Gold has surged more than 50% this year, topping $4,300 an ounce in mid-October. But before declaring a new golden era, investors should remember history’s humbling lessons.
After peaking in 1979 amid runaway inflation, gold languished for 28 years before eclipsing that prior high. Again in 2011, gold surged following a U.S. credit downgrade yet took nearly a decade to reach another record high. Long stretches of time with little to no gain are not uncommon for gold—and that’s before factoring in inflation.
As the graphic below shows, gold has outpaced inflation in just over half of rolling 1-year and 10-year periods, respectively, since 1972. U.S. stocks, publicly traded real estate (REITs), and U.S. Treasury bonds have outperformed inflation far more frequently.
The takeaway? If your risk is inflation, gold hasn’t been a reliable hedge.
Investors should remember that stocks and REITs represent ownership in businesses and real estate expected to generate real profits and cash flows. Bonds contractually compensate investors for lending their capital. Gold, by contrast, simply sits there—unchanged and unproductive—its future price dependent on what someone else is willing to pay.
Even as a proverbial “safe haven,” gold hasn’t always delivered. Since 1970, it has fallen in price in nearly half of months that U.S. stocks declined. That’s hardly the protection investors seeking shelter from stock market turbulence might expect.
Gold’s recent run-up may glitter, but investors should remember that history has rewarded patience and productivity, not speculation on shine.
Growth above inflation?
Frequency of outperformance
Source: DFA Returns Web. Data shown is frequency of outperformance compared to U.S. CPI from 01/1972 to 08/2025 over monthly, rolling 1-year and 10-year periods. Outperformance is calculated as difference in total returns for U.S. stocks (CRSP Deciles 1-10 Index from 01/1972-08/2025), bonds (5-Year US Treasury Notes from 01/1972-12/1972 and Bloomberg US Gov. Bond Index Intermediate from 01/1973 to 08/2025), REITs (FTSE Nareit US Real Estate Index from 01/1972 to 12/1977 and Dow Jones US Select REIT Index from 01/1978-08/2025), and gold (Gold spot price from 01/1972-08/2025) vs U.S. CPI using monthly data. Past performance is no guarantee of future results.
