Gold and the S&P 500 are two of the most popular investment vehicles in the world. Gold is a precious metal that has been used as a form of currency and a store of value for thousands of years. The S&P 500 is a basket of 500 large-cap US stocks.
Introduction
Gold and the S&P 500 are two of the most popular investment vehicles in the world. Gold is a precious metal that has been used as a form of currency and a store of value for thousands of years. The S&P 500 is a basket of 500 large-cap US stocks.
Performance
Over the long term, gold has outperformed the S&P 500 on a risk-adjusted basis. This means that gold has generated higher returns with less risk.
Data
The following table shows the performance of gold and the S&P 500 from 2005 to 2023:
GOLD ($GLD) vs. S&P-500 ($SPY) 20 Year Data Blue = $GLD - Black = $SPY
As you can see, gold has outperformed the S&P 500 on both a return and risk-adjusted basis. On the chart below, you can see that from 2005 - 2021 if you invested in gold, you would have been ahead of the S&P-500 for 16 years before the S&P-500 caught up to gold. Still, today, GOLD ($GLD) is winning. It is important to recognize the time of investment though. $SPY gives better opportunities for investment due to its volatility, giving you the options to buy in low. This is the best argument for the S&P-500 vs Gold.
The chart shows the performance of GLD (SPDR Gold Trust) and SPY (SPDR S&P 500 ETF) from 2005 to today. As you can see, GLD has outperformed SPY on a risk-adjusted basis. This means that GLD has generated higher returns with less risk.
GLD has outperformed SPY because it has served as a hedge against inflation. When inflation rises, the value of gold tends to rise as well. This is because gold is a real asset that has intrinsic value.
SPY has outperformed GLD on a few occasions, such as during the bull market of 2009-2019. However, GLD has generally outperformed SPY over the long term.
Investors who are looking for a safer investment with less downside risk should consider adding gold to their portfolio. GLD is a good way to get exposure to gold without having to physically own gold bars or coins.
Here are some of the key takeaways from the chart:
GLD has outperformed SPY on a risk-adjusted basis over the long term.
GLD has served as a hedge against inflation.
Investors who are looking for a safer investment with less downside risk should consider adding gold to their portfolio.
It is important to note that past performance is not indicative of future results. The stock market is volatile, and there is no guarantee that gold or the S&P 500 will continue to outperform in the future.
Why is gold a safer investment?
Gold is a safer investment than the S&P 500 for a number of reasons:
Gold is a tangible asset. It is not subject to the same risks as stocks and bonds, which are financial assets. Gold cannot be counterfeited or devalued by governments.
Gold has a long history of preserving wealth. It has been used as a form of currency and a store of value for thousands of years.
Gold is a hedge against inflation. When inflation rises, the value of gold tends to rise as well. This is because gold is a real asset that has intrinsic value.
Gold is a safe haven asset. Investors often buy gold during times of economic and political uncertainty.
Why is gold almost as if it's an example of money printing?
Gold is almost as if it's an example of money printing because it is resistant to inflation. When central banks print money, they are increasing the supply of money in the economy. This can lead to inflation, which erodes the value of fiat currencies.
Gold, on the other hand, has a limited supply. This means that it is resistant to inflation. When central banks print money, the value of gold tends to rise.
What is better? Paper Gold vs Physical?
In my opinion, paper gold (on the market) is better because you can write options to enter, exit, hedge, and generate income. This allows you to realize gains from gold while still holding unrealized gains from appreciation. People like physical gold for many reasons. One reason is that it is invisible, a form of asset protection. Another reason, as stated above, is that it is tangible.
Conclusion
Overall, gold is a safer investment than the S&P 500. It is a tangible asset with a long history of preserving wealth, is a hedge against inflation, and is a safe haven asset.
Investors who are looking for a safer investment with less downside risk should consider adding gold to their portfolio. Join ZTRADEZ Stock Market Discord: learn from experienced traders and gain access to exclusive trading strategies and insights.
This is not investment advice.
The information in this post is for educational purposes only and should not be construed as financial advice. I am not a financial advisor and I am not qualified to give investment advice.
Any investment decisions you make should be based on your own research and your own individual circumstances. You should always consult with a qualified financial advisor before making any investment decisions.
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