Is it Gold or Equity? No doubt Gold is a safe bet but remember, higher you take the risk higher is the return! After 2011 we have observed that bullions and especially Comex Gold has lost sheen and also the tag of “Best hedge against the Inflation”. Past two years showed that some asset classes enjoyed long term bull market whereas some eventually started to correct. In our July 2013 edition of monthly update we have shown that Comex Gold has ended secular bull trend and should underperform the other asset class for next 21 years.

 Here we have a decent sample size of 17 years of Gold and Sensex (data end of each year). By converting gold price from dollar to rupee and taking exchange rate of the same day, we found something very astonishing:

Since 1997 Gold on an average gave 13.03% while Sensex 16.7% every year. Though gold has given more return since 1997 till 2013 i.e one buy in 1997 and sell in 2013. But if someone would trade Sensex annually then annualized average return on Sensex is more during the same period! We know that Sensex is more volatile and risky but timing the market has always given exponential profits. By applying various Technical Analysis techniques you can forcast the next move and can protect your investments.

 Now after Comex Gold made a top at $1920 in September 2011, it is in downtrend and erased major gains but not with the case of Sensex which has increased substantially from that period till now. Financial Market is a never ending system which can come down but will possibly never become zero it is just an another opportunity to enter in this system.

In the end we can conclude that no doubt Gold always keeps its investors happy but at the same time Sensex is also generous enough to do the same. It is just the asset class difference but when both traded wisely can give mindboggling returns!

SO WHAT WILL BE YOUR BET NOW?

To know more about our Long term analysis along with Short term research products visit http://www.wavesstrategy.com


Year

Gold (Rs)

% Return

Sensex

% Return

1997

10294

3658

1998

11329

10.04

3055

-16.49

1999

12327

8.81

5005

63.82

2000

11860

-3.75

3972

-20.64

2001

12910

8.85

3262

-17.86

2002

16569

28.34

3377

3.52

2003

19198

15.86

5838

72.88

2004

19232

0.17

6602

13.08

2005

23593

22.67

9379

42.33

2006

28047

18.88

13786

46.7

2007

33159

18.22

20286

47.14

2008

41844

26.19

9647

-52.44

2009

50688

21.13

17464

81.02

2010

64408

27.06

20509

17.42

2011

80929

25.65

15454

-24.63

2012

91404

12.95

19426

25.69

2013

74407

-18.59

19894

2.41