Does investing in gold still make sense? Find out

Gold has outperformed equities globally over the past 24 years, but India remains an exception, according to data from DSP and Bloomberg. While gold has historically been a safe-haven asset, Indian equities have delivered better long-term returns.

Data reveals that 43% of Indian stocks have outperformed gold, compared to just 29% in China and 11% in the U.S. India’s equity market has delivered a 13.4% CAGR over 24 years, surpassing gold’s 12.5% CAGR. In contrast, developed markets like Japan, the UK, and the U.S. have seen gold outperform equities by 6-7 percentage points.

Despite equities’ dominance in India, gold has played a crucial role in hedging against market crashes. Historically, gold has gained 10-30% during every major Indian equity downturn of 20% or more. Furthermore, gold is 50% less volatile than Indian equities, offering better downside risk-adjusted returns.

Also Read: Why long-term SIPs in mid and small caps still make sense?

Globally, gold remains a strong alternative to equities, particularly in volatile markets. However, for Indian investors, equities have been the better long-term bet, although gold still holds value as a diversification tool.

Commenting on this, Adhil Shetty, CEO of Bankbazaar.com, said, “Gold has long been considered a safe-haven asset, but for Indian investors, equities have historically delivered superior returns. However, gold remains crucial for portfolio diversification and risk management, especially during market downturns. Gold is a hedge against volatility and inflation, but Indian equities have created more wealth over the long term. Investors should view gold as a protective asset rather than a primary growth driver.”

For investors, thus, a balanced mix of equities and gold can maximise returns while reducing risk, ensuring long-term financial stability.