For decades, investors in India have viewed equities as the most reliable engine of wealth creation, while gold was seen as a defensive asset. Yet, historical data shows that gold has not only matched equities in several timeframes but has also outperformed them across short-, medium-, and even long-term periods. This is not an opinion but a fact borne out by numbers. The figures present an eye-opener for anyone who assumed equity always leads over time.
Gold’s CAGR versus Equity
According to comparative data, gold has delivered a CAGR of 15.02 per cent since 2006, compared to the Nifty’s 12.15 per cent. Even when split across multiple timeframes, the difference remains striking. Over the last five years, gold’s CAGR stood at 22.84 per cent while Nifty clocked 15.53 per cent. In the ten-year window, gold returned 15.08 per cent compared to Nifty’s 11.71 per cent, and over fifteen years, gold registered 13.33 per cent, while Nifty recorded 11.17 per cent. The pattern is clear, gold has consistently produced higher compounded returns across time horizons.
Short-Term Outperformance
Recent Indian market performance makes this contrast sharper. In FY25, gold rose by over 33 per cent in rupee terms, making it the best-performing asset of the year. During the same period, Nifty’s returns were far lower. Reports also show that from a Diwali-to-Diwali perspective, gold has beaten equities for four consecutive years. In one-year periods as well, gold’s returns have touched over 50 per cent, while indices like Sensex and Nifty have delivered more muted or even negative performances. These facts underline gold’s ability to shine particularly during volatile and uncertain phases.
Medium-Term Outperformance
Looking beyond one-year windows, the trend continues. Data shows that over ten years, gold’s CAGR in India is around 12 per cent to 15 per cent, higher than Sensex’s 11 per cent. One analysis suggests that an investment of Rs 1 lakh made in gold in the year 2000 would be worth approximately Rs 22 lakh today, while the same in Nifty would be worth about Rs 16 lakh. These are long-term absolute numbers, not influenced by short cycles, and they demonstrate that gold has compounded capital more aggressively in rupee terms than equities during the same period.
Global Context
This is not only an Indian phenomenon. Internationally, gold has also proven its worth as a competitive asset class. During crises such as the 2008 global financial meltdown, gold surged while stock markets plunged. Central banks worldwide continue to accumulate gold reserves, strengthening its long-term positioning. Supply limitations and consistent institutional demand add further support to its price trajectory.
Reasons Behind the Outperformance
Several factors explain why gold can outperform equities. First, its role as a safe-haven asset ensures that during economic or market turbulence, investors rush to gold, pushing up its price. Second, gold acts as a hedge against inflation and currency depreciation. In India, the rupee’s steady depreciation against the US dollar has magnified gold’s domestic returns. Third, gold benefits from structural demand, both at a consumer level in India and globally through central bank accumulation.
When Equities Lead
It is also important to highlight that equities tend to perform strongly in long bull phases, where corporate earnings and growth drive stock valuations. Equities also generate dividends, which gold does not. Over extremely long spans in developed markets, equities often edge past gold due to this compounding effect. However, in India’s case, data from 2000 onwards shows gold holding a strong lead in compounded returns.
Conclusion
The numbers reveal a counterintuitive reality, gold has not only held its ground but has actually beaten equities in multiple time horizons in India. From five years to fifteen years, and even since 2006, gold’s CAGR has outperformed the Nifty. While market narratives often portray equities as the superior long-term wealth creator, the hard data shows that gold has, in fact, been the more rewarding investment in many cycles. The lesson is not about preferences but about acknowledging facts.
Disclaimer: This article is for informational purposes only. It presents factual data comparing the historical performance of gold and equities. It is not investment advice. The author is not a SEBI registered advisor. Readers should not construe this as a recommendation to buy or sell any financial asset. Investors are advised to do their own research or consult a registered financial advisor before making any investment decisions. |
