Gold During Stock Market MeltDowns

How does gold bullion perform when the US stock market crashes or turns down violently?

What is perhaps the best non-correlated store of value for stock investors who should consider selling and converting some nominal profit gain protection?

We and many of our customers buying bullion of late believe too, that answer is gold bullion. Followed too by short historic durations when silver even outperforms gold (e.g. 1979, 2010).

Other experts agree and are calling out record gold price forecasts and silver price forecasts to be threatening new nominal silver price highs within a matter of a few short years/months.

The following graphic by Sprott shows how gold spot prices have performed when US stocks are losing large swaths of value.


Gold During Stock Market Crashes? Modern Full Fiat & Derivative Era

Gold During Stock Market Crashes Meltdowns SD Bullion


Take a good long look at the stock market meltdowns of 2001 and 2007 and how gold performed as a safe haven for investors.

By the way, the 2007 gold price performance upside data ^ that only takes into account the derivative driven gold spot price data.

You need to scroll down this 2008 gold price page to see that when many people think their bank and financial markets may going broke, gold bullion coins got +25% premium bids over the then spot (see section: 2008 Gold Bullion Shortage). 

If our modern financial past is any prelude to what we might see ahead, it behooves bullion buyers to study and know about how gold (and often too silver) have gained during or following recessions and nominal downturns in the US stock market.

What percentage of the nation's GDP was the US stock market valued at before rolling over and losing tremendous value to gold?

Gold vs Stock Crash SD Bullion


We must both look back and contemplate ahead, to more easily identify the secular trends at play.

Often helpful is to measure the broadest US stock market index in gold bullion value.

The following chart measures a very broad stock index Wilshire 5000 vs gold over the full fiat currency era.

The Wilshire 5000 is a much broader more accurate general gauge of US stock market performance compared to the cherry-picked thirty or so companies in and out of the misleading DJIA stock index

Stocks vs Gold Full Fiat Currency Era

Stocks vs Gold Full Fiat Currency Era SD Bullion


Of course, anyone can look backward and cherrypick trends after major secular turning points. But the Blue vs Gold lines in the FRED chart above tell the general story about when US stocks were outperforming gold bullion (blue line) and vice versa (yellow line).

Just a cursory glance above shows how effective the Fed has been at both juicing and leveraging up financial markets after 2008, in order to give the appearance of increased economic prosperity.

This historic dead cat bounce measured in gold has been much more persistent than the 1975-1977 version, this current record price stock ride may have already turned the corner measure in gold. 

The record nominal stock market high President Trump brags about on Twitter, measured by gold has likely already peaked and is now in the process of rolling over in search of near 1980 levels.

If you have nominal gains sitting in the US stock market at the moment, you might consider taking some profits and rolling them into gold bullion before the line in the chart above becomes obvious and turns yellow yet again. Consider too how backtested data throughout nearly the entire full fiat currency era (1986-2016) shows that owning a prudent allocation to gold bullion makes common sense. Up to 25% gold bullion when only consider US stocks and US debt payment promises (i.e. bonds, t-bills, treasuries). 

Having now looked back at this modern fully fiat currency era’s stock market crashes vs gold performances, a few more final outlooking questions to consider. Consider if these trends will bolster gold's time to shine in the 2020s.

Considering the Trends, Do You Have Enough Gold Bullion?

To plan for the best potential upside versus the lowest downside potential, one must consider the past, current financial Fed interventions ongoing, and even trend spotting and perhaps speculating on what future financial market interventions may look like.

What are the potential actions to come?

For who and which asset classes might they benefit most?

Who will be the wealth transfer winners, who the losers are as a result?

For example, will the private Federal Reserve central bank of the USA double its balance sheet to prop up the stock market and further bailout the Baby Boomer Retirement Crisis in the 2020s and into the 2030s?

Never mind how extremely risky it is late in life, to have the bulk of one’s retirement savings denominated all in the same fiat currency and further concentrated/allocated into record priced stocks which can and often do get cut in half during crashes. Longer-term stocks end worthless. Pretty much why you don't hear retail stocks ever mentioned in family dynasty financial allocations (1/3rd gold bullion, 1/3rd arable land, 1/3rd finest art). Perhaps now is best to own what lasts.

Will the financial powers that be bailout underfunded western pensions in various forms and fashions to come? Will some pensions fold or their promises be marked down considerably?

How much will western governments further devalue their respective fiat currencies, all while data lying and propagandizing further that somehow still, “We don’t have enough price inflation?”

What will an MMT / FedCoin programs look like? Virtually no big money is prepared for inflationary outcomes to come, over $15 trillion currently parked in negative-yielding debt alludes to that fact.

What will such supposed “free money” handouts do to our economy?

How crazy will fiscal stimulus (spending on things like infrastructure) get now that we have reached the twilight zone of elite enriching fiat monetary policy?

We don't need to await the answers, it is rather predictable actually.

We and many in our customer base have already gone for the gold bullion. Get yours before the $2k oz gold 'wall of worry' gets breached into nonsense media coverage, and this largest gold mania gets going in earnest.


To learn more about best practices when either selling silver bullion or buying silver bullion, be sure to pick up our free SD Bullion Guide by email before you go.


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James Anderson
James Anderson
Content Director

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold