The equity markets have been flat recently, and gold has seen an up move. There are a bunch of conversations and articles around this now. Here is a comparison of Gold & Nifty since last year.
Aren’t equities better in the longer period?
Let’s look at the numbers from Jan 2000 onwards.
If you invested Rs. 100 in Nifty in Jan 2000, you would have Rs. 1173 at the end of 2022. For the same period, if you bought gold, your Rs. 100 investment would be worth Rs. 1213.
But you also get dividends with stocks. Will gold still be a better investment?
Fair, let’s assume you receive an average dividend of 1% p.a. If you invest in gold using Sovereign Gold Bonds (SGBs), the RBI pays you an interest of 2.5% p.a. on your investment. This is on top of the market returns on gold.
If you invest in equities through a mutual fund or a portfolio manager, you will also be charged a management fee. Suppose your mutual fund paid a return similar to Nifty. After a 1% p.a. expense ratio, today’s value of your Rs.100 investment made in Jan 2000 reduces from Rs. 1213 to Rs. 960.
Here is a comparison of Gold & Nifty since Jan 2000.
Gold is outperforming Nifty now and has done better in the last 23 years as well. Why should I invest in stocks at all?
The narrative seems to greatly favour gold if you look at the last year and the data since Jan 2000. However, equities were relatively expensive before the markets crashed in 2001. Picking a slightly different starting point can poke holes in the “gold is always better” narrative.
Here is Nifty & Gold since 2003. 
And here are a bunch of different starting points put together.
Gold has definitely done well if equities are overpriced at the period’s starting point. However, Nifty comes up on top if you pick a period where the markets have been muted for some time (see periods starting 2003 & 2013 above). Equities and Gold might be best when both are used in a portfolio together.
Regarding gold, Sovereign Gold Bonds from the RBI might be the best way to buy some.
