Gold is back in the headlines, having recently hit all-time highs and drawing investors who feel the need for a safe haven, believe they need extra protection from inflation, or are simply afraid of missing out. It’s not the first time this story has played out. In 1980, amid double-digit inflation and oil shocks, and again in 2011 after the U.S. lost its AAA credit rating and the world was still recovering from a financial crisis, gold surged on the same mix of fear and distrust. Each episode carried its own logic—debt concerns, inflation anxiety, a sense that policymakers had lost control—but the pattern has been remarkably consistent. When uncertainty peaks, gold’s appeal rises with it. But history reinforces the same lesson: fear-driven decisions rarely turn into sound long-term advice.
Gold vs. Stocks: The Long-Term Record
At TCI Wealth Advisors, our mission has always been to help clients live purpose-filled lives through advice grounded in clarity, confidence, and a calm perspective that comes from seeing the signal through the noise. We believe the best investment decisions come from that same place—deliberate, dynamic, and anchored to a plan built for the long term. Gold’s recent popularity illustrates how fleeting impulses can take hold when uncertainty rises. It’s the kind of story that captures attention for a moment but fades from memory as quickly as it came into our conscience. It’s easy to mistake attention for importance. But what truly matters in investing isn’t what dominates headlines today; it’s what endures over decades. History provides clear insight for applying that mindset here.
For all the attention gold receives in moments of uncertainty, its long-term record as an investment is far less impressive. Since 1979, a dollar invested in gold would have grown to just $17, while that same dollar in the Russell 3000 would be worth $222 today. The difference; an annualized return of 12.25% for stocks versus 6.24% for gold—is compounded not just by time, but by volatility: gold has been the bumpier ride, with long stretches where it simply went nowhere. And even these figures are unusually flattering for gold, coming on the heels of one of its strongest multi-year runs in history. It’s a reminder that even when something feels safe, it can quietly erode the very wealth it’s meant to protect.
Source: Dimensional Fund Advisors. Data from 1/1/1979–9/30/2025. Russell 3000 Index and Gold Spot Price in USD.
Gold shine fades next to the quiet power of compounding
Peaks That Didn’t Pay
History’s message becomes even clearer when we look at what happens following previous “gold rush” episodes.
In a recent post, we explored why investing in stocks at all-time highs isn’t nearly as risky as it feels—because, historically, markets have continued to compound from those points. Gold tells the opposite story. When it has reached euphoric peaks, the results have been consistently disappointing. After its 1980 surge, gold fell nearly 10% over the next five years while the Russell 3000 gained almost 16% annually. The same pattern repeated after 2011: gold declined more than 6% annually over the following five years, while stocks again delivered double-digit returns. Peaks that felt like validation at the time turned out to be traps for investors chasing safety at precisely the wrong moment.
| Returns Following January 1980 Peak | Returns Following September 2011 Peak | |||||
| Russell 3000 | Gold | Russell 3000 | Gold | |||
| 1 Year | 24.82% | -0.99% | 1 Year | 18.42% | -2.71% | |
| 3 Years | 16.19% | -0.80% | 3 Years | 19.22% | -12.66% | |
| 5 Years | 15.78% | -9.59% | 5 Years | 14.24% | -6.32% | |
Source: Dimensional Fund Advisors. Russell 3000 Index and Gold Spot Price in USD.
Why Gold’s Returns Disappoint
The 2011 episode was notable enough for Warren Buffett to devote a section of his annual letter to gold. He contrasts it with assets like farms and businesses which, unlike gold, produce valuable economic output, reminding investors that gold “will remain lifeless forever, producing nothing.” It’s worth is entirely rooted in what the next speculator will pay, not on any stream of earnings, dividends, or innovation.
That simple distinction explains the story in the numbers above. Gold does not create anything. Stocks, by contrast, represent ownership in the productive side of the economy; where companies innovate, create, grow, and generate cash flows. Over time, it’s that compounding of real economic value that creates wealth for investors. Taking all this into consideration, it’s easier to understand that gold’s poor returns aren’t an anomaly. They’re exactly what you’d expect from an asset that stands still while the world moves forward.
Additional Perspective on Gold’s Hidden Costs
Long-term returns are an important starting point for evaluating any investment. But at TCI, our due diligence on behalf of clients goes beyond performance alone. We look at the full picture, including how taxes, inflation, and real-world implementation shape an investment’s ability to support long-term goals. And when we apply that lens to gold, the story becomes even less favorable.
Taxes – Gold’s tax treatment deepens the problem. In most of its commonly investable forms—physical coins or bars, and even popular ETFs like GLD and IAU—the IRS classifies gold as a collectible. That means long-term gains aren’t eligible for the favorable 15–20% capital gains rate applied to stocks. Instead, they’re taxed at rates up to 28%, regardless of holding period. When you start from already inferior returns and layer on punitive tax treatment, the case for gold only weakens.
Inflation Protection – Gold’s tendency to spike during periods of uncertainty has helped fuel the illusion that it protects against inflation. The long-term data tells a different story. As the chart below shows, it took gold more than 25 years—until December 2005—to recover the nominal price it reached at its 1980 peak. Even then, by August 2007, gold still lagged the Consumer Price Index, meaning its purchasing power remained below where it stood a generation earlier. Over that same period, the Russell 3000 grew to over eight times the level of inflation. That’s because equities aren’t just stores of value—they’re engines of it. Businesses grow revenues and dynamically adapt to changing environments, allowing investors to participate in that growth. Gold, by contrast, simply mirrors sentiment: it moves when fear peaks, then stands still as the world moves forward.
Source: Dimensional Fund Advisors, U.S. Bureau of Labor Statistics. Data from 1/1/1979–9/30/2025.
Gold’s long road to recovery can mean decades of lost purchasing power.
The Real Safe Haven
It’s easy to see why gold feels comforting in uncertain times. It’s tangible, timeless, and has been trusted for centuries. Beneath that appeal lies a very human impulse—the fear of losing control when the world feels unstable. But as the evidence shows, owning gold to protect against loss often produces the opposite result. The real threat to long-term wealth isn’t systemic collapse; it’s the quiet erosion that happens when capital stops working.
At TCI, we believe the antidote to fear isn’t finding the next safe haven—it’s having a plan built on purpose and permanence. Real permanence doesn’t come from holding something that never changes; it comes from investing in a world that continually adapts, grows, and rewards patience. That’s what disciplined ownership of productive assets delivers. The glitter of gold fades, but the quiet compounding of good decisions endures.
Sources and Additional Reading:
- Buffett, Warren E. (2011). Letter to Shareholders. Berkshire Hathaway Inc. Retrieved from: https://www.berkshirehathaway.com/letters/2011ltr.pdf
- TCI Wealth Advisors. (2025). Should You Invest at All-Time Highs? Retrieved from: https://tciwealth.com/blog/should-you-invest-at-all-time-highs/
TCI Wealth Advisors, Inc. is an SEC registered investment advisor. This material is provided for informational purposes only and should not be construed as investment advice or a recommendation. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by TCI), will be profitable or equal any historical performance level(s). No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if TCI is engaged, or continues to be engaged, to provide investment advisory services.Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from TCI.
