Year Ender: Gold Vs. Equities In 2024; Which Was The Better Investment?

In India, gold and stocks continue to be the most popular investment options. Gold shines as a safe haven during times of economic uncertainty, even though equities frequently offer better long-term gains. Gold has always been seen as an inflation hedge, and 2024 reaffirmed this view in an uncertain economic climate. Investors felt safeguarded by gold's inherent worth and historical stability, whereas inflation reduced the value of fiat currencies. For Indian investors, 2024 truly seemed like a story of two investments: equities and gold. Although they have both historically produced long-term gains, gold and stocks have different uses in a portfolio. While equities provide more growth potential and higher volatility, gold offers stability and hedge against uncertainty. With the assistance of several industry experts, we will examine how gold and equities performed in 2024, which investment choice provided investors with the highest returns, and what the future is for both investments in 2025.

How Gold And Equities Performed In 2024?

In 2024, gold outperformed Indian equities, delivering returns exceeding 20%, while the Nifty 50 and BSE Sensex indices achieved gains of approximately 12%. Gold's strong performance was driven by factors such as geopolitical uncertainties, increased central bank purchases, and global economic challenges, enhancing its appeal as a safe-haven asset, as per Soumya Sarkar, Co-Founder, Wealth Redefine, (AMFI registered MFD).

In contrast, Indian equities experienced moderate growth. The Nifty 50 index, for instance, rose from 99 points in November 2023 to 124 points by October 31, 2024, marking a gain of around 25 points, according to Soumya Sarkar.

While equities have historically provided higher long-term returns, gold's performance in 2024 underscores its value in diversifying investment portfolios and mitigating risks during periods of economic uncertainty.

"Indian Gold prices are a factor of international Gold Prices which have given a 27% upside and the exchange rate of USDINR which has again risen by approx 2.5% during this year. Also, Indian Gold is subject to customs duty which impacts its prices in India. Union Finance Minister Nirmala Sitharaman announced a sharp cut in import duties on gold and silver, from 15 percent to only 6 percent this year resulting in a net gain of approx 21% in Indian gold prices actually which is still better than the Nifty returns," said Sachin Jain, Managing Partner, Scripbox.

"Looking at 2024, gold prices surged over 25%, outperforming Indian equities, which returned about 8.5%. However, this is a retrospective view and should not guide future investment decisions. Gold's strong performance was driven by economic uncertainties, fueled by geopolitical tensions such as the Ukraine-Russia and Israel-Palestine conflicts," said Sumit Sharma - Founder - Radian Finserv Private Limited.

Both gold and equities have historically delivered positive returns over the long term, but they serve different purposes in a portfolio. Gold provides stability and a hedge against uncertainty, while equities offer higher growth potential with higher volatility. The choice between the two depends on individual risk appetite and investment goals, but a diversified approach often yields the best results, added Sumit Sharma.

Gold vs. Equities In 2024: Which Was The Better Investment?

As per Mandar Bhojane - Equity Research Analyst, in 2024, the Indian equity market significantly outperformed gold, with the Nifty 50 delivering a stellar 29% return during FY 2023-24. This performance was fueled by strong corporate earnings, sectoral growth, and consistent inflows from domestic and foreign investors, making it the eighth consecutive year of positive returns for the index. The market's resilience highlighted its position as a key driver of long-term wealth creation.

"Gold, in contrast, posted a respectable 17% return, supported by global demand from central banks and its role as a hedge against geopolitical and economic uncertainties. However, its performance was eclipsed by equities, as investor confidence in India's growth trajectory spurred higher allocations to the stock market," said Mandar Bhojane.

While equities showcased superior growth potential, gold remained vital as a portfolio stabilizer. A diversified approach, combining the growth opportunities in equities with gold's risk-hedging qualities, is crucial for optimizing returns and mitigating market volatility.

"In 2024, Midcap & Smallcap stocks along with Cryptocurrencies were dominant, registering stellar returns thus far. Gold also had an above-average year with almost 21% returns in 2024. We believe 2025 could be a year for Gold, Silver & Nifty 50. We believe Mid & Small Caps are due for a decent correction due to a slowdown in the global economy coupled with geopolitical tensions. Investors are advised to keep booking profits in Mid & Small caps in the coming days," commented A R Ramachandran, Independent Research Analyst.

2024 really felt like a tale of two investments for Indian investors gold and equities. The NIFTY 50 had a spectacular run, hitting 26,170 in September with a solid 20% return. But then came a sharp turn. FIIs started pulling out in September and October, and the index tumbled by 11%. By December, anyone who bought at the peak was probably looking at negative returns. Gold, on the other hand, seemed to play it safe and steady, climbing 22% over the year. With geopolitical tensions and a weaker rupee in play, it became a reliable option for those looking to shield their portfolios from volatility, said Trivesh D, COO Tradejini.

"I feel equities demonstrated strong growth potential but carried heightened risk, evident from the mid-year volatility. Meanwhile, gold provided a reliable, substantial return, appealing to conservative investors. It really comes down to risk appetite, gold attracts those seeking safety, while equities suit investors with a long-term outlook and higher tolerance for market swings," commented Trivesh D.

How Gold And Equities Remain Top Investment Choices In India?

Gold and equities remain top investment choices in India. While equities often deliver superior long-term returns, gold shines during economic uncertainties as a safe haven. Over the past five years, domestic gold prices have doubled, offering stability with a 10.6% CAGR (1990-2024) and lower volatility (14.7% standard deviation). While equities have more growth potential, As a mix of investment Gold should certainly be there since gold's consistent performance and reasonable returns make it a reliable asset for long-term investors navigating market unpredictability in 2024, stated Mr. Pankaj Dhingra, CA & US CPA, Managing Partner, FinTram Global LLP.

Is Gold Still A Hedge Against Inflation? Lessons From 2024

According to Pankaj Dhingra, gold has long been regarded as a hedge against inflation, and 2024 reaffirmed its role during economic uncertainties. While inflation eroded the value of fiat currencies, gold's intrinsic value and historical stability provided investors with a shield. With a 10.6% CAGR (1990-2024) and lower volatility compared to other assets, gold proved its resilience yet again. For investors navigating rising prices and economic challenges, gold remains a reliable store of value, preserving wealth in turbulent times.

Top Strategies For Investing In Gold In 2025 or Gold Outlook For 2025: Key Drivers to Watch

"Gold's outlook for 2025 remains promising, driven by key factors like global economic uncertainty, central bank policies, and inflation trends. As a safe-haven asset, gold continues to attract investors seeking stability amidst market volatility. Strategies for 2025 include diversifying portfolios with physical gold, ETFs, and digital gold while monitoring geopolitical risks and currency movements," said Ms. Swati Dhingra, Managing partner, FinTram Global LLP.

With its historical resilience and consistent performance, gold remains a critical asset class for investors looking to balance risk and preserve long-term wealth. The only caveat is that we should avoid jewellery gold since it has a component of making charge and impurity. Buying raw - certified gold is the best choice.

Equity or Gold: Where To Invest In 2025?

Whether to invest in equity or gold has become a more famous question than chicken/egg recently.

As per Nikhil Gangil, Smallcase Manager & Founder of Intrinsic Value, 90% of the time equity outperforms gold, but whenever gold outperforms equity, the debate becomes hot, for valid reasons. Gold is stable and equity is volatile.

Given the last 1 year of returns, gold is up by 21%:

Meanwhile, Nifty50 is up by 10.7%

So, who is the real winner here?

Let me show you one more chart before I conclude this.

This Asset/Security is up by 243%

Similarly, this one is up by 303%

The same goes to this which is up by more than 110%

So, what are these and why are we discussing them?

These are nothing but stocks of companies that deal only in gold.

These are charts of PC Jewellers, Senco Gold and Kalyan Jewellers respectively.

When gold is up by 21%, Businesses which deal in gold are up by 110% to 303%.

If this doesn't answer your Question. Nothing will.

Equity is far better than gold or any asset class (like real estate), and the beauty is you can use the asset price increment.

Why does this happen?

This happens due to the Domino effect.

Let's dissect that.

Let's say the asset price goes up by 20-30%, in this case Gold. The revenue of the business also went up by the same %.

Since the Fixed cost remains the same. The EBITDA can be up by 60-70% and PAT can go up by 120% and the stock price can increase by 240%.

Let's understand with an example-

Let's say Gold prices have increased by 20% in a year and because of that volume surge is also there for let's say 15%.

This domino effect is the reason why you invest in Equity rather than the asset class. This is where cyclical investing helps you. You go for the sectors where the asset is cheap or undervalued and the surge in prices can make the stocks become multibaggers.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.