Gold Outshines Equity, Others Asset Classes

Gold has experienced a golden era in terms of returns to Indian investors, while the stock market has turned negative in the past three years, according to an ASSOCHAM study, cited by Rapaport.
ASSOCHAM noted that those who invested in gold during August and September of 2009 have seen their investment more than double, thanks largely to a record price run for the yellow metal.  On the other hand, investors in the equity market have seen their wealth erode in the same period, with steep erosion for retail investors who generally invest in the small mid-cap stocks, it added.
The study noted that real estate property, which is generally out of reach for the small investors, too has seen good returns but not as much as gold, which often outshines all other investments when the global economy experiences tumultuous times.
The standard gold in India is above $592 (INR 32,000) per 10 grams, giving more than double the returns on investment from three years ago, ASSOCHAM said. Gold has seen a sharp increase even in the London Metal Exchange (LME) and is now selling above $1,700 per ounce, up from $900 to $1,000 per ounce in 2009.
D.S. Rawat, ASSOCHAM’s secretary general, stated that whether it is local investors or global investors, they have all gone by the conventional wisdom of gold being the safest bet when there is uncertainty about all other investment avenues. “Thus, it will be wrong to blame Indian passions for gold, as if it is only this passion, which led to a big yellow metal import of $60 billion in fiscal 2011-12. There are global risk aversion factors at play,” Rawat said.