Gold vs. Sensex: Which Gave Better Returns in the Last 10 Years
- 28 Jul
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People who want to multiply their savings quickly and make their money work and grow faster usually look beyond fixed deposits or traditional bank saving schemes. Such individuals either choose to invest in gold or look at the stock exchange. Their sole purpose in doing so is to get much higher returns on their investments. Both of these options come with their own benefits and advantages.
Investing in Gold
Investing in gold is a win-win for many. If it appreciates, you get more monetary value in exchange. If it does not, you get more gold against the previous amount. This new and increased quantity of gold is bound to fetch you more returns someday. Lastly, gold has a lot of traditional and religious values attached to it in Indian households. Hence, investing in it is an added advantage.
Investing in Sensex
Then there is the stock market too. A seasoned, knowledgeable stock market investor knows when to buy and when to sell his stocks and shares. They can make decent profits when this is done at the right time. However, the stock market does come with its own risks. This clarified that most individuals would vouch for the stock market as a place that provides great long-term capital gains.
Having established both of these as investments with comparatively more attractive returns, you may ask which is the better option? To find out, we have analyzed the returns on investment on both gold and in the stock market.
We have assessed the profits made on each and have some conclusions. These conclusions and insights will help you make an informed choice about your future investments.
Also Read:- Why Gold Price is Increasing?
The Returns in the Last Decade
The last decade saw decent returns on both gold and the stock market. But gold has marginally outshone the latter in terms of performance related to an increase in value. The Bombay Stock Exchange (BSE) Sensex cumulatively appreciated by 130% in these last 10 years. Gold, however, increased in value to 134% during the same period.
When you consider the recent past, in the period ending in the year 2019, the stock exchange had rallied above the 40,000 mark. On the other hand, in the same time period, gold reached a high of INR 40,280 per 10 grams.
Hence, investing in gold has been just slightly more profitable during this time period. It is worth mentioning here that very recently (last year and currently), gold is on an all-time high of more than INR 50,000 per 10 grams.
All in all, people have invested in gold anytime before 2019 but after 2015 have been really lucky in terms of getting more monetary value against their investment.
The Monetary Value Against Investment
Now, let’s compare and analyze gold prices between 2010 and 2020. Here again, there has been a phenomenal rise in value, from 16,650 to around 39,000 by the end of the decade.
Coming to the stock exchange, this has largely moved upwards but not as quickly as gold.
This is not to say that there have never been negative returns on either option. Both have shown a decrease in value and price for brief periods of time. There were 2 years when Sensex gave negative returns (-25.1% in 2011 and -5% in 2015).
Among these, the year 2011 was when the Sensex crashed terribly. This resulted in huge losses for those who invested in it. 2015 was also not a good year for the Sensex but to a lesser extent.
Gold, on the other hand, gave negative returns from 2013 through 2015 – three years consecutively. But its value saw only a marginal decline relatively; -4.9%, -8.2%, and -6.2% in the respective years as above.
Of these, the year 2014 saw a more significant decline in the value of gold. However, these declines were more than offset by several sharp rises in value, the highest being in 2019 (INR 39,000).
Silver as a metal that begets great investment returns is another factor worth mentioning here. Considered a precious metal too, its returns were 72.7% during this decade. Its value has seen sharp fluctuations, though. Five out of the 10 years have seen a negative return on silver. So, it is not a very reliable source of high returns on investment.
The Big Jump in Gold Prices
Between 2011 and 2017, a nearly 6-year period, gold prices in India rarely fluctuated. The real progress was made in 2020 and 2021 after the identification of Covid-19 infections, after which there was some marginal progress.
Because gold is a safe haven asset, investors flocked to it, driving up global prices. Gold for 24 karats in India peaked at around Rs 54,000 levels, following which there was a slight decline.
What's more, this equivalent gold return was achieved with remarkably minimal volatility. For instance, the annualized standard deviation for gold was far lower (16.62) than Sensex's (24.35).
Due to the fact that gold's returns typically do not correlate with those of stocks, it is also a suitable asset class for diversification. For instance, during the 2008–2009 financial year, when the Sensex fell over 38 percent, gold produced a return of 24.58 percent.
Also Read:- Gold Breaking the Code
Also, when you have gold in hand, it is easier to cash it out when you are in a crunch or in dire need of cash. With organizations such as 24Karat, we can help you with selling gold for cash. We can assist you if you want to know how to sell gold and silver. So, with us, you can make the right decision on how to sell gold for cash.