Gold and the S&P 500 have had impressive starts to the year, each gaining around 17-18% in the first half of 2024. With both assets reaching record highs, you might be wondering which the smarter investment choice is.
The good news? You don’t have to choose. A well-diversified investment portfolio typically includes a mix of stocks, bonds, and gold—often regarded as a “safe haven” asset.
Currently, gold is trading at approximately $2,640 per troy ounce, up over 17% year-to-date and over 23% over the past 12 months. This surge is partly fueled by expectations of interest rate cuts and robust central bank purchases. While stocks have historically outperformed gold, there are notable exceptions. For instance, over the past 20 years, gold has delivered better returns than the S&P 500.
That said, past performance is not a guarantee of future results. Both gold and stocks have their own unique advantages and risks, making them complementary rather than competing assets.
Performance Snapshot: Gold vs. S&P 500
Year-to-Date (2024)
- Gold: $2,059 → $2,414 (+17.2%)
- S&P 500: 4,743 → 5,590 (+17.9%)
3-Year Performance
- Gold: $1,808 → $2,414 (+33.5%)
- S&P 500: 4,370 → 5,590 (+27.9%)
5-Year Performance
- Gold: $1,404 → $2,414 (+72%)
- S&P 500: 3,000 → 5,590 (+86.3%)
20-Year Performance
- Gold: $407 → $2,414 (+492.8%)
- S&P 500: 1,113 → 5,590 (+402.3%)
Key Insights: Gold and Interest Rates
Gold often has an inverse relationship with interest rates. When rates rise, fixed-income investments become more attractive, potentially pulling investors away from gold. Additionally, high interest rates tend to strengthen the dollar, which can weigh on gold prices, as the metal is commonly used as a hedge against inflation.
In summary, both gold and stocks have their place in a balanced portfolio, offering unique benefits for different market conditions and investment goals.
