hard time grasping what a 401(k) is. I would be shocked if I got more than one call a year requesting a certain type of fund. 

Anything with no risk and high returns. 

Will those requests take root?  Nearly two-thirds (63.4%) of this week’s respondents said they didn’t plan to act on those requests, though 12% said they did – and the remaining quarter…weren’t sure. 

As for verbatims: 

The trustees discussed with out pooled account manager increasing our precious metals investment. Participants who self-direct totally choose their own investments, and some do have investments in precious metals.  

We have considered a couple of funds with a focus on diversified inflation hedges (gold, commodities, TIPS, etc), but have not added any to date. It is a tough call since these funds have higher volatility and participants could lose significant amounts if they are not diversified and we enter a prolonged period of deflation instead of inflation.  

We just implemented a plan on 7/1/10 and a Commodity fund was added specifically because of perceived interest. I was against adding this fund because I believe employees will chase returns, but not know when to exit such a fund.  

Had a guy call in who gave me a 20 minute lecture on why we should have at least a mutual fund that has gold included in it. I asked him to write me a letter/email explaining why he thought it would be a good idea and that I would pass it along to our Benefits Committee. I figured, if it was important enough to him, he would take the time to write the letter. Never got anything from him. Don't get me wrong, I agree with him, but I'm low man on the totem poll. 

I'm old enough to remember that gold,similarly, became "worth its weight in gold" in the early 80's and our physicians were buying it like toilet paper (at more than 1/2 today's price). My mantra then was physician "heel" thyself for when the worm turns. It was right then and I'm of a mindset that it's still good advice today. 

Our plan provider does not allow commodity based funds in the prototype plan we have adopted or we probably would have added one; if not in response to participant requests then due to mine, I'm on our plan committee and I've been anxious to get one for a long time.  Other than that we already have a self-directed brokerage account so anyone who wants to go into commodities can do so through that.  We also have target date funds so there isn't a lot left for participants to request.  We (the committee) try to add funds that will enhance the participant's options before they start requesting them.  Annuity options may be somewhere on the horizon. 

Why do some think gold is an important as a "hedge against inflation"?  It is only a rare commodity.  It is NOT money! 

My wife's charity is sponsoring a gold buying party where people bring their "old" gold jewelry, get cash for it and a portion of the proceeds goes to the charity.  With gold prices so high, people feel like they are doing good and getting paid for it. 

We did have one beneficiary who wanted to be paid out in gold bars and refused to submit his forms until we agreed.  Needless to say, he waited a long time for distribution.  Eventually he was paid out just like everybody else. 

We added a gold fund and an emerging markets fund in April when we hired an new investment advisor for our plan.  We left the money with the same recordkeeper but wanted more help with the selection of our investments. 

I've always though of gold as a speculation rather than an investment.  I've (repeatedly) warned my brother-in-law to get out, but he keeps putting more money in.  Looks like another relative I'll be supporting someday. 

A few participants have requested we add a precious metals fund or, if not, that we allow self-directed funds.  We have said no to both as we want to keep investment choices simple and not overwhelming to the majority.  We also agree with you that this is a bubble in the making. 

I have had 1 request for gold and quite an argument with this guy, too.  But, we do not put sector funds, no matter how well they are doing, in our retirement plan. They're too volatile and easily abused. 

Buying on fear at the top of the market will make the brokers rich and the participants broke(r) 

One person is really pushing it, but they also talk about Glenn Beck everytime I see them. That's why I don't take them seriously!  

If Glen Beck likes gold, it's got to be a good thing, right? 

But this week’s Editor’s Choice goes to the reader who said, “We have had a few requests for the ability to invest in gold / precious metals.  Based on my experience, this is usually the surest sign that we are at the peak and it will only go down from here.” 

For this week’s Bonus Survey Says, I asked readers to share a more personal perspective – if they had bought gold (as an investment) in the past six months, either in – or outside – their retirement plan. 

Most – 64% - said they hadn’t, while another 21.3% said “no, darn it!”  Nearly 9% had done so outside of their retirement plan, and another 6.4% had made that investment inside the retirement plan. 

Among the verbatims in this section were the following: 

No, but I seriously considering selling both my high school and college rings for the cash!  

No but received some as a wedding gift from India.  

Purchased a precious metals ETF in my IRA.  

But this week’s Editor’s Choice goes to the reader who hadn’t, but shared, “But I have sold some...and at a hefty profit. I may sell more...if we can just keep people buying at these highs. Thanks for helping promote it!” 

Thanks to everyone who participated in our bonus survey says!