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2020 Progress Report: How Have Gold & Silver Fared vs. Stocks?

Jeff Clark, Senior Analyst, 
JUN 4, 2020

Now that it appears the virus is ebbing and things are slowly opening back up, let’s look at how our two favorite investments have fared so far this year. Did gold provide a hedge? How did metals perform against the stock market? And where is the better value now?

This chart “pictorial” answers all those questions…

Gold and Silver Year-to-Date

First, let’s look at how the precious metals complex has performed so far in 2020, through May 29.

Only industrial-use platinum lags more than silver

Gold led the pack except for rhodium, which rose primarily on supply issues. Silver ended the first five months of the year up 1.4%, underperforming all precious metals except platinum.

Now let’s compare gold and silver to the broad stock market, again through the end of May.

gold leads stocks in 2020, silver trails only the nasdaq

Gold not only provided a hedge, it outperformed all major US stock indexes. Even silver has done better than the Dow and S&P 500.

And it wasn’t just stocks—gold outperformed real estate, the US dollar, and even Treasuries.

gold performed better than treasuries, real estate, & us dollar during coronavirus

Through May of this year, gold has risen more than all major asset classes.

But this wasn’t the case with the FAANG and other darling stocks.

Gold only rose more than Alphabet (Google) stock, and all have risen more than silver. This highlights the fact that Wall Street hasn’t yet given up on their favorite equities—many of these stocks have benefited from the virus, since the world turned to increasingly to tech and e-commerce in response. You also notice how volatile Tesla stock has been this year, even more than silver.

What about Warren Buffet’s company Berkshire Hathaway… how has gold fared against it? He famously claimed that gold has “no utility,” so I can’t resist pointing out how gold has performed against his stock not just this year but the last seven times it’s crashed:

gold during berkshire hathaway stock crashes

Gold has hedged his stock every time it’s crashed over the past 22 years. The contrast this year is stark: through the end of May gold is up 13.5%, while BRK-A is down 18%, a difference of 31.5%. The spread between gold and his stock in the last three crashes is striking.

Come on Warren, when you gonna wise up and buy some gold?

Where’s the Stronger Opportunity?

To get a feel for which assets might offer the better opportunity to an investor right now, let’s pull back and look at the five-year picture.

Here are the major stock indexes vs. gold and silver over the past five years, from May 2015 through May 2020.

silver offers the better opportunity

Silver clearly offers a better upside than the general stock market.

And notice what happened in 2016… silver went from the worst performer to the best, in a matter of eight months. This shows just how volatile silver can be, and that you really have to be positioned before those moves get underway.

What about gold and silver vs. the darling stocks?

gold and silver offer stronger opportunity than faang, tesla, & microsoft

In a five-year timeframe those stocks have soared. Gold and silver clearly offer more upside.

Gold often serves as a hedge, but what Mike Maloney sees ahead will look more like this in our opinion.

silver & gold trounce stocks 1976-1980

The gold and silver markets are heating up. If they correct this month it would signal nothing but a buying opportunity to us.

Because with all risks surrounding us—social, economic, geopolitical, monetary—there has hardly been a time more critical to own them.