Should You Invest in Gold or the S&P 500? It Depends.

Investors often view gold as a hedge against equity market volatility. While the broad-market State Street SPDR S&P 500 ETF Trust (NYSEMKT:SPY) represents the core of many portfolios by tracking the 500 largest U.S. companies, SPDR Gold Shares (NYSEMKT:GLD) offers a low-correlation alternative to equities, providing higher recent returns and lower volatility focuses solely on the price of gold bullion.

This comparison examines how these two heavyweights differ in cost, risk, and portfolio role.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The SPDR trust is the more affordable option, featuring an expense ratio of 0.09% versus 0.4% for GLD. Because the equity fund holds dividend-paying companies, it provides a 1% yield, whereas the gold fund provides no income payout.

Performance & risk comparison

What's inside

SPDR Gold Shares tracks the price of physical gold bullion by holding the asset in secure vaults. Because it is backed by a physical commodity, its portfolio concentrates 100% of its weight in physical gold bullion rather than shares of various companies. This fund, which was launched in 2004, does not provide a trailing-12-month dividend because it does not hold income-generating securities. It remains the first U.S.-listed ETF backed by a physical asset, offering investors a way to trade gold without the complexities of physical storage.

In contrast, the State Street SPDR S&P 500 ETF Trust holds a diversified basket of 504 holdings. Its largest positions include Nvidia at 8.5%, Apple at 6.9%, and Microsoft at 5%. The fund was launched in 1993 and has a trailing-12-month dividend of $7.38 per share. Its sector exposure is led by technology at 37%, financial services at 12%, and communication services at 11%.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

An S&P 500-tracking exchange-traded fund (ETF) is commonly recommended as an investment that can serve as the foundation of a portfolio. In fact, many investors, including, famously, Warren Buffett have argued that retail investors can build wealth by investing only in a low-cost S&P 500 index fund. At just 0.09%, SPY’s expense ratio is certainly lower than GLD’s 0.4%.

However, GLD has trounced the S&P 500 fund over the last year, and even outperformed over the last five years. The price of gold has been on a historic run recently, reaching an all-time high in early January 2026, and some analysts believe that despite geopolitical volatility, the metal could continue to mark new highs this year. Gold has demonstrated its unique ability to be both a store of value and a vehicle for high returns, and an index fund that tracks gold’s price, and that is backed by physical bullion, is a smart and convenient way to take advantage of both.

Investors looking for a relatively safe and simple way to grow their money would be well served with either fund, though the smartest play may be to allocate some investment dollars to both strategies for even more diversity.

Sarah Sidlow has positions in Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.