Gold Could Beat Stocks By 2030 Due To Geopolitical Risk, Stagflation

Forbes

01-04-2025

During times of economic uncertainty and high inflation, gold tends to outperform stocks. When economic growth is strong and predictable and inflation declines, stocks outperform gold.
Due to the near certainty of high uncertainty under the current administration and the odds of high U.S. tariffs and counter-tariffs driving up inflation, we are entering a golden era for buying gold.
Historically, stocks outperform other asset classes. For example, over the last 70 years, The Dow Jones Industrial Average rose 13,900% – considerably more than the 7,800% inflation-adjusted rise in the price per ounce of gold.
However, for the next five years, due to geopolitical risks, inflation, and/or central bank buying, gold could outperform stocks – rising to about $5,000 in 2030. If instead the next five years are a period of stable, low-inflation growth, earnings and dividends could send stocks up more than gold.
Read on for a comparison of times when gold outperformed stocks and vice versa, why the difference, and what you should do about it.
In times of high fear, people buy gold. This brings back memories of my sophomore year in high school when I asked my history teacher why people bought gold – which struck me as a shiny but fundamentally useless store of economic value. The teacher simply stared at me as if I was an unutterable fool.
The answer to my question emerges from this analysis of the time periods over the last 70 years when gold outperformed the Dow:
When economic growth is strong and inflation is low, stocks tend to outperform gold.
What do the next five years bring for gold and stocks? Economists and portfolio managers – of which MacroPolicy Perspectives polled 115, expect a 'stagflation supply shock,' according to the New York Times.
Those experts expected a 0.6 percentage point reduction in growth, a half point rise in the unemployment rate – to 4.6% over the next year, and a 0.5 percentage point rise in inflation to 3%, noted the Times.
Such stagflation looks like the period from 1971 to 1980 – when gold outperformed stocks by 2,325%. It will certainly put the Fed into a difficult position of whether to raise interest rates to tamp down inflation or to keep them where they are now – or lower them – to keep unemployment from rising more.
'Internally they have to sit up and take notice of that even though in public they're trying to downplay it,' retired president of the Cleveland Fed Loretta Mester told the Times. 'You look at those measures and you have to say, 'Wow, these may not be as well anchored as we'd like.''