The problem is that, during a stock market crash, virtually all assets fall in value. However, gold and other precious metals almost always rise, making them a better option than many other investments. The reason gold tends to be resilient during stock market crashes is that both are negatively correlated. In other words, when one goes up, the other tends to go down.
And stocks and bonds are generally considered better investments for retirement, as they have historically outpaced the rise in the price of gold over the long term. To get a historical perspective on gold prices, between January 1934, with the introduction of the Gold Reserve Act, and August 1971, when President Richard Nixon closed the United States. But regardless of what stocks do, is it wise not to have a significant amount of physical gold and silver in light of all the risks we face today? I don't think so. Stocks benefit from economic growth and stability, while gold benefits from economic difficulties and crises.
Brokers sometimes point to the 100-year chart of the stock market and show that, in the end, it always recovers and rises, even after big falls. In all investment portfolios, diversification is important, and investing in gold can help diversify a portfolio, usually in the event of market crashes, when the price of gold tends to rise. Jeff speaks regularly at conferences on precious metals, is a member of the board of directors of Strategic Wealth Preservation in Grand Cayman and provides exclusive analysis and market commentary to GoldSilver clients. As the son of an award-winning gold digger, with family-owned mining claims in California, Arizona and Nevada, Jeff has deep roots in the industry.
To help answer the questions posed above, I analyzed past stock market declines and measured the performance of gold and silver in each of them to see if there are any historical trends. The following table shows the eight biggest falls of the S%26 P 500 since 1976 and how the prices of gold and silver responded to each of them. So, in the long run, stocks appear to outperform gold by about 3 to 1, but over shorter time horizons, gold can win. This is because the catalysts for the rise of gold were not related to the stock market, but rather to the economic and inflationary problems that were taking place at that time.
The first is the VanEck Vectors Gold Miners ETF, known as GDX, a security that tracks the overall performance of gold mining companies. And, although gold is traditionally considered to be a safe asset, it can be very volatile and lower in price. We need to consider the possibility that this will happen again and that citizens will be attracted to gold for reasons not related to the performance of S%26P.