Gold vs. stocks: As both hit record highs, which is performing better for investors?

Pete Grieve
Photo illustration of black and white hands holding gold bars with purple background.
Money // Getty images

The price of gold and the S&P 500 both reached new record highs after the Federal Reserve signaled that it's still expecting to cut interest rates this year. Both assets have had a strong first quarter so far in 2024, and as they reach new all-time highs, you may be wondering which is the better investment, as well as looking at online gold dealers or gold IRAs

According to a Money report, the reality is you don't have to choose: A diversified investing portfolio typically includes a mix of stocks and bonds, and some experts recommend including gold investments as a "safe haven" asset as well (usually no more than 5% to 10% of your portfolio).

Gold, which is trading around $2,180 per troy ounce, is up about 6% so far this year and 11% over the last 12 months, partially due to expectations for interest rate cuts and high levels of central bank buying.

There's usually an inverse relationship between the price of the precious metal and interest rates. When interest rates are high, opportunities in fixed-income investments can pull investors away from gold. Also, high interest rates strengthen the dollar, which tends to hurt gold as the metal is considered an inflation hedge.

With all that in mind, it's no surprise that gold gained momentum when Fed officials indicated at the end of March that they expect three interest rate cuts in 2024. Meanwhile, stocks also appear to have gotten a boost and the S&P 500 has climbed to about 5,230.

How gold and stocks have performed over time

Stocks have generally performed better than gold over the years, but there can be exceptions. Looking back 20 years, for example, gold has outperformed the S&P 500.

However, the historical data doesn't mean that stocks are guaranteed to have higher returns going forward, as past performance is no indication of what's going to happen next.

Gold vs. S&P 500 — Year-to-date

  • Gold: $2,059 to $2,180 (+5.9%)

  • S&P 500: 4745 to 5227 (+10.1%)

Gold vs. S&P 500 — 3 years

  • Gold: $1,729 to $2,180 (+26.1%)

  • S&P 500: 3879 to 5227 (+34.7%)

Gold vs. S&P 500 — 5 years

  • Gold: $1,322 to $2,180 (+64.9%)

  • S&P 500: 2796 to 5227 (+86.9%)

Gold vs. S&P 500 — 20 years

  • Gold: $416 to $2,180 (+424%)

  • S&P 500: 1091 to 5227 (+378.9%)

Gold vs. S&P 500 — 40 years

  • Gold: $387 to $2,180 (+462.7%)

  • S&P 500: 157 to 5227 (+3,232%)

Advertisement