This is a chart of the price of gold and the S&P 500 since 1994. Until 2008, the price of the S&P was consistently higher than gold. In 2008-09, stocks crashed below the price of gold, and the two prices rose together from there until 2010-11 when they decoupled as gold outpaced stocks. Since late 2011, gold has declined and stocks have continued rising. Last week, stocks caught up to gold in the high 1500s, though at Friday's close, gold had regained a slight lead.
The point here is that the two asset classes have similar long-term returns, though wildly different short-term returns. That makes them excellent diversifiers for each other. Gold's price return over the period is 302%, or 7.6% annualized. The S&P's price return is 247%, or 6.8% annualized. Add in the S&P's dividend yield which has averaged around 2%, and stocks have outperformed gold. But gold has equity-like returns with significant risk diversification. And the real winner is anyone who dollar-cost averaged into both asset classes, buying more gold when gold was low and stocks were high and more stocks when stocks were low and gold was high.
Gold and stocks are both essential components of any rational long-term portfolio strategy.