S&P At All-Time Highs, But Still Hasn't Beaten Gold

Despite a Friday bump in the road, the S&P 500 is still within a stone’s throw of its all-time high and is now trading roughly 40 percent above its pre-Financial Crisis high. Yet despite the stock market being swept up in one of the most impressive bull markets in history since early 2009, it has still underperformed a surprising alternative investment in the past decade.

In the past 10 years, the SPDR S&P 500 ETF Trust SPY is up an impressive 66 percent. However, in that same time, the SPDR Gold Trust (ETF) GLD is up 109.6 percent.

This outperformance by gold is somewhat surprising considering that gold is often thought of as a flight to safety trade when the stock market is weak. However, while it’s true that gold does tend to perform well during times of stock market uncertainty, a long-term look at the SPY and the GLD highlights another important point about gold: it can still perform well even when the stock market is rising.

Related Link: 4 Reasons Morgan Stanley Thinks The S&P 500 Is Going To 2,300

Gold prices went on quite a run during the early stages of the bull market following the financial crisis when interest rates were cut to near zero and fears about the long-term impact of QE were rampant. However, even after gold’s abysmal performance from 2012-2015, it has still managed to outperform stocks since September 2006.

With interest rates around the world still near or below zero, stock prices in the U.S. near all-time highs and rising global debt already at troubling levels, gold’s long-term run may be far from over.