When planning for retirement or long-term savings, one of the most common questions is whether gold or the stock market offers better performance. Both have unique advantages, risks, and roles in a portfolio. Stocks are often associated with growth, while gold is seen as stability. Looking at their historical performance side by side reveals why many investors choose to hold both.
The Long-Term Role of Stocks
Over the past century, the stock market—particularly the S&P 500—has been one of thestrongest drivers of long-term growth. On average, U.S. stocks have delivered annualizedreturns of about 7–10% after inflation. This growth comes from corporate profits, dividends, andeconomic expansion.
However, stocks also experience volatility. Market crashes in 1929, 2000, 2008, and 2020 wiped out significant value in short periods. For investors who were heavily exposed, recoveries sometimes took years. While stocks reward long-term patience, they can be punishing during recessions or financial crises.
The Long-Term Role of Gold
Gold doesn’t produce dividends or earnings, but it has served as a reliable store of value forthousands of years. Unlike stocks, gold’s value isn’t tied to company performance orgovernment policy.Instead, it thrives during times of uncertainty, inflation, and currencydevaluation.
For example:
- 1970s Inflation: As inflation surged into double digits, gold rose from about $35 anounce in 1971 to more than $800 by 1980.
- Dot-Com Crash (2000–2002): While tech stocks collapsed, gold steadily gained, reinforcing its safe-haven reputation.
- 2008 Financial Crisis: Stocks fell more than 50% from peak to trough, but gold climbed as investors sought protection.
- COVID-19 Pandemic (2020): Global markets plunged in March, but gold hit record highs later that year.
These examples highlight gold’s ability to hold or increase value during downturns—times when stocks often struggle.
Comparing Performance
Over very long stretches (20–30 years), stocks have generally outperformed gold in terms ofraw returns. However, gold has consistently provided protection during economic crises, helpinginvestors limit losses and preserve wealth.
A balanced perspective looks like this:
- Stocks: Higher long-term returns, but with more volatility and reliance on economic growth.
- Gold: Lower average returns, but reliable protection and stability when markets falter.
Together, they complement each other. Gold’s best periods often coincide with stock market declines, making it a natural hedge.
Inflation and Purchasing Power
One of gold’s biggest strengths is its ability to preserve purchasing power. For instance, in theearly 1970s, an ounce of gold was about $35—the same amount that could buy a tailored men’ssuit. oday, an ounce of gold is worth more than $1,900, and that same ounce still buys ahigh-quality suit. By contrast, $35 in cash would barely cover a dinner for two.Stocks can also beat inflation over time, but they are more sensitive to short-term downturns.Gold offers steady purchasing power across decades, regardless of market cycles.
What This Means for Retirement Investors
For retirement planning, the question isn’t “stocks or gold?” but rather how much of each to hold. Stocks provide the growth needed to outpace inflation and build wealth. Gold adds security and stability, ensuring that when markets crash, your portfolio has an anchor. Financial advisors often recommend holding 5–15% of a portfolio in gold or other precious metals. The exact amount depends on individual goals, risk tolerance, and economic outlook.
The Merchant Gold Group Difference
At Merchant Gold Group, we help clients build retirement strategies that balance growth andprotection. We specialize in adding IRS-approved gold and silver to retirement accounts,
ensuring your portfolio is diversified, secure, and positioned for the long term.
Our approach is simple and transparent: educate clients on the benefits and limitations of each asset class, provide access to high-quality metals, and arrange safe storage. By combining personal service with industry expertise, we help you protect what matters most—your savings, your legacy, and your peace of mind.
Summary
Gold and the stock market serve different purposes. Stocks deliver strong long-term growth butcan be volatile during downturns. Gold provides stability, inflation protection, and a hedge whenmarkets struggle. Together, they create a balanced portfolio that can grow during good timesand endure during bad ones.
For investors who want confidence in their retirement savings, holding both stocks and gold is not a matter of choosing one over the other—it’s about combining their strengths to build lasting
financial security.
