Gold delivers, but equity delivers even better

With the spot Gold prices breaching the Rs 31,000 per 10-gram level, the yellow metal has once again caught the fancy of return hungry investor. However, a near term return analysis of Gold vis-a-vis Equity reveals that the yellow metal has in fact under performed many of the equity sectoral indices.

In the past one month alone, while Gold has gained about 4.2% in value, ET Capital Goods has risen by more than 4.8% during this period. ET Cement and ET Infotech have been the two best performing sectoral indices for the month, having returned over 11% gains, far more than those of Gold.

Handsome gains were also clocked in by other sectoral indices like the ET Automobiles, 8.3%, ET Pharma, 6.2% and also ET FMCG, 5.7%.

This eventually brings one to contemplate that notwithstanding Gold's proven track record of delivering better returns than equity in adverse times and as a proven hedge to inflation and currency fluctuation, it would be foolish to ignore Equity and invest only in Gold from a long-term investment perspective.

In the past 1-year, for instance, ET sectoral indices like Automobiles, Cement, FMCG, Infotech, and Pharma have delivered over 20% returns against 8.3% gains clocked in by Gold. ET Cement has turned out to be the best performing index in the past one year period having returned more than 45% followed by ET FMCG that delivered 30% gains during this period.