Keith Weiner: Gold vs the S&P 500

Guest post by Keith Weiner at Monetary Metals:

In 2024, the S&P 500 delivered a total return of 25%, while gold finished the year up 27%. This marks the first time in recent financial history in which gold and stocks achieved gains exceeding 25% within the same calendar year.

This rare state of affairs has sparked intense interest among financial commentators, and investors want to know – is this a new normal?

Gold is off to a commanding lead in 2025. It cleared the mythical $3,000/oz barrier and is hitting fresh all-time-highs (read the dollar is hitting fresh all-time-lows) and is up over 14% YTD, while the S&P 500 is down 3.5% YTD. Curious to hear where we think it’s going to go next? Read our Gold Outlook 2025 report.

Today’s article will be a deep dive into the data around gold and the S&P 500. History is often the best, albeit imperfect, indicator of the future. We’ll seek an answer to our future-oriented question, and a few others, by mining past data. Let’s dig in!

Gold Versus the S&P 500 – What Does the Data Show?

We looked at the previous 54 years of return data for gold and the S&P 500^[1]. We included the data table showing the years that gold outperformed at the end of the article.

Here are a couple of immediate insights from the data.

• Gold had superior returns in 23 out of 53 years, just shy of half the time. According to the data, its performance was especially strong during periods of weak market performance (the inflationary 1970’s, the dot-com boom and bust, and in the immediate aftermath of the Great Financial Crisis.)
• When gold outperformed, it did so by an average of 8%. During the nine years when the S&P 500 posted negative returns, gold outperformed in eight of them, averaging returns of 19.4% compared to -15.3% by the S&P 500.
• The S&P 500 had superior returns in 31 out of 54 years. Its strongest periods were during the 1980’s, the high-growth 1990’s, and throughout the 20-teens and 2020s. When the S&P 500 outperformed gold, it did so by an average of 20.5%.

This analysis lends credence to the view that gold is not only a good asset for diversification, but also an excellent choice for when markets trade sideways or negative.

Going Deeper – Other Important Metrics to Consider

Let’s build on our analysis above by investigating some more involved questions. Specifically, we want to look at the Compound Annual Growth Rate (CAGR), volatility and the cumulative value of a $100 investment over time.

Here’s what we uncovered:

• The CAGR for both assets diverge substantially, with gold’s CAGR over the whole time period being 8.19% compared to the S&P 500’s 11.52%. $100 invested in gold in 1971 would be worth $7023.46, while the equivalent value for the S&P 500 is $36,104.55. Adding a yield to gold changes this picture substantially, which we’ll discuss in the next section.
• Gold’s average volatility over the period was about ten points higher, 26.9% compared to 16.2%. Much of this volatility was during the mid-1970’s and early 1980’s. However, the two series start to converge around 1985.
• Volatility is a proxy for risk. While gold seems riskier in the earlier part of the data set, today, they seem to have very similar risk profiles. In fact, since the year 2000 there have been greater spikes in volatility for the S&P 500 than gold. Even more fundamental however is the fact that gold historically does not default or go to zero. The same cannot be said of the stocks that comprise the S&P 500. This doesn’t mean there isn’t any risk for gold, of course, but it’s something investors should be aware of.

Run it Back with Gold Yield

Let’s look at how the picture changes when we add a yield to gold. Specifically, we’ll look at the performance of the respective assets with an annual gold yield of 3.12%, which is the current weighted average return on gold in the Monetary Metals leasing program.

Here’s what we found:

• With yield, gold has a stronger performance overall, but still only beats the S&P 500 in 23 out of 54 years.
• The CAGR changes substantially; $100 invested 1971 would be $33,687.86 for gold with yield and $36,104.55 for the S&P 500.
• Volatility does not change in this hypothetical scenario.

This analysis is important because two of gold’s main drawbacks are its negative carry costs and the fact that it doesn’t generate income on its own. By earning a yield on gold with Monetary Metals, investors can overcome both.

Monetary Metals enables investors to lease or loan their gold to qualified businesses and earn an income paid in ounces in return.

With yields on gold leases paying between 2-5% in gold and yields on gold bonds paying between 6-19% in gold, investors can supplement any price appreciation from gold with fixed income benefits as well.

The Bottom Line

Equities showed market resilience by skyrocketing in a tumultuous 2024, but gold rallied on inflation concerns, central bank demand, and geopolitical uncertainty.

2025 is off to a shaky start, but gold is excelling. For investors looking to navigate today’s complex economic landscape, adding gold with yield offers a unique combination of growth, stability, and income.

[Read our Gold Outlook 2025 Report for more comprehensive analysis on what’s important for money, markets, and metals in 2025]

Whether you’re seeking to replace bonds in a traditional portfolio, hedge against economic uncertainty, or simply enhance your returns, gold with yield takes a good asset and makes it even better.

^[1] In this table, we are using total return data for S&P 500, which includes dividends