Since 1972, the only full decade in which gold outperformed stocks was the 2000s, when the S&P 500 fell an average of 0.7% annually, while gold rose an average of 13.4%. The combination of the dot-com crash at the start of the decade and the 2008 financial crisis led to low stock returns over those 10 years.
Gold also outperformed stocks from 1972 through 1979, with annual returns of 29.3% compared to 5.3% for the S&P 500. Stocks suffered from a lackluster U.S. economy with stagflation. Gold, on the other hand, soared after the Nixon administration ended the gold standard, making it a freely traded asset.
Stocks and gold respond to different things
Stocks provide higher, more consistent returns than gold on average due to fundamental differences between the two asset types.
A stock is an ownership claim on a business. Stock returns are generally tied to a company's finances, most importantly its earnings, and its growth prospects. In addition to appreciating in value, stocks can also return value to shareholders by paying dividends. The S&P 500 has a dividend yield of about 1.0% as of 2026, according to MacroMicro.
As a precious metal, gold has no earnings and pays no dividends. Its only return is price appreciation, which typically happens during periods of high inflation, lack of confidence in the U.S. dollar, and investor fear. Unlike stocks, gold tends to perform best during downturns, not economic growth.
Gold is also more volatile than stocks. The standard deviation of gold from 1972 to 2024, meaning the average year-to-year swing, was 23.3%, according to Macrotrends. The S&P 500's standard deviation was 16.9%, according to Shiller/Yale. Over that same period, gold had a positive return in 34 of 54 years (63%). The S&P 500 was in green 42 of 54 years (78%).
Gold tends to rise when stocks fall
The annual return correlation between gold and the S&P 500 is negative 0.22. This is a weak negative correlation, meaning the two tend to move in opposite directions more often than not, though the relationship isn't reliable year to year.
Perhaps the most notable recent example in gold's favor is 2008, when gold returned 24.9% while the S&P 500 plummeted 39.2%. Gold also did better in 2022, as it ticked up 0.3% while the S&P 500 took a 15.0% loss.
Gold's performance during equity drawdowns and bear markets is the main structural case for holding it, either directly or through gold ETFs, which are a more convenient way to own it. Over the long haul, gold produces no income, which is part of why there's a long-term return gap in favor of stocks. Owning gold can act as an inflation hedge and provide some protection against drawdowns, even if it's not ideal for maximizing returns.
