Performance of Gold vs. S&P 500 During Major Crises


You need to invest money wisely - any successful entrepreneur will tell you this. Keeping it at home as a fixed amount is the worst thing you can do with your money holdings. But investing in the first investment project that comes across is also not recommended, because many types of investments are associated with great risks or require a lot of experience from the investor.

One of the oldest, yet still relevant, investment options remains gold. Today, of course, it has a lot of competitors from other types of investments: real estate, intellectual developments, cryptocurrencies, securities. Is it worth investing money in it? In our previous article we discussed 5 reasons why gold is still a profitable investment, and in this article we will consider how financial crises affect gold prices and stock indexes.

Gold is an important asset class to own in a well diversified portfolio. The performance of gold is negatively correlated to risky assets such as the S&P 500. In this post, let’s review the return of gold vs. the S&P 500 during major crises in the past few decades.

Before we get to that, a quick note on the price of gold. Gold topped out at over $2,000 during the pandemic last year. This year gold has been an average performer so far. Yesterday gold prices closed at $1,775.00 an ounce. From a historical perspective, gold has returned 516% since 2000.

As mentioned above, gold tends to have strong growth when stock prices decline and vice versa. This is because gold is considered a safe haven asset and as investors flee from risky stocks they try to take shelter in gold. In addition, gold is traditionally regarded as a good source for holding value. So when the world is engulfed in a major crisis gold attracts hordes of investors. For example, during the Covid crash of 2020 S&P 500 plunged 20%. But gold was a winner with just over 6% gain. The case for gold was even more pronounced during the Global Financial Crisis when stocks crashed by about 48% and gold rose over 47%.

First column: Black Monday October 1987, Long-Term Capital Management (LTCM) hedge fund crisis, Dot-com bubble, September 11 Terrorist attacks, 2002 recession, Global financial crisis, Sovereign Debt Crisis 1 and 2, 2018 pullback, COVID market crash, Average Returns

Second column: S&P 500 Index

Third column: Gold price in $

Fourth column: Commodities in $

Gold is an excellent investment tool, especially if you are looking for long-term income or want to be flexible in your decision making. Buying gold bars is a great start for novice investors, because such investment will definitely not depreciate, and you do not need to monitor exchanges and stock markets in order not to miss the moment when your investment is no longer profitable. And in order not to make a mistake with a purchase, it is better to buy gold from trusted sellers, or even better - from manufacturing companies that carry out gold mining by themselves, such as Golden Way, for example. By doing so you can get gold first-hand.