Why Gold Should Be a Part of Your Portfolio: A Deep Dive into Market Data
A fascinating study from DSP Bloomberg Data has revealed some shocking insights into gold and equity returns across emerging and developed markets. The findings challenge the belief that equity markets always deliver superior returns. In fact, gold has consistently outperformed equities in many countries over the last 25 years, making a strong case for its inclusion in every investor’s portfolio.
Gold vs. Equity Returns in Emerging Markets
Looking at emerging markets, the data shows that in Turkey, equity markets have returned 21%, while gold has delivered a staggering 29%—an 8% excess return in favor of gold. The trend is similar across other major markets:
Brazil: 8% equity vs. 14.6% gold (+6.4% gold outperformance)
Poland: 4.9% additional returns in gold
South Korea: 4.9% additional returns in gold
China: 5.6% equity vs. 8.8% gold (+3.2% gold outperformance)
Surprisingly, India is the only country where equity has slightly outperformed gold, with equities returning 13.4% and gold delivering 12.5% over the same period. Even though equities have done well in India, gold has held its ground and remains a strong asset for investors.
Developed Markets: A Clear Case for Gold
The trend of gold outperforming equities is not just limited to emerging markets. Even in major developed economies, gold has delivered better returns:
Japan: 4.6% equity vs. 11.3% gold
UK: 4.3% equity vs. 10.6% gold
France: 4.2% equity vs. 9.3% gold
Even in the United States, gold has outperformed equities by 1.6%, proving that gold is a valuable hedge against uncertainty.
The Role of Gold in Portfolio Stability
Many investors believe that equities and gold are competing asset classes, but that’s not the case. Gold serves as a hedge against stock market volatility. Every time equity markets experience a downturn, gold tends to rise, helping balance overall portfolio risk. In times of uncertainty—such as economic crises, inflation spikes, or currency depreciation—gold has proven to be a safe haven.
Additionally, another DSP Bloomberg study shows that only 43% of Indian stocks have been able to beat gold over the last 24 years. In the US, this number is even lower at 11%, meaning 89% of US stocks have failed to outperform gold. This highlights why having a gold allocation is necessary to protect and grow wealth over time.
How Much Gold Should You Hold?
If you have 0% gold, start with 5%
If you already have 5%, increase it to 10%
If you have 10%, consider moving to 20%
Gold is a global asset, and investing in it is one of the simplest ways to diversify internationally. Unlike equities, where country-specific risks exist, gold provides exposure to global markets without additional complexity.
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