Gold Outperforms S&P 500 for Past Five Years

Set aside the noise about record gold prices for a second. 

Something bigger is being overlooked. 

Gold vs S&P graph

Over the past five years, the pet rock is now outperforming the S&P. 

This comes after the S&P hit record high after record high in a post-pandemic stimulus-fueled orgy of retail buying in 2020 and 2021. 

And it comes after a recent string of new record S&P highs driven by the Magnificent Seven and individual AI stock valuations that dwarf most countries’ economies. 

Three Tiny Gold Stocks to Check Out Now

Gold Just Hit a Record-High Price Yet Gold Stocks Remain Severely Undervalued

Here’s how to position now…

Trillions spent. Checks mailed out — signed by both Trump and Biden. Money printers made to go ‘brrrrrrrr’. 

And for what? 

An economy that’s been teetering for half a decade now. A middle class getting eaten alive by higher for longer inflation and interest rates. And a stock market that can’t outperform a hunk of metal. 

It’s amazing when you think about it. 

Most would agree that the S&P is largely representative of US economic trajectory. And the US economy is a $27 trillion behemoth. It grew 3.4% in the last quarter, 4.9% the quarter before that. And will likely show good growth again when the Q1 number comes out this week. Unemployment has been below 4% for the longest stretch since the Vietnam War.

Yet the stock market index representing 500 of the largest companies in that economy is now underperforming an asset that produces and yields nothing. 

And here’s something else that few are talking about. 

Gold and gold stocks are not the same thing. 

While gold just hit record-high prices and is outperforming the S&P over the past five years, gold stocks have not kept up. A broad basket of gold stocks is only up 52% in that time versus gold’s 79% return. 

Gold and Gold Stocks graph

Look at the blue line on this chart. Look back when gold last hit record prices in 2020 and 2022. It overshot higher both times. 

That hasn’t happened yet this time around. But it’s starting to. 

Inflation ate into miners’ profits in 2023 but gold prices north of $2,300 per ounce will soon overcome higher costs and make their way to the bottom line. 

The market is starting to price this in now. As you can see, that blue line started to take back off in late February. 

There is now a rising probability that gold stocks outperform gold and the S&P over the next six to 12 months. 

You could make 50% or so for yourself by owning a gold stock ETF over that time. 

You could do even better by owning some quality individual gold names. Here’s one last chart for today. It’s the same as the chart above, now with one of our top gold stock picks added in green. 

Our picks graph

Again look back to the record high gold prices of 2020, when this stock was up 160%. 

It’s headed back there. 

And we’re not the only ones who think so. 

See why one billionaire is buying it as part of ‘the greatest gold trade ever’

Call it like you see it,

Nick Hodge

Nick Hodge
Publisher, Daily Profit Cycle