Is gold a good investment during a stock market crash?

Whenever equities tumble, investors instinctively ask whether gold can cushion the blow. Historical records show that gold and the stock market move in opposite directions: the metal almost always rises when share prices fall, and it doubled between 2007 and 2011 while broad indices collapsed. Because physical gold maintains purchasing power during inflation or currency devaluation, it behaves as a liquid safe-haven asset, out-performing cash and money-market funds when recessions strike. Central banks reinforce this pattern; they enlarge their own reserves in periods of instability, and Federal Reserve easing that accompanies downturns further lifts the price. Consequently, gold tends to perform well during recessions, benefiting from the same economic distress that undermines equities.

What happens to gold when stock market crashes?

When equities collapse, gold took a hit as margin calls forced investors to sell off assets initially, yet within weeks the metal is used to ride out macroeconomic volatility and its recovery trajectory diverges sharply from other asset classes. Central banks increased their gold reserves to hedge against falling fiat currencies, while prolonged low-interest-rate conditions makes non-yielding assets like gold more attractive compared to bonds, rising gold prices signal a shift toward more cautious investment strategies and investment demand for gold spiked in 2007. Silver plummeted over 50% during the 2008 financial crisis, but investors gravitate towards gold and silver once forced liquidations end, gold prices surged from around $700 an ounce to nearly $1900 in 2011.

I see gold initially selling off away as shareholders raise cash to cover losses elsewhere. The whole scale of the economic damage became clear, anxiety and uncertainty dominated shareholder opinion, and capital required secure harbor. Precious metal is independent from the solvency of any organization or state, it constitutes a tangible store of value, and its price strengthens when trust in different securities collapses. Key financial institutions began on unprecedented monetary easing, assets fled from risk, and precious metal later entered a multi-year bull market.

Thomas Goldfreburg

Investor at Goldfreed

How does gold perform in a stock market crash?

When a stock market crash strikes, the relative moving of equity prices and the gold price is normally inverse: when one goes up, the other tends to go down. Historical episodes show the two are negatively correlated. During the dot-com sell-off, gold increased 12.4 % from March 27 2000 through October 9 2002. In the 2007-2009 crisis, gold doubled in value between 2007 and 2011, and the Producer Price Index for gold surged 101.1 % between 2008 and 2012. From September 2010 to September 2011, gold jumped 50.6 %, and the metal rose from around $700 an ounce to nearly $1900 in 2011. Even amid the broad 2025 risk-asset rally, gold has been surging to record highs, although it did fall $150 per ounce in mid-June 2025 from $3450 to $3300.

Because equity collapses coincide with flights to liquidity and quality, gold outperforms traditional assets like stocks and bonds. It has historically outperformed the cash sitting in your bank account or money market fund, and gold bullion has returned 26.20 % for recent seven-month periods. Recent global uncertainty pushed the gold price up more than 25 percent, reinforcing its reputation as a safe-haven asset and a diversifying asset that holds up versus commodities.

During a crash, gold behaves as non-correlated asset, not following a similar trajectory to shares. While my other assets dropped abruptly, my investments in gold ingot stayed steady. This stability provided a sense of safety, and it acted as a steady anchor in my financial portfolio. It served as a store of value, and its price appreciated as shareholder sentiment deteriorated. Thus, it helped me to shield part of my investments from systemic risk involving assets, and offered stability.

Thomas Goldfreburg

Investor at Goldfreed

Does gold crash with the stock market?

History answers with a clear no: gold has a negative correlation with stocks, so when equity indices tumble the precious metal usually holds or gains. Gold prices rose during the September 11 attacks, and again while stock markets trembled during the 2008 financial crisis, showing that gold and stocks are negatively correlated in shock periods. Even short-lived joint selling episodes are corrections within a gold bull market, not true crashes, because gold price drop was largely confined to the precious metals markets while other major markets were little moved.

The idea that gold and the stock market crash together is therefore unsupported, gold is uncorrelated to stocks over long horizons and gold price is uncorrelated to stocks and bonds, letting it act as a standalone buffer. When anxiety spikes, capital migrates to the metal, so gold goes up when stock market crashes, reinforcing the record that gold is negatively correlated to stocks and confirming its function as a portfolio stabiliser rather than a co-crasher.

Precious metal's behavior during a capital stock exchange collapse is an advantage. Its value does not go in marching with the S & P 500, and does not follow in marching with the NASDAQ. I think this bad correlation is a foundational rule of portfolio diversification. I have seen flight to refuge frequently happen, so it often works as a counterweight. Furthermore, I discovered historical function as a store of value. Besides, I do not anticipate gold to be resistant to all industry pressures, for a serious liquidity emergency can sometimes force all funds.

Thomas Goldfreburg

Investor at Goldfreed

Did the gold stock market crash?

Gold itself did not crash in 1929, Homestake gold stock climbed 474% from 1929 until January 1933, while the Dow collapsed. In the 2025 gold market crash, gold prices fell by 6% on October 21, the steepest single-day decline in over 12 years, dropping from an all-time high of $4,381.21 on Monday to $4,082.03 on Tuesday. Silver dropped roughly 9%, and platinum slumped 5% on the same day. Despite the plunge, gold stabilized just above $4,000 after the crash, and gold-mining shares gained 3.8% over the subsequent month, 8.1% over the next two months, and 13.8% over the subsequent quarter.

Is gold a good investment during a stock market crash?

Gold has demonstrated its value as a safe haven asset during the seven crisis periods since 2007; gold bullion has returned 26.20% on average for the seven periods, whereas the S&P 500 Total Return Index has returned -4.20% on average for the seven periods.

Gold is a solid investment for diversification. When equities fall, gold investment rises. During the recession of 1980-1982 the S&P 500 declined 27 percent. During the crash of 2000 to 2002 the S&P 500 dropped 49 percent. Between 2007 and 2011 gold doubled in value. Gold price rose due to inflows of gold-backed exchange-traded funds. Gold ETFs have helped push up the price. Advisors regard allocation to gold 5-10 percent. Yet gold is a liquid commodity, and its price falls sharply. Eamonn Prendergast said gold's sharp fall is a reminder that hype often comes before a hangover. Susannah Streeter said investors must not put all their eggs in a golden basket.

Precious metal can function as protection when common stocks decline. During the market crash, the value of my gold holdings stayed steady while share costs altered sharply. That steadiness offered a feel of safety which could not be provided by my other investments. Because gold showed part as a non-correlated advantage, I chose to allocate a part of my portfolio to it. A moderate portion to precious metal can be a wise plan of action, particularly during economic uncertainty, and serves as sensible strategic handling of total portfolio risk.

Thomas Goldfreburg

Investor at Goldfreed