The Rise of Gold Over 25 Years
Over the last 25 years, gold has quietly become one of the best-performing assets in the world. Data from DSP Netra (see the image below) highlights that since the start of the 21st century, gold has given higher returns than equities across most developed markets.
Countries like Japan, the UK, France, Canada, the US, and Australia have all seen gold outperform their local stock markets. When measured in local currencies, gold’s excess return over equities has been clearly positive.
Gold Outperforms Emerging Market Equities Too
The story is no different for emerging markets. From Turkey and Argentina to India, Malaysia, and China, gold has delivered better returns than equity markets in local currency terms. This means no major market has been able to beat gold’s performance over the last two and a half decades. While some may argue that timing plays a role, the consistency of gold’s strength across regions and timeframes tells its own story.
The Power of Gold as a Portfolio Companion
Even though gold and equities are different types of assets, they complement each other perfectly. When equity markets struggle, gold often performs well, acting as a natural balance in a portfolio. This combination helps investors stay stable through market ups and downs. Gold’s role is not to compete with equities but to support them, making it a key asset for long-term stability.
India’s Gold Advantage
Looking specifically at India, gold’s performance stands out even more. Over the last 20 years, gold has given an average return of about 14%. If we compare this to the NSE 500 index, only 35% of the stocks in that index have managed to outperform gold. That means nearly two-thirds of Indian stocks could not match gold’s return. The same pattern holds true in other global indices like the S&P 500 and FTSE 100, though to a lesser extent.
Gold’s Image is Changing
For a long time, many investors believed gold was a “useless asset” that generated no income and had no value beyond its shine. This idea was pushed by many traditional value investors. However, recent data clearly proves that gold has not only preserved wealth but also grown it. It has protected countless portfolios during uncertain times. The belief that gold is only for show no longer holds true in today’s world.
