August 2025 | Gold vs. Equities & Good Books
As I write, the Standard & Poor’s 500 is very near its all-time closing high of 6,389.77. For those of you that remained faithful through the media induced pandemonium earlier this year, well done. A quick piece below.
GOLD VS. EQUITIES
Occasionally in meetings or in conversation, the age-old question of investing in gold arises. I understand the logic trail, especially when the overall market is posed with the newest “this time it’s different” disaster. In these moments, gold seems safer than ever, and occasionally (like this April), gold has its day in the sun. Journalists were singing its praises as the precious metal achieved its new all-time high.
However, I owe it to each of you as an advisor to tell you the whole story, not simply leave you subject to the newest media craze or investment fad. Yes, gold did reach an all-time high in April. And yes, as one of our clients shared with me, gold has outperformed the S&P 500 year-to-date. So why should we own stocks at all and not just gold? The chart below outlines the change in three categories since January 1980: the return of gold, the growth of inflation, and the return of the S&P 500. What follows is the whole story.
Notes:
The price of gold in the table is from 08/05/2025.
The CPI number is from June. CPI stands for Consumer Price Index – this number tracks inflation based on consumer spending.
The price of the S&P 500 is from 08/05/2025.
It’s worth mentioning the price for the S&P 500 does not include the 44+ years of dividends. On the flip side (as you might guess), gold produces no dividends, interest, or anything else.
The numbers speak for themselves. Since January 1980, the price of gold has increased by 4.2 times. The price of large cap American companies, as represented by the S&P 500, has increased by 54.8 times. Gold has minutely outplaced inflation. The S&P 500 has, as they say, “left it in the dust.”
CLIENT’S CORNER AND BOOK RECOMMENDATIONS
Client’s Corner will not be released this month, but will return in September. In place of Client’s Corner, Nick Murray shared a list of his “Essential Books,” in his newsletter to advisors. In the same spirit, I’ve included two of my favorite financial books below – should any of you feel inclined to read the writings of authors much more articulate than myself!
Simple Wealth, Inevitable Wealth by Nick Murray
Written for the layman, I have yet to find a more clear, concise, and compelling book on the power of common stocks in the wealth-building process. In many ways, we have aimed to build Perennial Wealth Advisors in line with the philosophies outlined in this book. Though explicitly written for non-professionals, I have found the book to be foundational in my work as an advisor. I highly recommend you give it a read.
The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel
There are plenty of books outlining the path to wealth; wealth (though often vaguely) defined as a large net worth, in a purely monetary sense. In contrast, this book does a great job describing the importance in how we think about money, as well as a redefining the role money plays in our lives, especially with regard to happiness. I found it to be rich in wisdom and a helpful guide as I move forward with my own financial life.
FRIENDLY REMINDERS
One Big Beautiful Bill Act –Signed into law by President Trump on July 4th, 2025, this legislation makes permanent the seven tax brackets created by the TCJA. These permanent brackets are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Also, the estate tax exclusion per individual was moved up to $15 million.
Life Insurance – In the event that you have active life insurance policies, please reach out to us for a review. We are doing our best to cover these in meetings, but want to make sure we do not have any unforeseen lapses in coverage. As a newly independent firm, we do not have the same type of viewing/payment capabilities as before. Please reach out with any questions.
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We welcome your comments and questions. Thank you, as always, for being our clients. It is a privilege to serve you.
On behalf of your PWA team,
Brock Hedgecoke, CFP®
Financial Advisor