The short answer
Since 1972, U.S. stocks have returned about 11% a year with dividends, against about 9% for gold, and stocks pay you income while you wait. But the lead has swapped back and forth: gold crushed stocks in the 1970s and 2000s, and stocks crushed gold in the 1980s, 1990s and 2010s. Because the two often move differently, many investors own mostly stocks with a small amount of gold alongside.
What you actually own
A share of stock is a slice of a business. Its value comes from the company’s profits, now and in future, and many companies pay part of those profits to shareholders as dividends. Over time, stock prices tend to rise as the economy and corporate earnings grow.
Gold is a metal. It doesn’t earn profits or pay income, so its price depends entirely on what buyers will pay for it: jewelers, industry, central banks and investors. That price often rises when people are worried about inflation, the dollar or the financial system, and falls when those worries fade or interest rates rise.
Returns, decade by decade
| Years | S&P 500 with dividends, per year | Gold, per year |
|---|---|---|
| 1972 to 1979 | 5.2% | 36.0% |
| 1980 to 1989 | 17.3% | -2.5% |
| 1990 to 1999 | 18.0% | -3.1% |
| 2000 to 2009 | -1.0% | 14.1% |
| 2010 to 2019 | 13.4% | 3.4% |
| 2020 to 2025 | 14.9% | 19.1% |
| 1972 to 2025 | 11.1% | 8.9% |
Over the full period, $10,000 put into the S&P 500 at the start of 1972, with dividends reinvested, would have grown to about $2.9 million by the end of 2025. The same amount in gold would have grown to about $1 million, before the costs of storing and insuring metal.
The decade view shows why the choice isn’t simple. Gold did best when stocks struggled: during the high inflation of the 1970s, and in the 2000s, which began with the dot-com crash and ended with the financial crisis. Stocks did best in long periods of growth and falling inflation, when gold drifted lower.
How they behave in bad years
Gold has often held up when stocks fell hard:
| Year | S&P 500 with dividends | Gold |
|---|---|---|
| 1974 | -25.9% | +66.2% |
| 2002 | -22.0% | +25.6% |
| 2008 | -36.6% | +4.3% |
| 2022 | -18.0% | +0.6% |
It has its own bad years too, which don’t line up with the stock market’s. Gold fell 32.6% in 1981, when stocks slipped 4.7%, and 27.6% in 2013, when stocks gained 32.2%. This tendency to zig when stocks zag, or at least not to fall at the same time, is the main reason investors hold gold alongside stocks.
Income, costs and taxes
| Stocks | Gold | |
|---|---|---|
| Income | Dividends from many companies | None |
| Cheapest way to own | Low-cost index funds | Gold funds, or bullion bought at a low premium |
| Costs of holding | Fund fees, often very low | Fund fees, or storage and insurance for metal |
| Top federal rate on long-term gains | 20% (plus 3.8% for some high earners) | 28% for physical gold and funds that hold metal (plus 3.8% for some) |
The tax difference matters over time. Long-term gains on physical gold, and on exchange-traded funds that hold gold bullion, are taxed as gains on collectibles, at up to 28%. Most stock gains qualify for the lower long-term capital gains rates. Holding either inside an IRA or 401(k) defers or avoids that tax, which is one reason some people buy gold inside retirement accounts.
Using them together
Most long-term investors build around stocks and bonds, because those pay income and have grown faster over time, and some add a modest amount of gold as a diversifier. There’s no official right amount. It depends on your age, your goals and how you’d feel watching either one fall 30%.
If you’re weighing gold, our guides to whether gold is a safe investment and the ways to invest in gold cover the next questions.
Frequently asked questions
Has gold beaten the stock market?
Over some decades, yes: the 1970s and the 2000s, and since 2020. Over the whole period since 1972, stocks have returned more, especially once dividends are counted.
Why does gold often rise when stocks fall?
Many investors buy gold when they’re worried about the economy, inflation or the financial system, the same worries that push stock prices down. Falling interest rates in a downturn also make gold, which pays no interest, relatively more attractive.
Do gold mining stocks behave like gold?
Only partly. Mining shares are businesses with costs, debt and management risk, so they tend to swing more than the metal and sometimes move with the stock market. Ways to invest in gold compares them.
Should I sell stocks to buy gold?
That depends on your whole plan. A fee-only financial planner can help you decide whether gold belongs in your mix and how much.