Peak Youth

I bet that you are aware of peak oil, peak silver, or peak gold. But have you heard about the – perhaps much more important – peak youth? If not, we came to the rescue!

The peak youth means that number of young people in the world reaches a peak. Now, all depends how we define the “youth”. Let’s start with the most narrow definition. According to the United Nations, the number of children aged under five will peak in 2015 at 701.90 million children. Then, another important peak will follow soon. The number of children aged under 15 will reach a peak in 2057 at 2.09 billion children.

Chart 1: World’s population of child aged under 5 (blue line) and of child aged under 15 (green line) from 1950 to 2100 (in millions)

Peak Youth and Gold Chart

So, no more kids. Of course, we all love kids, but it does not imply that we want to have too many of them. The global fertility rate dropped – since the mid-1960s, the average number of children each woman around the world has, halved from 5 to 2.5 children per woman. It’s a demographic change of great importance, as it will bring about the end of rapid population growth.

It does not, however, mean that the size of global population will decrease. On the contrary, it is expected to reach 11.18 billion by the end of the century. After all, people live longer. So, let’s add 2 and 2. Fewer kids plus people with greater life expectancy equals the ageing population. And it does not apply only to Japan and other developed countries. The whole globe is getting older.
Indeed, as the chart below shows, in 2018, the number of people older than 64 years old surpassed the number of children under 5 years old. This was the first time in history and this is what actually many people call “peak youth”.

Chart 2: Total world’s population (red line), population of child aged under 5 (dark blue line) population of child aged under 15 (green line), population of youth aged below 25 (purple line), population of adults aged between 25 and 64 (light blue line) and population of people aged 65 and more (orange line) from 1950 to 2100 (in billions)

Peak Youth and Gold Chart

What is more, the global population of people older than 64 years will continue to grow. In 2075, this age group will surpass the number of children aged under 15. So, it’s clear that we’re moving towards an ageing world. And we are also about to pass the point in this century where more people on the planet would be above 30 years of age than younger, i.e., we will reach the peak youth (widely defined).   

Gold and Peak Youth

What is the link between the peak youth and gold? Well, the ageing world in which more old people live than the young should be fundamentally positive for the gold prices. Why? Well, ask your grandma. Ask her whether how comfortable she is with taking risk and whether she prefers to invest in stocks or in precious metals. Old people are generally more conservative and risk-averse, so they should invest more in safe-haven assets such as gold. Moreover, the ageing population is also a less dynamic economy and slower economic growth should also support gold prices. Last but not least, the peak youth and the ageing society imply the rising dependency ratio. At some point in the not too distant future, the Social Security will be under tremendous pressure – the resulting pension crisis should also be positive for gold.