Gold outshines equities in India, ROI doubles in three years
NEW DELHI(Commodity Online): Gold has outshone all other investment avenues even when the global economy has been through tumultuous times and the equity market has performed the worst, according to Associated Chamber of Commerce and Industry of India (ASSOCHAM).
In terms of return to the investors, gold has witnessed a golden era. The share market has given negative returns on investment in the last three years. Not only in India but around the world yellow metal is becoming the first choice for investors.
“Whether it is local investor or global investors, they have all gone by the conventional wisdom of gold being the safest bet when there is uncertainty about all other investment avenues,” says ASSOCHAM Secretary General D S Rawat.
It will be wrong to blame Indian passions for gold, as if it is only this passion which led to a big yellow metal import of USD 60 billion in fiscal 2011-12. There are global risk aversion factors at play, he added.
According to Assocham reports, Standard gold was selling at around Rs 15,000-15,500 per ten grams in India just about three years ago. Today it is well above Rs 32,000 per ten grams- giving more than double the returns on investment in three years.
The worst performer has been the equity market The high point of the benchmark Sensex in 2009-10 was 17,711. Today, it is trading in the same range. So, the investment in equity has not even given a simple bank interest rate equivalent and are negative in actual yield.
On a five-year horizon, the equity investors have lost significantly. The high point of Sensex in fiscal 2007-08 was 20873 whereas it is range-bound between 17,000-18,000 now. But gold has given even more handsome results to the investors. The precious metal was selling around Rs 9,500 per ten grams five years ago in September, 2007. So, the returns on this time horizon are about 350 per cent.
"Net-net, gold has absolutely outdone other asset classes and it is likely to remain an attractive bet as long as uncertainty over the global economy stays" says Mr. Rawat.