THE GOLDEN OPPORTUNITY
GOLD RETURNS ARE SUPERIOR TO EQUITIES
Nifty 50 vs S&P 500 vs Gold
VOLATILITY
CHARACTERSTICS
Beta
20000
18000
16000
14000
12000
(Gold vs Nifty)
0.32
Sharpe Ratio
(Gold)
1.45
Sharpe Ratio
1.82
10000
8000
(Nifty)
6000
4000
Maximum
Drawdown (Gold)
-28.5%
Maximum
Drawdown (Nifty)
-38.2%
2000
0
Nifty 50
Gold
S&P500 (INR)
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In Turbulent Times, Gold has Outstandingly Outperformed Nifty
• Gold and equities form a complementary asset duo, essential for a strategic welldiversified long-term portfolio. Historically, they share an inverse relationship—
when stocks decline, gold often thrives.
• Globally, as gold demand spikes when GDP growth slows. In financial crises,
equities fall out of favor, while gold, a traditional safe-haven asset, provides stability.
Why Gold now?
• Central banks are increasing gold reserves to hedge against fiat currency risks,
reinforcing gold's role as a superior store of value.
• Additionally, we are witnessing a unidirectional equity market, making gold a
compelling diversification tool. Both the reasons are translating into returns.
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Let's look at how Gold has fared during periods of uncertainty
1. Global Financial Crisis (2008)
Nifty 50 vs MCX GOLD (GFC)
1600
1400
• During the 2008 subprime mortgage crisis,
1200
equities plunged, but gold surged. During a period
1000
of 16 months, from Dec 2007 to May 2009, Gold
800
appreciated 49%, while Nifty fell 24%, delivering
600
an alpha of 73% over the index.
400
200
Nifty50
MCX Gold
Gold's surge during the 2008 financial crisis highlights its role as a dependable asset that provides stability and
safeguards wealth during economic turmoil
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2. Market Volatility (2010-11)
Nifty 50 va MCX Gold (2010-11)
1900
1700
1500
1300
1100
900
700
Nifty 50
MCX Gold
Global market turbulence—triggered by the European debt crisis and U.S. credit concerns—left equities volatile.
Between Jan 2010 and Dec 2011, Nifty declined 12%, while gold soared 63%, underscoring its resilience.
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3. 2014 General Elections and Euphoric Market Sentiment
Nifty 50 vs MCX Gold (Pre General Elections 2014)
1040
Nifty 50 vs MCX Gold (Post General Election 2014)
1300
1250
1020
1200
1000
1150
980
1100
960
1050
940
1000
950
920
900
900
850
880
800
Nifty50
1
MCX Gold
Pre-election uncertainty (Jan-May 2014)
Nifty 50
2
MCX Gold
Post-election rally (May-Dec 2014)
While investors anticipated a change in
As investor confidence surged with the
leadership, there was skepticism about the
appointment of Prime Minister Narendra
economic direction under a new government.
Modi in May 2014, Nifty rose 24%, while
Nifty saw a modest 5% gain, while gold
gold dipped 12%.
outperformed with 11% returns.
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4. Covid-19 Pandemic
Nifty 50 vs MCX Gold (During Covid)
Nifty 50 vs MCX Gold (Post-Covid)
1200
1400
1100
1300
1000
1200
900
1100
800
1000
700
900
600
800
Nifty 50
1
MCX Gold
Jan-Apr 2020: Nifty plummeted 38%, while
gold surged 14% as investors sought safety
Nifty 50
MCX Gold
The COVID-19 pandemic brought unprecedented
Sep 2020-Mar 2021: As markets
recovered, Nifty rebounded 30%, while
gold corrected by 13%.
challenges to the global economy. As the virus
However, as markets began to recover and adjust
spread, markets reacted to the uncertainty with
to the new normal after September 2020,
steep declines.
investors shifted funds back to equities
2
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Conclusion: Gold vs. Stock Market: Long-Term Trends
Period
GFC (Dec’07Dec’09)
Jan’10-Dec’11
2014 PreElection (Jan’14May’14)
2014 Post
Election
(May’14-Dec’14)
COVID-19
Post COVID-19
(Jan’20-Jun’20) (Sep’20-Mar’21)
Gold Returns
+49%
+63%
+11%
-12%
+50%
-13%
Nifty Returns
-24%
-12%
+5%
+24%
-37%
+30%
From May 2007 to July 2024, gold has consistently outperformed equities during economic downturns while keeping
pace with Nifty in the long run.
As we step into 2025, gold remains an attractive investment. Frothy equity valuations, geopolitical tensions, and
economic uncertainties—amplified by inflation and currency volatility—position gold as a critical hedge against market
instability.
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