- The S&P 500 has outperformed gold and silver, reaching highs when priced in ounces of those precious metals
- Pricing the S&P 500 in alternative assets like gold, silver, and oil provides insight into shifting opportunity costs of stock investing
- While stocks crashed early in the COVID-19 pandemic when priced in dollars, they soared when priced in barrels of oil due to the oil price crash
The S&P 500 has been on an impressive run compared to commodities like gold and oil. Let’s take a look at some charts that show just how well stocks have performed.
Stocks vs. Gold
Gold saw a huge rally starting in 2000, peaking in 2011. Since then, it has declined as the S&P 500 climbed. Both have rallied recently, but the S&P 500 has clearly outpaced gold over the past decade.
When pricing the S&P 500 in ounces of gold instead of dollars, we can see this outperformance even more clearly. From 2011 to 2018, the S&P 500 annualized return was 22% priced in gold. Though it briefly dipped below its long-term average priced in gold, the S&P 500 has maintained its value over the last couple years.
Stocks vs. Silver
The story is similar when looking at the S&P 500 priced in silver. From 2011 to 2018, the S&P 500’s annualized return was 32% priced in silver ounces. Today, the S&P 500 remains far above its long-term average priced in silver.
Stocks vs. Oil
Oil saw a dramatic crash early in the pandemic, with futures even going negative briefly. This made stocks look like a bubble priced in oil barrels. But after falling to its long-term average priced in oil in 2022, the S&P 500 has skyrocketed 144% over the last couple years measured in barrels of oil.
Key Takeaway
While the S&P 500 is hitting new highs priced in dollars, it looks even more impressive compared to commodities. This shows the opportunity cost of choosing stocks over gold, silver, and oil has paid off enormously over the last decade. Stocks remain attractively valued relative to commodities today.
