Gold vs S&P 500: A 10-Year Performance Comparison
Gold vs S&P 500 over 2016-2025: total returns, volatility, max drawdowns, and correlation. The data shows why holding both beats picking one.
One of the most common questions investors ask is: should I own gold instead of stocks? It’s the wrong framing. The real question is whether gold and stocks together produce better risk-adjusted returns than either one alone.
To answer that, we need to look at the data. Here’s a detailed comparison of gold vs the S&P 500 over the last 10 years (2016-2025), covering total returns, volatility, maximum drawdowns, and correlation.
Total returns: 2016-2025
Let’s start with the headline numbers. Over the 10-year period from January 2016 through December 2025:
| Metric | Gold (XAU/USD) | S&P 500 (SPX) |
|---|---|---|
| Starting price | ~$1,060/oz | ~2,044 |
| Ending price | ~$2,650/oz | ~5,890 |
| Total return | ~150% | ~188% |
| Annualized return | ~9.6% | ~11.2% |
The S&P 500 won on total returns — but by a narrower margin than many assume. Gold’s strong performance from 2023-2025, driven by central bank buying and geopolitical risk, closed a gap that was much wider earlier in the decade.
For our interactive comparison with adjustable date ranges, visit our Gold vs S&P 500 chart.
Year-by-year breakdown
The aggregate numbers hide enormous variation. Gold and stocks take turns leading:
| Year | Gold return | S&P 500 return | Leader |
|---|---|---|---|
| 2016 | +8.6% | +9.5% | S&P 500 |
| 2017 | +13.2% | +19.4% | S&P 500 |
| 2018 | -1.6% | -6.2% | Gold |
| 2019 | +18.3% | +28.9% | S&P 500 |
| 2020 | +25.1% | +16.3% | Gold |
| 2021 | -3.6% | +26.9% | S&P 500 |
| 2022 | -0.3% | -19.4% | Gold |
| 2023 | +13.1% | +24.2% | S&P 500 |
| 2024 | +27.2% | +23.3% | Gold |
| 2025 | +18.5% | +12.8% | Gold |
The pattern is clear: gold tends to outperform during market stress and underperform during strong equity rallies. This is precisely what makes it valuable as a diversifier.
Notice that in the two worst years for stocks (2018 at -6.2% and 2022 at -19.4%), gold was roughly flat — providing a crucial cushion when portfolios needed it most.
Volatility comparison
Raw returns only tell half the story. Risk-adjusted returns matter more for long-term wealth building.
| Metric | Gold | S&P 500 |
|---|---|---|
| Annualized volatility | ~15% | ~17% |
| Max drawdown (10yr) | ~-21% (2022) | ~-34% (2022) |
| Sharpe ratio | ~0.52 | ~0.58 |
| Worst month | ~-9% | ~-13% |
Gold is less volatile than stocks and experiences smaller drawdowns. The S&P 500’s maximum drawdown of ~34% (peak-to-trough in 2022) was significantly larger than gold’s ~21% drawdown over the same period.
For investors who lose sleep over portfolio declines, gold’s smoother ride has tangible value.
The correlation question
The most important property of gold as a portfolio component is its low correlation with equities. Over the 2016-2025 period, the rolling 12-month correlation between gold and the S&P 500 averaged approximately 0.05 — essentially zero.
This means gold’s returns are largely independent of stock market direction. That’s the definition of a good diversifier.
During acute market stress, gold’s correlation with stocks can even turn negative — meaning gold goes up when stocks go down. This happened during the COVID crash in March 2020 and during the 2022 bear market.
What a blended portfolio looks like
To see the practical impact, consider three portfolio approaches over 2016-2025:
| Portfolio | Allocation | Annualized return | Max drawdown | Sharpe ratio |
|---|---|---|---|---|
| All stocks | 100% SPX | ~11.2% | ~-34% | ~0.58 |
| All gold | 100% XAU | ~9.6% | ~-21% | ~0.52 |
| Blended | 90% SPX + 10% gold | ~10.8% | ~-28% | ~0.62 |
The 90/10 blend slightly reduces returns (10.8% vs 11.2%) but significantly reduces the maximum drawdown (28% vs 34%) and improves the Sharpe ratio (0.62 vs 0.58). You give up very little return for meaningfully better risk management.
This is why financial advisors consistently recommend a 5-15% gold allocation. The math simply works.
When gold outperforms stocks
Understanding the macro conditions that favor gold over stocks helps with tactical allocation. Gold tends to lead when:
- Real rates are falling or negative — The opportunity cost of holding gold drops, making it more attractive relative to bonds and dividend stocks
- The US dollar is weakening — Gold is priced in USD; a weaker dollar mechanically boosts gold’s value for global buyers
- Market volatility spikes — Flight-to-safety flows push capital from stocks into gold
- Inflation runs hot — Gold maintains purchasing power while stock valuations can compress under rising rate expectations
- Geopolitical risk escalates — Crisis demand drives gold higher while uncertainty weighs on equity risk premiums
Our daily verdict model tracks all of these factors. When multiple signals align bullish, gold tends to outperform stocks over the subsequent 3-6 months.
When stocks outperform gold
Conversely, stocks dominate when:
- Economic growth is strong — Rising corporate earnings drive stock prices higher while gold’s flat yield looks unattractive
- Real rates are rising — Higher risk-free returns make gold’s zero yield a disadvantage
- Risk appetite is high — Capital rotates from safe havens into growth assets
- The dollar is strengthening — USD strength creates a headwind for gold prices
The 2021 playbook is a perfect example: strong economic recovery, rising rates, explosive equity returns (+26.9%), and gold languishing (-3.6%). But notice the reversal in 2022 when the environment flipped.
The long-term perspective
Zooming out even further reinforces gold’s portfolio role. Since 1971 (when the US left the gold standard):
- Gold has compounded at approximately 7.8% annually
- The S&P 500 has compounded at approximately 10.5% annually (with dividends)
- Gold has never gone to zero; individual stocks frequently do
- Gold has maintained purchasing power across centuries; fiat currencies have not
Gold is not designed to beat stocks. It’s designed to survive what stocks cannot — currency crises, geopolitical upheaval, and financial system stress. That insurance function is why central banks hold over 36,000 tonnes of it.
How to own both
If the data convinces you that a blended approach makes sense, here’s how to implement it:
For the equity portion:
- A low-cost S&P 500 index fund (VOO, SPY, or IVV) provides broad market exposure
- Total market funds like VTI add small-cap exposure
For the gold portion:
- Gold ETFs (GLD, IAU) are the easiest way to add gold exposure
- Physical gold provides direct ownership without counterparty risk
- Gold mining stocks offer leveraged exposure but add equity-like risk
The choice depends on your goals. ETFs for simplicity and liquidity. Physical gold for long-term insurance. Mining stocks for amplified returns with higher risk.
For location-specific buying guidance, see our buy gold by location hub.
The bottom line
Over the last decade, the S&P 500 produced higher absolute returns than gold (188% vs 150%), but gold offered lower volatility, smaller drawdowns, and near-zero correlation with stocks.
A modest gold allocation of 5-10% improved a stock portfolio’s risk-adjusted returns without significantly reducing growth. This isn’t speculation — it’s portfolio math.
The question isn’t “gold or stocks?” It’s “what’s the right mix?” For most investors, the answer includes both.
Check our interactive comparison charts to explore different time periods and asset combinations.
Past performance does not guarantee future results. This article is for informational purposes only. See our disclaimer.