Why You Should Not Ignore Gold While Investing In Equities, Historical Returns From Gold

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Personal Finance
oi-Kuntala Sarkar

| Published: Saturday, June 18, 2022, 23:04 [IST]

Investors, at present, are more likely to take risks, going beyond the traditional assured income instruments, like FDs and saving schemes offered by the banks of the government. Now, the equity market is attracting investors’ eyes offering quite lucrative short term and long term returns, beating inflation. However, many investors are also looking for alternative investment options like commodities like gold and cryptocurrencies. The crypto market is a highly volatile market and the price range has dropped to a record low now, due to a major sell-off. On the other hand, the gold market thrived after the pandemic hit the globe. Since then the yellow metal has mostly stayed bullish. After the Russia – Ukraine war in March, gold rates again got further push.

The prices fell marginally this month, in the global markets. Reflecting the same trend, the gold market has also fallen marginally in India. In the domestic markets, today 22 carat gold rate is quoted at around Rs. 47650/10 grams, and 24 carat gold rate is quoted at around Rs. 51980/10 grams.

The reason investors should not ignore gold as an investment is its high long term returns. In 2018, in the Comex futures, gold was quoted at around $1200/oz. Within 4 years, gold rates reached around $2000/oz after the pandemic. At present, the yellow metal is staying around $1850/oz, within 5 years, since 2018. Gold’s 10-year return is again much higher. In 2012, it was quoted at around $1604/oz, in the Comex futures. Considering this gain, if you are thinking about an investment tool that can beat the current inflation rate, gold can be a significant option. The inflation rate in the US is at a 41 years high level, it has gained by 8.6% in the past month. In India, retail inflation stood at 7.04% in May, as the government informs. So, investing in gold will be an important addition to your portfolio. Analysts also suggest that one should have around 20% of gold in the portfolio, along with the equities.

The Comex gold futures were quoted at $1841.90/oz, falling by 0.43%, from the last trading day. Yesterday it was last quoted at $1849.90/oz. The spot gold prices were last quoted at $1840.80/oz, falling by 0.97%, from the last trading day. The US dollar index in the spot market stood at 104.62. In India, the Mumbai Commodity Exchange (MCX) gold in August future was quoted at Rs. 50,820/10 grams, falling by 0.33%, from the last trading day.

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Story first published: Saturday, June 18, 2022, 23:04 [IST]