How to Hedge Your Stock Portfolio Against a Crash
Every common way to protect a stock portfolio, from cash and bonds to puts, collars and trend rules: how each works, what it costs, and how it actually behaved in 2008, 2020 and 2022.
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Does Gold Hedge a Stock Market Crash?
Gold has a reputation as crisis insurance. The record is mixed: it fell much less than stocks in most selloffs, but it still fell, and in 2022 it barely helped. Here is what gold did in 2008, 2020, 2022 and 2025.
Key takeaways
- Sometimes, and only partly. Gold (GLD) fell much less than the S&P 500 in every recent crash, but it still dropped 29% inside the 2008 crisis and 12.5% in the COVID crash (Exent’s data, as of Sep 30, 2026).
- Gold’s link to stocks has been weak: a 0.14 correlation on monthly returns since mid‑2016, and an average −0.4% in the 16 months the S&P 500 fell more than 4%, against −6.7% for the index.
- In 2022 gold returned −0.8% while the S&P 500 lost 18.2%: steadier than stocks, but not a gain.
- Gold has its own swings. It returned 63.7% in 2025, then fell as much as 26.4% within the 12 months to Sep 30, 2026.
Does gold go up when stocks crash?
Not reliably. Gold held up far better than stocks in each of the last five big selloffs, but it did not rise through them. In the sharpest phase of a panic, gold has often been sold alongside everything else. The table shows the deepest peak‑to‑trough fall inside each crisis window.
| Crisis window | S&P 500 (SPY) deepest fall | Gold (GLD) deepest fall | Gold, calendar year |
|---|---|---|---|
| Financial crisis, Oct 2007–Mar 2009 | −56.5% | −29.4% | n/a (window spans two years) |
| Trade-war selloff, Oct–Dec 2018 | −20.2% | −2.7% | 2018: −1.9% (SPY −4.6%) |
| COVID crash, Feb–Mar 2020 | −34.1% | −12.5% | 2020: +24.8% (SPY +18.3%) |
| Inflation bear market, Jan–Oct 2022 | −25.4% | −21.0% | 2022: −0.8% (SPY −18.2%) |
| Tariff selloff, Feb–Apr 2025 | −19.0% | −5.0% | 2025: +63.7% (SPY +17.7%) |
Exent’s data as of Sep 30, 2026. Deepest fall = largest peak‑to‑trough decline inside the window, total return.
What did gold do in the 2008 crash?
Gold fell hard, then recovered before stocks did. Inside the October 2007 to March 2009 window, GLD’s deepest fall was 29.4%, about half the S&P 500’s 56.5%. A large part of that drop came in 2008, when investors sold whatever they could to raise cash.
The lesson for hedging is timing. Gold helped across the whole crisis, but an investor who needed the hedge at the worst moment of the credit panic found it down too. Gold miners did far worse: VanEck Gold Miners ETF (GDX) fell 71.0% in the same window, more than the index.
What happened to gold in the COVID crash?
It dipped, then held. Measured month‑end to month‑end, gold returned −0.9% over February and March 2020, while the S&P 500 lost 19.4%. Inside the window, GLD’s deepest fall was 12.5% during the March scramble for cash, against 34.1% for the index.
Gold then gained 24.8% for 2020 as a whole. For a portfolio, that is useful diversification, but it is not the same as a hedge that pays out on the day of the crash.
Why didn’t gold protect more in 2022?
Because 2022 was a rate shock, and gold pays no income. When interest rates and real yields rise quickly, holding a non‑yielding asset becomes less attractive. Gold returned −0.8% in 2022 and fell as much as 21.0% inside the January to October window.
It also disappointed as an inflation hedge in the short run. US consumer prices rose 7.0% in the 12 months to December 2021, according to the Bureau of Labor Statistics, while gold returned −4.1% that year. More in how to hedge against inflation.
How correlated is gold with the stock market?
Weakly, which is gold’s main value in a portfolio. A correlation near zero means gold’s monthly moves have had little to do with the stock market’s, in both directions (see correlation coefficient).
| Measure (Exent’s data, Sep 30, 2026) | Gold (GLD) | S&P 500 (SPY) |
|---|---|---|
| Correlation with SPY, monthly, since mid-2016 | 0.14 | 1.00 |
| Correlation with SPY, calm months only | 0.10 | 1.00 |
| Correlation with SPY, last 60 months | 0.17 | 1.00 |
| Average return in the 16 months SPY fell more than 4% | −0.4% | −6.7% |
| Annual return, 10 years to Sep 30, 2026 | 11.7% | 15.2% |
| Volatility, 10 years | 15.5% | 15.3% |
In the same data, adding a 5% gold position to an S&P 500 portfolio lowered its volatility over the last 60 months from 15.7% to 15.1%. Small, but it came without a premium.
What does holding gold as a hedge cost?
The cost is volatility and missing income. Gold is about as volatile as the S&P 500 on its own, it pays no dividend or interest, and it can fall for years. In the 12 months to Sep 30, 2026, after a 63.7% gain in 2025, GLD’s deepest fall was 26.4%, larger than the S&P 500’s 8.9% over the same period.
Fund costs, storage costs for physical metal, and tax rules also differ from stocks, so they are worth checking for your own situation. For position sizing, see how much gold to hold in a portfolio; the current data is on GLD’s page. Other approaches are compared in how to hedge a portfolio.
How investors think about gold in a hedge plan
- Treat gold as a diversifier with low average correlation, not as a crash payout. It has fallen during panics.
- Know which gold you own: miners and silver have behaved more like stocks in crashes than bullion has.
- Check what gold changes in your own stress test: replay your holdings, gold included, through 2008, 2020, 2022 and 2025.
- Pair it with other diversifiers for different shocks: T‑bills held steady in every window above, and long Treasuries rose in early 2020.
How to test gold in your own portfolio with Exent
- Upload a screenshot of your holdings (or a CSV, Excel, PDF or Google Sheet); no brokerage login.
- Exent replays the portfolio, gold included, through 2008, 2018, 2020, 2022 and 2025, and shows which correlation cluster gold sits in.
- Add or remove a gold position in the what‑if simulator to see the change in volatility and crash losses before you trade.
Frequently asked questions
Not steadily. In Exent’s data, GLD fell as much as 29.4% inside the October 2007 to March 2009 crisis window, about half the S&P 500’s 56.5% drop.
It has held up better than stocks in most recent selloffs, but it is volatile and has fallen in sharp panics. It is a diversifier rather than a guaranteed hedge.
In the sharpest part of the COVID selloff, investors sold many assets to raise cash. GLD fell as much as 12.5% inside the February to March window before recovering.
Not on average. In Exent’s data, gold’s monthly correlation with the S&P 500 was 0.14 since mid-2016, close to zero rather than negative.
Historically, no. In Exent’s data, the VanEck Gold Miners ETF fell 71.0% in the 2007–09 crisis window and 38.8% in the COVID crash, more than bullion.
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Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.