Gold or S&P 500? The answer changes depending on when you started investing

Let’s understand that these two are two very different asset classes. One has a long record of compounding. The other has a reputation as the safe haven to park funds. Both claims sound right. But when it comes to the returns, what do the numbers tell?

One thing to note before we begin. The S&P 500 is a US index, and the gold price used here is the international price. Both are measured in US dollars, not rupees.

Let us find out. A look at the performance of gold and the S&P 500 over the last 26 years, from 2000 till date, does not throw up a straightforward winner. All returns and prices in this story are in US dollar terms.

It has been a wild ride for both. Between 2000 and 2026, they have lived through the dot-com crash, the 2008 financial crisis and the more recent volatility of the pandemic.

Does the Scoreboard Pick a Clear Winner?

According to VTMarkets, the compound annual growth rate (CAGR) for the S&P 500, including reinvested dividends, has averaged approximately 10.1% since 2000. In contrast, gold has delivered around 8.2% annually over the same timeframe. Both figures are in US dollars, and the gold figure is based on international prices. On this count, the S&P 500 is ahead.

But that is the long-term picture. Within the period from 2000 to 2026, some stretches show a very different result.

Significant Variations Across Different Periods
(Gold CAGR is based on international gold prices in US dollars. S&P 500 CAGR is in US dollar terms and includes dividends.)

Source: VTMarkets

Here is what the table reveals. Gold ruled the first decade. From 2000 to 2010, it compounded at 12.8% a year, while the S&P 500 (with dividends) slipped 0.9% a year.

Then the tables turned. From 2010 to 2020, the S&P 500 rose 13.9% a year, against just 1.5% for gold.

The latest stretch is closer. Since 2020, the S&P 500 is ahead at 11.2%, but gold is not far behind at 9.3%. Again, these are dollar returns, so Indian investors may see different numbers in rupees.

A Simple Ratio That Tracks the Gold vs Equities Race

The S&P 500-to-gold ratio is another way to look at the relationship between the two. The ratio is calculated by dividing the S&P 500 index price by the price of one ounce of gold. Both are priced in US dollars, so the ratio itself is not affected by the rupee. It indicates how many ounces of gold are needed to purchase the index at any given time.

And here’s how to read the ratio: When the ratio increases, the stock market outperforms gold. When it decreases, gold outperforms equities.

Gold started its recent bull run in October 2023. The S&P 500-to-gold ratio back then was 2.1. Before that run began, if we look at the performance of gold and the S&P 500, the picture gets clearer.

The S&P 500 rose by nearly 10% CAGR, while gold managed around 5%, almost an inflation-beating return. The ratio had risen to 2.1, validating the view that a rising, higher ratio denotes equities outperforming gold.

Then the tide turned. As of October 2026, the ratio sits at around 1.83, with the S&P 500 near 7,666 and the gold price at $4,185 per ounce in the international market.

Between October 2023 and October 2026, gold has gained 28% while the S&P 500 managed 21%. These gains are in US dollar terms. A falling ratio means gold outperformed the equity index.

How Can Investors Use the Ratio?

The historical long-term average for the S&P 500-to-gold ratio is around 1.14 to 2.0. One way of making use of this Gold-S&P 500 ratio indicator is for investors to consider rebalancing their holdings between these two benchmarks. Still, it is just a guide, not a guarantee.

When Does Gold Really Shine?

When the economic situation gets uncertain, and the geopolitical environment gets tense, investors often run to gold. It has historically outperformed in severe recessions, high inflation periods, geopolitical conflicts, and fears of fiscal mismanagement by central banks of developed countries. Most of these factors are playing out in the recent bull run in gold, including that of the worsening debt burden of the US. The gold price that reacts to all this is the international price, quoted in US dollars.

Why Does a Weak Dollar Help Gold?

In addition, the gold price in the international market is also influenced by the US dollar with which it has a close relationship. Being a non-yielding asset, gold finds support when the dollar weakens. This was clearly noticed in 2025, when the dollar index dropped nearly 12% while gold continued to rise, gaining 65% during the year. A weaker dollar, a stronger gold.

Does Gold Pay You Anything?

But wait, one key difference between gold and the S&P 500 is income generation. Here is where the two part ways.

The S&P 500 offers dividends yielding around 1.5%, which compound over time and enhance long-term returns. In contrast, gold generates no income. It relies solely on price appreciation for profit, which significantly influences wealth accumulation through reinvestment. Dividends from S&P 500 companies quietly do a lot of work over the years. Gold has to depend on its price rising.

Why Should an Indian Investor Care About a US Index?

The S&P 500 is the biggest barometer of US stocks. For an Indian investor, it works as a benchmark for equities. So does a US index matter to you? Yes, because the gold-versus-equities question is the same everywhere.

The relationship between the S&P 500 and gold stays the same for international and Indian investors. But there is one catch. The returns from gold can differ for Indian investors because the landed cost in India depends on import duties and taxes, which are different from other markets.

The prices and returns for gold are in US dollar terms. They will not match what you see in rupees. A move in the rupee against the dollar can change your returns too. For an Indian investor, the S&P 500 is simply a window into equities.

So, Which One Wins?

Gold serves as a hedge during equity bear markets with lower drawdowns. But it tends to underperform during extended stock bull markets, resulting in gaps in relative returns.

So there is no permanent winner. And don’t even try to look for one. Each one has to complement the others in one’s portfolio. That holds in US dollar terms. Rupee returns can look different.

The S&P 500 has led on the long-run average. Gold has led in the recent run and in rough patches. Each has a different job. The smarter question may not be which one to pick, but how much of each to hold.

Disclaimer: This article is for informational purposes only and should not be treated as investment advice. The S&P 500 is an equity index and comes with market risk. The historical performance of US stocks is not a guarantee of future returns, and gains should not be viewed as an offer or solicitation to buy. Gold prices are subject to market volatility and may rise or fall without notice. Past performance is not indicative of future returns. Please consult a qualified financial advisor before investing.