Investing In Gold Vs Stocks: Winner In 2026?

Is investing in gold vs stocks the better move in 2026? For most investors, the answer is both. Gold returned about 63% in 2025 while the S&P 500 returned about 18%, and gold set a record high of $5,501.70 per ounce in January 2026. Over longer stretches, stocks still lead but the choice depends on your goals and how much protection you want when markets drop.

How has gold performed compared to stocks historically?

Over the long run, stocks have delivered higher total returns, but the gap is narrower than you might think. Since 1957, the S&P 500 has averaged about 10% a year. Gold’s U.S. dollar price has risen about 8% a year since 1971, a pace the World Gold Council calls comparable with equities.

Individual investors couldn’t legally own physical gold again until December 31, 1974. Stocks have compounded faster since then, but gold has outperformed during some of the most stressful stretches for stock market investors, including the past two years.

How has gold compared to stocks recently?

The long-run averages tell one story. The past two years tell another. In 2024, gold returned about 27% while the S&P 500 returned about 25%. In 2025, gold rose about 63% while the S&P 500 delivered a total return of about 18%.

Central banks were a big reason as they bought 863 tonnes of gold in 2025 and kept buying into early 2026. That steady institutional demand helped push gold to its record high of $5,501.70 per ounce on January 28, 2026. In early 2026, gold pulled back from that peak while stocks edged higher.

Here’s how the two compared over the past two years:

Year	Gold return	S&P 500 return
2024	about 27%	about 25%
2025	About 63%	About 18%

Does gold protect against inflation?

Neither gold nor stocks wins in every inflationary period. A Charles Schwab analysis of gold, stocks, and inflation found that gold tends to outperform during inflation shocks, while stocks do better over long stretches of moderate inflation. That’s why the two work well together rather than one replacing the other. 

You can check any starting year back to 1971 to see what a dollar amount would be worth today as cash, savings, or gold.

Should you invest in gold, stocks, or both?

Both. They do different things. Stocks are for long-term growth. Gold is for protecting your purchasing power when markets fall, inflation spikes, or geopolitical risk rises.

Many financial planners recommend holding 5% to 10% of your portfolio in gold. That gives you diversification without concentrating too much in one asset class. Some suggest a larger share during periods of elevated uncertainty.

The right split depends on your time horizon and risk tolerance. A 60-year-old approaching retirement has different needs than a 35-year-old with decades of compounding ahead. The retiree benefits more from gold’s downside protection. The younger investor benefits more from stocks’ higher long-term growth rate.

What are the advantages and drawbacks of gold?

Gold’s biggest advantage is that it holds value when other assets drop. It has no counterparty risk because it doesn’t depend on any company’s performance.

Advantages

• Downside protection: Gold has often risen during sharp market downturns such as 2008 and 2020, when stocks fell hard.
• Low correlation: Gold moves independently of stocks and bonds. When the S&P 500 fell during the 2008 crisis, gold held up and then climbed in the years after.
• No counterparty risk: Physical gold doesn’t rely on a company, bank, or government to keep its value.

Drawbacks

• No income: Gold doesn’t pay dividends or generate cash flow. It’s a defensive asset, not a cash generator.
• Storage costs: Physical gold needs secure storage and insurance, which add ongoing costs.
• Higher tax rate: The IRS taxes gold at the collectibles rate of up to 28% for long-term capital gains, compared to 15% or 20% for stocks. A Gold IRA gives you a way to defer taxes.

What are the advantages and drawbacks of stocks?

Stocks offer higher long-term returns than any other major asset class, which is why they’re part of growth portfolios.

Advantages

• Higher growth: Over long periods, stocks have outpaced gold, bonds, and real estate in total return.
• Dividend income: Many stocks pay quarterly dividends, providing a steady income stream.
• Liquidity: Stocks trade on public exchanges and can be bought or sold in seconds during market hours.

Drawbacks

• Volatility: The S&P 500 fell about 34% in early 2020 and more than 50% during the 2008 crisis. Short-term swings can be severe.
• Company-specific risk: Individual stocks can lose all their value if a company fails. Index funds reduce this risk but don’t eliminate market-wide declines.
• Counterparty exposure: A stock’s value depends on the performance and management of the underlying company.

Here’s how gold and stocks compare side by side:

Factor	Gold	Stocks
Long-term returns	About 8% a year since 1971	About 10% a year since 1957
Income	No dividends or cash flow	Some pay quarterly dividends
Downturn behavior	Often rises during sharp declines (2008, 2020)	Fell more than 50% in 2008 and about 34% in early 2020
Counterparty risk	None for physical gold	Depends on the company’s performance
Correlation to stocks	Low; often moves independently	Correlated to the broader market
Tax treatment	Up to 28% (collectibles rate)	15% or 20% long-term capital gains
Storage costs	Requires secure storage and insurance	None
Liquidity	Sold through a dealer	Bought and sold in seconds on exchanges

How do you invest in gold?

There are three main ways to add gold to your portfolio, and each carries a different level of ownership and risk.

• Physical gold bullion: Gold bars and coins you buy from a dealer and hold directly. You own the metal, with no counterparty risk.
• Gold ETFs: Funds that pool investor money to buy physical gold and issue shares. More liquid than physical gold, but you carry counterparty risk from the fund issuer.
• Gold mining stocks: Shares in mining companies, or funds that track gold-related assets. Returns depend on company performance, not just the gold price.

We cover the differences in one of our recent podcasts:

What are the steps to start investing in physical gold?

• Step 1: Choose what to buy. One-ounce government-minted coins like American Eagles or Maple Leafs are the easiest place to start.
• Step 2: Choose a dealer. Look for an established dealer with a track record and a buy-back policy.
• Step 3: Place your order.
• Step 4: Store it somewhere safe. A home safe, a safe deposit box, or a private depository.

Final thoughts on gold vs stocks

Stocks grow your money over time. Gold protects it when markets fall. The two do different jobs, which is why most investors hold both rather than picking one. 

To learn more about adding gold to your portfolio, connect with the Swiss America team today!

Investing in gold vs stocks: FAQs

Is physical gold better than a gold ETF?

Physical gold has no counterparty risk because you own the metal outright, and its value doesn’t depend on a fund issuer. Gold ETFs are more liquid and easier to trade, but you hold shares in a fund, not metal. 

Can you lose money investing in gold?

Yes. Gold fell for roughly two decades after its 1980 peak before recovering, and short-term drops of 10% to 20% in a single year aren’t unusual. Buying at a peak and selling during a dip locks in a loss, as some buyers learned when gold pulled back from its January 2026 record. 

Why is gold so expensive right now?

Central bank buying is the biggest driver. Central banks bought 863 tonnes of gold in 2025, and a 2025 World Gold Council survey found that 95% expect global gold reserves to keep rising. 

Persistent inflation concerns, expanding government debt, and geopolitical risk have added to demand for tangible assets, pushing gold to its record high in early 2026.

How does gold perform when the dollar drops?

Gold tends to rise when the dollar weakens. Because gold is priced in U.S. dollars globally, a falling dollar makes it cheaper for foreign buyers, which lifts demand. When government debt expands and confidence in the dollar slips, gold benefits as an alternative store of value. 

The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.