Gold vs. S&P 500 Long-Term Returns: Chart

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Gold is a safe heaven asset class. During adverse market conditions for stocks gold tend to perform better and vice versa. To put it another way, bear market in stocks can be bull market for gold and vice versa.

The following chart shows the  long-term return of Gold vs.  S&P 500:

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Source: Is Gold a Good Long-term Investment?, Young Research

From the above article:

Since President Nixon closed the gold window in August of 1971, the price of gold has increased more than 37-fold. From a price of $40.65 at month-end August 1971, gold has risen to $1,528 today. A $1,000 investment in gold at the end of August 1971 would be worth over $37,000 today—a compounded annual return of 7.8%.

How Does Gold’s Return Compare to Stocks and Bonds?

Gold’s 7.8% return since August of 1971 compares favorably to the 7.4% return that intermediate-term U.S. Treasury securities delivered over the same time. More surprising to some is that gold has even appreciated more than stocks over this period. From August of 1971 through today, the S&P 500 index has increased at a 7.3% average annual rate. These numbers for the S&P exclude dividends and the reinvestment of dividends, but gold’s returns relative to stocks remain impressive for an asset that many consider to be the ultimate safe-haven.  (emphasis mine)

Gold’s performance is comparable to stocks as shown in the above because it does not include dividend reinvestments. The chart shows only the price return of S&P 500. If total return, which includes dividends was used the chart would have looked different.

Going back to the main theme of this post, during the 1980s and 1990s owning gold was a bad idea as stocks soared in a long and strong bull run. However during the 2000s stocks return was modest while gold performed very well.

Updated (Sept 22, 2024):

1.Gold outperforms stocks in the 21st century:

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Source: Gold has outperformed the S&P 500 in the 21st century, FX Street

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a. SP 500 vs. Dow Jones vs Gold vs. Silver – 10 Years Return Chart (From Feb 2014 thru Feb 2024):

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Source: LongTermTrends

1.SP 500 vs Dow Jones vs Gold – 50 Years Return  Chart:

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2.SP 500 vs Dow Jones vs Gold – 100 Years Return Chart:

3.SP 500 vs Dow Jones vs Gold 50 Years Total Return Chart (i.e. including Dividends Reinvested)

Color Legend:

  •  S&P 500 Price Index
  • Dow Jones
  • Wilshire Large-Cap
  • Gold
  • Silver

Source: Long Term Trends

3.Gold vs. S&P 500 Total Returns Chart From 1990 to 2017:

Source: Topdown charts

4.Gold vs. S&P 500 Return Chart From 2000 to 2010:

Source: Stockcharts

Related ETFs:

  • SPDR Gold Trust ETF (GLD)
  • SPDR S&P 500 ETF (SPY)

Disclosure: No Positions

U.S. vs. Canada: Comparing Equity Market Returns and Benchmark Sector Weightings

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The economy of Canada is mainly natural resources based whereas the US economy is well diversified. Accordingly materials and energy are two of the major sectors in the benchmark TSX Index. The following chart shows the total returns and sector weights in the benchmark index of Canada and the US:

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Note: The data shown above is of May, 2019

Source: A Northern View: 10 Years into a Canadian Bull Market, Franklin Templeton

Financials account for nearly one-third of the TSX Index but in the S&P 500 their weightage is just 13%. Compared to Canada, the combined weightage of Materials and Energy equals only 7.5% in the S&P 500.

Canada is a NOT a technology powerhouse and hence IT has a low weight in the TSX relative to over 21% in the US,

On Total Return basis, Canada has underperformed the US for the period shown.

Related ETFs:

  • SPDR S&P 500 ETF (SPY)
  • iShares MSCI Canada Index (EWC)

Disclosure: No Positions

Corporate Tax Rate Cut Propels Indian Stocks

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The Indian economy is in a severe slowdown with the latest GDP falling to just 5%, the lowest in five years. Unlike developed countries’ GDP rate, 5% is considered a low rate for India since it is an emerging market and has been growing at a much higher rate like 7% or more. With the economy stagnant, job growth is almost zero. Many industries are suffering and the highly important auto sector saw the decline in new auto sales for the 10th month in a row in August. Auto sales have crashed by 41% the highest decline in the past two decades.

To arrest the further crisis in the economy, past Thursday the corporate tax rate was slashed from 30% to 22%. This dramatic action should help companies as they stand to save in taxes paid and more importantly this policy change is expected to spur investments leading to economic growth again.

Indian stocks as represented by the benchmark Sensex soared by 5.3% on Friday. It remains to be seen if this tax cut leads to additional gains in equities in the coming days.

The following chart shows the YTD return of Sensex Index:

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Source: Google Finance

A handful of Indian companies trade on the US markets. The complete list of Indian ADRs can be found here.