Is Gold a Good Investment? Gold vs Stocks Since 1971, Measured

Gold had its best year in decades in 2025. It rose 66%, its biggest gain since 1979. In January 2026, gold futures closed at a record of about $5,318 an ounce.

So is gold a good investment? Or is it a good story? We pulled every year of gold, stock, bond and cash returns since 1971 and measured it.

Why we start in 1971

Before August 1971, the US dollar was tied to gold. Other countries' central banks could swap dollars for gold at a fixed $35 an ounce, so the price barely moved for decades.

That month the US ended the link, and gold started trading freely. So 1971 is the first year gold behaves like an investment you can measure. We start from the end-1970 price of $37 and run to the end of 2025, when it was $4,340. That's 55 years.

Keep one thing in mind. Gold had been held down at $35 for a long time, so some of its 1970s jump was a catch-up. Starting in 1971 flatters gold a little. We'll show what a less friendly start date does further down.

$10,000 in gold vs stocks since 1971

Here's what $10,000 at the start of 1971 became by the end of 2025. Stocks are the S&P 500 with dividends reinvested. Gold is the price of an ounce, with no costs taken off.

Gold grew about 4.9% a year after inflation. Stocks grew 7.0%. Two points a year doesn't sound like much. Over 55 years it's the difference between $142,500 and $404,600, in 1971 dollars.

Gold did beat both safer choices. 10-year US Treasuries grew 2.0% a year after inflation, and T-bills, the closest thing to cash, only 0.5%.

Why the gap with stocks? A share is a slice of a business that earns money and pays some of it out. Gold just sits there. It pays no dividend and no interest. Its whole return is someone paying more for it later.

Gold vs stocks, decade by decade

The long-run totals hide how lumpy gold is. Split the 55 years into decades and it's a tie: gold won three, stocks won three.

Gold's two biggest decades were rough ones for everyone else. In the 1970s inflation averaged 7.6% a year and stocks lost money after inflation. Gold rose 33.7% a year.

In the 2000s, stocks went nowhere through two crashes (−1.0% a year). Gold rose 14.1% a year. And since 2020, through a pandemic and an inflation spike, gold has beaten stocks again: 19.1% a year against 14.9%.

Then look at the 1980s and 1990s. Stocks made 17.3% and 18.0% a year. Gold fell in both decades. In the 2010s it scraped 3.4% a year while stocks made 13.4%.

Gold's 31 lost years

The worst thing about gold is how long it can stay down. Gold ended 1980 at $590 an ounce, after a buying frenzy driven by double-digit inflation.

By 2001, after inflation, it had lost 77% of its value. It didn't get back to its 1980 level in real terms until 2011. That's 31 years. Even before inflation, the year-end price didn't pass its 1980 level until 2006.

Start date matters a lot with gold. Bought at the end of 1980, gold made 1.5% a year after inflation through 2025. Stocks made 8.5% a year over the same 45 years.

We also checked every 10-year stretch since 1971, 46 of them. Gold beat stocks in 14. It lost money after inflation in 19. Stocks lost money after inflation in 5.

Does gold go up when stocks crash?

Mostly, yes. This is where gold earns its place. US stocks had 11 losing calendar years since 1971. Gold rose in 7 of them, though two of those gains were under 1%.

In 2008, the S&P 500 lost 36.6% with dividends. Gold gained 4.3%. In 2002, stocks lost 22.0% and gold rose 25.6%. In 1974, stocks lost 25.9% and gold rose 66.1%.

It's not a guarantee. In 1981 stocks dipped 4.7% and gold crashed 32.6%. In 2000 both fell. Over all 55 years, the link between gold's and stocks' yearly returns was slightly negative (a correlation of -0.17). In plain terms, they mostly move on their own.

Is gold a good hedge against inflation?

Sometimes. US inflation hit 5% or more in 11 of the 55 years. Gold beat inflation in six of them, and stocks in four.

On average in those years, gold returned +14.3% after inflation and stocks −4.1%. That looks like a clear win for gold. But almost all of it comes from the 1970s.

Look at the most recent burst of inflation. In 2021 prices rose 7.0% and gold fell 3.8%. In 2022 prices rose 6.5% and gold gained just 0.5%. Gold lost to inflation both years. It caught up later, from 2023 on, after inflation had cooled.

So gold has protected buying power over very long periods. Year to year, it's an unreliable inflation hedge.

Gold swings more than stocks

People think of gold as the safe choice. Its record says otherwise. Since 1971, gold's yearly returns swung more than stocks' did (a standard deviation of 27% against 17%).

• Gold fell in 19 of the 55 years. Stocks fell in 11.
• Gold's worst year was 1981, at −32.6%. Stocks' worst was 2008, at −36.6%.
• Gold's best year was 1979, at +127%. Stocks' best was 1995, at +37.2%.

Gold is safe in one narrow sense. It can't go bust, and it tends to hold up when markets panic. On its own, though, it's a bumpy ride.

What a little gold does to a portfolio

Most people who own gold don't go all in. They hold a slice of it next to stocks and bonds. We tested that with a classic 60/40 mix, rebalanced once a year.

Gold made the bad years less bad. The worst year for every mix was 2022, when stocks and bonds fell together. With 10% in gold, that year's loss went from 18.0% to 16.1%. With 20%, it was 14.3%.

What it did to the long-run return depends on the start date. From 1971, adding gold raised it a little. From 1981, right after gold's top, it lowered it: 10% gold cost 0.33 points a year.

That's an honest summary of gold. It's insurance. It smooths the ride, and how much it costs or pays depends on when you buy it. You can read more about mixing assets in our guides to the 60/40 portfolio and diversification.

Where gold is now

Our yearly data ends with 2025, when gold finished at $4,340 an ounce. Gold futures kept climbing into 2026 and closed at a record of about $5,318 on 29 January.

It has fallen back since. On 13 October 2026 gold futures were around $4,222, about 21% below that record and 3% below where 2025 ended.

Drops like that are common for gold. It fell 28% in 2013 alone, and 33% in 1981. Nobody knows whether the next move is up or down. In the past, big run-ups were followed by long flat spells, and sometimes by further gains.

How to invest in gold

There are four main ways in. They differ a lot in cost and in what you actually own.

• Coins and bars. You own the metal itself. Dealers sell above the gold price and buy back below it, so you start a little behind. You also have to store and insure it.
• Gold ETFs. A fund holds bullion in a vault, and you buy shares on a stock exchange like any other fund. It's the cheapest, simplest way for most people. Make sure the fund holds physical gold.
• Gold mining shares. You own companies that dig gold up. They're stocks, not gold. Their price also depends on each company's costs, debt and management.
• Futures and CFDs. Leveraged bets on the gold price. You don't own any gold, and losses can exceed what you put in. Our guides to futures and CFDs explain how they work.

Fees matter more with gold than with stocks, because gold pays no income to cover them. GLD costs 0.40% a year and GLDM costs 0.10%, for the same gold. Over decades that adds up, so it's worth checking the expense ratio before you buy.

Tax on gold varies a lot by country. In the US, gold coins count as collectibles, and long-term gains on them are taxed at up to 28%. In the UK, Sovereigns and Britannias are legal tender, so gains on them are free of capital gains tax. Krugerrands aren't. Check the rules where you live before you buy.

So, is gold a good investment?

It depends on what you want it to do. Here's what 55 years of data say:

• As a way to grow money, stocks did far better: 7.0% a year after inflation against gold's 4.9%.
• Gold beat bonds and cash over the whole period, but it went through two decades of losses after inflation.
• As insurance, gold did its job. It rose in 7 of 11 bad years for stocks, and a 10% slice softened a 60/40 portfolio's worst year.
• As an inflation hedge, it worked over decades but not reliably year to year. It lost to inflation in both 2021 and 2022.
• When you buy matters more with gold than with almost anything else. A 1980 buyer waited 31 years to break even after inflation.

If you want the background on stocks, bonds and the other assets people hold, Stage 19 of the free course, Beyond Stocks, covers it.

What this test can't tell you

• All of it is in US dollars with US inflation. If your money is in another currency, gold's return in your currency will be different, sometimes very different.
• Gold's return here is the price alone. Real owners pay fund fees or dealer markups, plus storage and insurance for metal. Stocks' return includes dividends but no fund fees either.
• We use one price a year, at year end. Within each year, the swings were bigger than the table shows.
• 55 years is only a few full gold cycles. There's very little history to lean on.
• The future can be different. Central-bank buying, interest rates and the dollar all move gold, and none of them repeat on a schedule.