It has been more than 10 years after a major financial crisis, the 2008 housing bubble. What can I do to protect my investment portfolio if I encounter a big market downturn? Is gold a good option to add in my portfolio?
After doing some research, I put together some data and we can see the price correlation of gold with the stock market.
I use the S&P 500 index data as proxy for stock market, because there are ETFs that track the S&P 500 index which are commonly invested by many investors.
2020 Covid-19 Crisis
S&P 500 Index plunged from 3380.16 (February 21, 2020) to 2304.92(March
20, 2020).
| Asset | Price(High) | Price(Low) | Percent Changed |
| S&P 500 Index | 3380.16 | 2304.92 | -31.8% |
| Gold | $1707.67/oz | $1689.7/oz | -1.1% |
2008 Housing Bubble
S&P 500 Index plunged from 1561.8(October 12, 2007) to 683.38 (March
6, 2009).
| Asset | Price(High) | Price(Low) | Percent Changed |
| S&P 500 Index | 1561.8 | 683.38 | -56.2% |
| Gold | $980.98 /oz | $1146.43/oz | 16.9% |
2000 Recession
S&P 500 Index plunged from 1509.98 (July 14, 2000) to 800.58
(October 4, 2002).
| Asset | Price(High) | Price(Low) | Percent Changed |
| S&P 500 Index | 1509.98 | 800.58 | -47.0% |
| Gold | $442.66/oz | $474.54/oz | 7.2% |
1968 Recession
S&P 500 Index plunged from 831.74(November, 1968) to 298.46 (July,
1982).
| Asset | Price(High) | Price(Low) | Percent Changed |
| S&P 500 Index | 831.74 | 298.46 | -64.1% |
| Gold | $310.27/oz | $881.73/oz | 184.2% |
The Great Depression
S&P 500 Index plunged from 473.66(September, 1929) to 88.50 (Jun,
1932).
| Asset | Price(High) | Price(Low) | Percent Changed |
| S&P 500 Index | 473.66 | 88.5 | -81.3% |
| Gold | $325.41/oz | $415.14/oz | 27.6% |
Conclusion
Gold prices has low correlation with the S&P 500 index during the Great
Depression, 1968 recession, 2000 recession , 2008 housing bubble crisis and
2020 Covid-19 crisis.
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