Is Gold a Better Investment Than the S&P 500?

Gold has long been seen as a storehouse of wealth, measurement unit and symbol. Its allure has drawn people in Egypt, Aztec Empire and California gold rush.

But is gold really outstripping the S&P 500 in terms of performance? Over long time periods, stocks significantly outpace gold.

Low Correlation

Gold has long been considered an investment that provides safe haven from stock market decline or economic instability, often rising during these events as investors seek shelter from riskier investments.

However, this correlation may not be as strong as many believe; gold has more correlation to US 10-year Treasury rates than stocks – making it less suitable as an effective diversifier in a portfolio.

To determine whether gold investment is the appropriate choice for you, it is essential that you assess both its purpose and your risk tolerance. No matter which option you select, always consult a financial advisor prior to making any significant decisions.


Gold can bring stability to any portfolio. Investors turn to it during times of economic or geopolitical instability or market instability; its prices typically surge during these times as people search for safety in this yellow metal.

Gold’s price tends to increase during recessions as investors flee stocks and bonds that offer negative returns during these volatile times, opting instead for gold’s 9% average annual return during tough economic conditions.

Determining whether gold is the superior investment depends heavily on an investor’s priorities and time horizon. If wealth preservation is your top goal, gold may be ideal; otherwise stocks might offer greater growth potential. As more investors turn their attention toward mining shares as an indirect exposure strategy while mitigating risks associated with direct holding, more investors may consider exploring gold miner shares for investing.

Inflation Resistance

Gold has long been recognized as an effective hedge against inflation, increasing in value when other investments diminish in purchasing power. It’s particularly appealing in countries where inflation and currency devaluation threaten savings; investors turn to gold as an asset class as an avenue of protection from their savings being lost.

However, gold does not serve as an effective inflation hedge; over the course of its history it has risen and fallen with inflation rates, offering investors mixed returns.

Before investing in gold, it’s essential to carefully assess your financial goals and risk tolerance. Investors might find a gold savings plan useful as a means of increasing holdings over time in small but regular increments – this approach reduces short-term price volatility while providing greater returns overall; additionally many of these funds offer tax benefits for long-term investors.


Gold’s low correlation to stocks and bonds makes it an excellent diversifier, while its global nature enables investors to use it as a hedge against depreciating fiat currencies.

Gold returns are often positive during periods of inflation and do not experience the same levels of volatility as stocks or bonds; historically speaking, its historical returns have actually outshone both over time.

Physical gold investments can be expensive and don’t produce income, so it is wise to carefully consider your investment goals, risk tolerance and time horizon when making this decision. But gold-mining companies provide another cost-effective method for diversifying your portfolio while potentially earning passive income – this asset type is known as exchange-traded funds (ETFs) whose long-term returns have outshone those of S&P 500 indexes such as Dow Jones Industrials Index.

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