Gold has witnessed a golden era in terms of return toinvestors, while the share market has given negative returns on investment inthe last three years, an ASSOCHAM study has noted. Lakhs of Indians, who hadinvested in gold over the last few years, have been benefited - and marketexperts pointed out that the trend is likely to continue.
Those who invested in gold during August-September in 2009have seen their money grow more than double up to August-September this year,thanks largely to the yellow metal becoming the first choice for investors notonly in India but all round the globe.
On the other hand, investors in the equity market have seentheir wealth erode in the same period. The erosion has been seen more for theretail investors who generally invest in the small mid-cap stocks.
Property which is generally out of reach for the smallinvestors too has seen good returns but not as much as gold, which has outshoneall other investment avenues when the global economy has been throughtumultuous times.
Standard gold was selling at around Rs 15,000-15,500 per tengrams in India just about three years ago. Today it is well above Rs 32,000 perten grams- giving more than double the returns on investment in three years.
The worst performer has been the equity market. The high point of the benchmark Sensex in2009-10 was 17,711. Today, it is trading in the same range. So, the investmentin equity has not even given a simple bank interest rate equivalent and isnegative in actual yield.
In fact, on a five-year horizon, the equity investors havelost significantly. The high point of Sensex in fiscal 2007-08 was 20873whereas it is range-bound between 17,000-18,000 now.
"Net-net, gold has really outdone other asset classesand it is likely to remain an attractive bet as long as uncertainty over theglobal economy stays" ASSOCHAM Secretary General D S Rawat said.
Mr Rawat said whether it is local investor or globalinvestors, they have all gone by the conventional wisdom of gold being thesafest 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 $60billion in fiscal 2011-12. There areglobal risk aversion factors at play,” said ASSOCHAM Secretary General.
On the five- year horizon, gold has given even more handsomeresults to the investors. The precious metal was selling around Rs 9,500 perten grams five years ago in September, 2007. So, the returns on this timehorizon are about 350 per cent.
Its prices have seen a sharp rise even in the London MetalExchange (LME). It was being traded in the range of $900-1000 per ounce in 2009and now it is selling above $700 ounce.
The property prices, according to the ASSOCHAM study, havegiven average yield of 40-50 per cent on all-India basis. It is true thatprices in some pockets of big cities like Delhi, Mumbai, Chennai and Gurgaonhave doubled in the past three years. But these cases are far and few. Thereare also cases in cities like Hyderabad where the investors have not got theyield at simple interest rates in property.
“Net-net, gold has absolutely outdone other asset classesand it is likely to remain an attractive bet as long as uncertainty over theglobal economy stays” said Rawat.
