Many investment options exist today, including everything from real estate to cryptocurrency plus bonds and mutual funds. When planning their financial futures, many Americans opt to invest in precious metals like gold and the S&P 500.
Precious metals and the stock market should play key roles in your investment strategy. They’ve each hit record highs recently and proven their respective merits.
Take the time to compare gold vs. S&P 500 stocks to see how these prominent investment options stack up. In this guide, we’ll analyze their historical performances and review the potential they offer investors like you.
Analyzing the Historical Performances of Gold vs. S&P 500
When comparing gold vs. the S&P 500, it’s easy to get caught up in only examining their recent performances. While it’s important to do this, it’s even more essential to look back at how each has historically performed.
Begin by checking out how gold and the S&P 500 have performed over the last five decades, based on the averages closing prices from each year:
- 10-Year Span (2014 to 2024):
- 20-Year Span (2004 to 2024):
- Gold: $409.53 to $2,388.98 (+483.35%)
- S&P 500: 1,130.65 to 5,428.24 (+380.1%)
- 30-Year Span (1994 to 2024):
- Gold: $384.16 to $2,388.98 (+521.87%)
- S&P 500: 460.42 to 5,428.24 (+1078.98%)
- 40-Year Span (1984 to 2024):
- Gold: $360.65 to $2,388.98 (+562.41%)
- S&P 500: 160.46 to 5,428.24 (+3282.92%)
- 50-Year Span (1974 to 2024):
- Gold: $158.76 to $2,388.98 (+1404.77%)
- S&P 500: 82.78 to 5,428.24 (+6457.43%d)
Understanding the Investment Implications of the S&P 500 vs. Gold
After scrutinizing the historical performances of gold vs. the S&P 500, it’s easy to see which investment option has produced better long-term results. The S&P 500 has consistently delivered excellent returns despite occasional stock market volatility.
So, does this mean the stock market automatically wins the gold vs. S&P 500 debate? Not necessarily.
Next, let’s look at the investment implications associated with each option.
Evaluating the S&P 500’s Superior Gains
The S&P 500’s superior long-term gains have been impressive. The stock market has offered investors lucrative capital gains and extended opportunities to accumulate dividend earnings.
However, the higher returns the S&P 500 delivers don’t negate the need for gold. Incidents like the 2008 stock market crash highlight gold’s importance.
Looking at the Role of Gold in an Investment Portfolio
Gold shouldn’t make up a sizable portion of an investment portfolio. Most experts agree that only about 5% to 10% of an investment portfolio should include gold. At the same time, many experts also advise that gold is necessary for portfolio diversification.
Why gold? Gold is considered a safe haven asset and may help investors hedge against market volatility and inflation.
Forecasting the Future Performance Outlook of Gold vs. the S&P 500
Those developing long-term investment strategies must examine how gold and the S&P 500 have historically performed and consider their possible future performances.
See what the future could hold for gold vs. the S&P 500.
Considering Gold’s Potential To Outperform the S&P 500
If you sneak a peek at gold vs. the S&P 500 over the last year, you’ll notice that they’ve performed similarly.
In December 2023, gold was worth $2,078.66. Today, it’s worth $2,884.63. The S&P 500, meanwhile, was at 4,783.35 in December 2023. It’s up to 6066.44 today, a notable increase.
Gold’s return could soon pull ahead of the S&P 500’s returns, too, due to:
- Rising inflation
- Stock market volatility
- Geopolitical concerns
Americans’ increased confidence in gold might also cause its price to soar higher. A 2024 Gallup poll revealed that 26% of people believe gold to be the best long-term investment overall.
Listening to Financial Experts’ Market Predictions
Financial experts disagree on how they see the S&P 500 performing in 2025.
This December 2024 report pointed out that Goldman Sachs research has shown the S&P 500 could increase by 10% over the next 12 months. It also included information on a survey involving 15 Wall Street firms that collectively predicted an S&P 500 increase of 9%.
However, this report also pointed out that analysts from financial services companies like Charles Schwab aren’t so sure about the anticipated growth of the S&P 500. They referred to the stock market as “difficult to predict due to extreme uncertainty about what 2025 will bring.” Analysts believe everything from the second Trump administration to geopolitical turmoil could affect the potential of the S&P 500.
A separate November 2024 report also found that, regardless of how well the S&P 500 performs, it might only be a matter of time before gold prices hit another record high. Several Goldman Sachs analysts predict gold will top the $3,000 mark by December 2025.
Hedging Against Inflation With Gold vs. the S&P 500
Inflation remains a major concern for many as rates continue to affect the American economy. Navigating the rate of inflation has its challenges, but hedging against inflation by investing in gold vs. the S&P 500 might help.
Utilizing Gold As an Inflation Hedge
Many financial analysts have long viewed gold as an effective inflation hedge. As the value of the U.S. dollar decreases, the demand for gold increases, typically increasing its price.
Remember that gold may preserve value during inflationary periods, making it appealing to anyone concerned about inflation.
Understanding the S&P 500’s Response to Inflation
While gold prices tend to increase when inflation occurs, inflation doesn’t always positively impact the S&P 500. Studies show that the stock market performs best when inflation hovers between 2% and 3%. Many investors see this as confirmation that adding gold investments to your financial portfolio can provide more protection than S&P 500 investments during inflationary periods.
Deciding How To Invest for the Future in the Right Way
After comparing the long-term returns offered by gold vs. the S&P 500, you can see that investing in the stock market has historically been a fantastic long-term investment strategy. However, investing in gold can also benefit your financial future if you require more stability and predictability in your return.
Gold investments may deliver more consistent returns, especially during tough economic times. Contact us at (877) 444-0923 for more information on investing in gold.
