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Gold or Stocks? It Doesn't Matter!

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If you had a $100 bill in 1990, would you have put it into stocks or gold?

You might have agonized over the decision back then. Buying gold protects you from inflation, but buying stocks entitles you to a cut of future profits. Gold is shiny, but lots of stocks have cool names. So which one would you have chosen?

Here's the thing: It wouldn't have mattered.

On the first day of June in 1990, gold futures and the S&P 500 were each trading at about 360. And on April 3, 2013, gold and stocks traded at the same nominal level again—but by then, that level was about 1,550.



That means that no matter which one you purchased, you enjoyed a 430 percent return over 23 years. Of course, you would have earned even more with stocks, because that percentage gain excludes dividends.

That sounds pretty good—and it is. Both have appreciated in value much more extravagantly than your average household goods.

Price Appreciation Since June 1990

White Bread...208%
Unleaded Regular Gasoline...205%
Ground Coffee...193%
Whole Chicken...159%
Kilowatt Hour of Electricity...147%

Source: Bureau of Labor Statistics

So what does this tell us—besides that those chickens in your freezer might not be a great investment?

It shows gold and stock prices have both outpaced inflation, at least as far as the Bureau of Labor Statistics calculates it. So if you're buying gold on the theory that it will have to rise to keep pace with inflation, keep in mind that it's already risen far faster than the value of the dollar has fallen ... and stocks have done the same thing.

—By CNBC's Alex Rosenberg

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