Gold vs. Stocks, Which Pays Off More and How to Combine Them in a Portfolio?

When we talk about an investment approach in the area of gold stocks, investors often tend to compare too much and look for one clear winner. They want to find the best option and then invest their money, or a large part of it, into that choice.

However, it is important to remember that both assets, gold and stocks, have different goals. While stocks are mainly meant to generate long-term returns and build your wealth, gold is primarily meant to preserve value against the effects of inflation.

Looking at the current year 2026, gold is currently at record levels, while stocks are experiencing significant volatility due to developments in the global macroeconomy. In this case, asking what is better is pointless. It is more about what characteristics they have and how you can use them to your advantage.

In this article, you will not find one universal solution. But we will show you real historical data, tax impacts in the Czech Republic, and why diversification is the best path to protecting and growing your wealth.

Gold vs. Stocks Returns, Historical Comparison 

Everyone naturally wants to know how much an investment will actually earn. If we want relevant data, we need to look at a horizon of 10 years, and ideally 20 years. These numbers give us a fairly clear picture of how gold has historically performed compared with the driver of the US market, the S&P 500 index, and with our domestic Czech stock market.

In the long term, one unwritten rule applies: stocks simply beat gold in total return. And it makes sense. When you buy a share in a company, you are buying a business. People in those companies go to work every day, develop new products, sell them and generate profit.

The American S&P 500 index has historically delivered an average return somewhere between 9 and 10% per year, if we also include reinvested dividends. The Czech stock market is a little different.

The price of the stocks themselves may not grow at such a rocket-like pace as in the US, but Czech companies, in return, pay truly generous dividends. In the long term, the Czech stock exchange ranks among those with the highest dividend yields in Europe.

Gold, on the other hand, does absolutely nothing. It sits in a vault, creates no profit, produces nothing and definitely will not send any dividend to your account. Even so, over the past 20 years it has comfortably managed to beat inflation and add around 7 to 8% per year on average.

Sometimes, however, anomalies appear, and they can be significant. A typical example was 2024. That year was record-breaking for gold:

• Gold gained +27% in that single year.
• The technology-heavy S&P 500 closed the year with an excellent +23%. 

It was a truly exceptional year, driven by massive purchases by central banks around the world. So, when it comes to a long horizon, stocks outperform gold in the vast majority of cases. They are simply a productive asset. But for this higher return, you pay with your own peace of mind, you must tolerate significantly higher volatility and price drawdowns. 

Volatility, Which Asset Is More Stable? 

Volatility, simply put, shows how large the price swings of a given asset are over time. The higher the volatility, the more dynamic the price movement and the greater the investment risk connected with it.

Historical data clearly shows that gold is, in terms of volatility, a provably more stable instrument than stocks. Its main strength becomes visible especially during periods of market tension and economic uncertainty.

While stock markets experience deep declines during crises, gold tends to fall much less or even shows strong growth, fulfilling the role of a safe haven in a portfolio.

The following table clearly summarizes the average volatility of both assets and their reaction to the most important market shocks in recent history:

Liquidity, How Quickly Can You Sell? 

The ability to quickly and without major losses turn an investment back into cash is absolutely crucial. And here, there are quite clear differences between stocks and gold in the process itself: 

• Stocks: Liquidity is practically immediate. If you hold shares of a large, commonly traded company on the stock exchange, you can sell them through your broker’s mobile app within a few seconds. The trade is executed right away, and you can then transfer your money back to your regular bank account within a few days.
• Physical gold: Here you are holding a real, tangible metal in your hand. Logically, you cannot sell it with one click of a mouse. Selling physical metal within 1–3 days through a certified dealer is completely common today. You just need to account for the fact that the selling and buyback price differ slightly, and that you must physically deliver the bar to the dealer.
• ETF gold: For many people who do not want to deal with home safes or safety deposit boxes, there is an alternative, exchange-traded funds linked to the price of gold. ETF gold offers a huge advantage in that liquidity is exactly the same as with stocks. But you lose the most important feature. You do not actually own a piece of metal that is independent of the banking system.

Tax Aspects in the Czech Republic, Gold vs. Stocks 

Taxes are often the deciding factor when making a decision. You may have a great gross return, but if the state takes half of it, there is not much to celebrate. The Czech Republic, however, has fairly favorable rules for investors, although they differ slightly. 

• Stocks: If you sell stocks at a profit, in the Czech Republic this falls under income tax with a fixed rate of 15%. But the Czech tax system offers an exemption from this tax. If you hold the purchased stocks for more than 3 years, the so-called time test, and only then sell them, you do not have to pay the state a single crown from the achieved profit. You are also exempt if the volume of your securities sales in one calendar year does not exceed the limit of 100,000 CZK.
• Physical gold: And here comes the best part. Physical investment gold is not subject to any VAT when purchased. And what is absolutely crucial for us in the Czech Republic, income from its sale is fully exempt from income tax for private non-business individuals. You simply do not tax profit from gold. You do not have to watch any 3-year period, you do not have to calculate 100,000 CZK limits. The entire profit stays cleanly and simply with you.
• ETF gold: Be careful, if instead of a bar you buy an ETF linked to the price of gold on the stock exchange, the authorities treat it as a classic security, a stock. No tax advantages like those for physical metal apply here. It follows exactly the same tax regime as stocks, meaning you either apply the 3-year time test, the 100,000 CZK limit, or pay 15%.

Gold and Stocks in a Portfolio, How to Combine Them? 

If we summarize everything, searching for an absolute winner in the imaginary gold stocks battle is actually a bit of a waste of time. The question is not what is better, but rather how to connect both assets.

The vast majority of major financial analysts recommend roughly the following allocation: gold should ideally make up 5–15% of a well-diversified portfolio. You may think that is too little, but trust us, even a 10% share can work wonders for your finances during times of crisis.

This works through the principle of negative correlation. It sounds technical, but in practice it means that when stocks fall sharply, gold tends to stay flat or even rise. These two components simply balance each other out. By combining them, you significantly reduce overall investment risk and avoid panicking during every market decline.

Let’s look at a practical example of a more conservative growth portfolio:

• 80% stocks: Ideally diversified globally through ETFs. This is your engine that beats inflation and builds wealth over the long term.
• 10% gold: Physical metal acting as your financial anchor, stabilizing your portfolio and protecting you from major volatility.
• 10% bonds or cash: A cushion for unexpected expenses or situations where markets drop significantly and buying assets at a discount becomes attractive.

When Is Gold Better and When Are Stocks Better? 

It is also important to understand what kind of environment benefits each instrument. Every asset reacts differently to events happening around the world. 

Comparison table for a quick overview 

Gold performs well when: 

• High inflation reduces purchasing power.
• Geopolitical uncertainty rises, conflicts emerge, or markets become turbulent.
• The US dollar weakens. Gold is traded in dollars, so the cheaper the dollar becomes, the more gold you can buy for it.

Stocks perform well when: 

• The economy experiences strong growth and companies perform well.
• Inflation remains low and predictable.
• Interest rates are falling or remain low. When money from banks is cheap, companies can invest more easily into growth.

Both instruments have a clear and justified place. It depends entirely on your investment horizon and how much risk you are willing to tolerate. 

Frequently Asked Questions 

Want to diversify your portfolio with physical gold? We offer investment bars starting from 1 g with immediate availability and guaranteed 999.9 purity. Combine stocks with gold and reduce the overall risk of your portfolio.