Does Gold Outperform The Stock Market?

Does Gold Outperform The Stock Market?

I was recently asked: “Does gold outperform the stock market in the long term?“. This an interesting question, so I took a look.

John Maynard Keynes, one of the world’s most renowned economists, called gold a ‘barbarous relic’. It is supposed to be antiquated and useless. Fast forward to today, and gold still plays a critical role in the global financial system.

In this article, I like to answer the following question: Does gold outperform the stock market?

When looking at the last 20 years, the short answer is, yes.

Let’s first take a look at one of the best performing stock market indices in the past 20 years, the Standard & Poor’s S&P500 ($SPY), consisting of the best companies not only in the U.S. but arguably in the world, such as Apple, Amazon, Google, Meta, Microsoft, etc.

S&P 500 in grams of Gold

What is striking is the fact that the S&P500, measured in grams of gold, was not even able to recoup its 2000 high!

In other words, it’d have been better to simply buy and own physical gold in all those 22 years.

Dow Jones Industrial Avg in grams of Gold

When looking at the Dow Jones, basically the same picture.

And as the Euro Stoxx 50 performed significantly worse than the SPY or Dow Jones, gold also has a field day with the large blue-chip European stocks.

Euro STOXX 50 in grams of Gold

The Euro STOXX 50 chart, measured in grams of gold, is quite depressing to look at. Investors who believed in Europe, and invested in the best European stocks, would be approx. 5,5 times worse off as someone who just purchased gold bars or gold coins with it!

20 Year Performance Comparison

Let’s take a look at the facts:  On 1. January 2000, the gold price was 285 USD per Oz. As of today, 16 August 2022, it’s at 1,780.

Does Gold Outperform Currencies? 

When looking at how gold performs in major currencies, it’s an even better performance. Let’s first look at how gold does compare to Euro. In 1999, you could buy approx. 120 milligram of gold with 1 Euro. In 2022, you can only buy 20 mg per Euro, a massive decrease of -83%.

Gold Performance Since 2000 In Various Currencies

Incrementum released its annual InGoldWeTrust.report, a release I look forward to every year. My favorite table is the following, showing how gold has performed in various currencies:

Conclusion

Numbers and charts don’t lie. When zooming out, not even the best stock markets indices were able to beat the ‘barbarous relic’. Many people are in disbelief when hearing that since 2000, Gold is up more than the S&P500! Although it doesn’t generate free cash flow or dividends, it still outperforms almost all asset classes.

The relentless money printing will continue, and the debt-train wreck will speed up. In the coming decade, we will thus see an even faster debasement of fiat currencies. And this will result in the price of gold increasing a lot.

📘 Read Also

• The Top 10 Reasons To Invest In Gold
• How To Invest In Commodities – 15 Great Commodity Stock Ideas
• How To Build A Portfolio Of Gold Mining Companies
• How To Store Precious Metals At Home – 5 Important Tips!

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