Yet, while gold’s glitter continues to captivate festive sentiment, our comprehensive analysis at OmniScience Capital reveals a compelling truth — when it comes to long-term wealth creation, equities shine brighter.
As gold prices breach the $4,000 per ounce mark (Rs 1,14,761 per 10 grams), investors are once again drawn to the timeless allure of the yellow metal. However, our detailed study shows that while gold often sparkles during uncertain times, equities consistently deliver stronger and more sustainable growth over the long term.
A recent study by OmniScience Capital, “Gold’s Glitter vs. Stock’s Sparkle,” examined 35 years of market data on Rolling Returns method from 1990 to 2025, and the findings are unequivocal.
The Sensex 30 delivered an average annual return of approximately 11.5%, significantly outpacing gold’s 9.5% returns based on RBI Gold Prices. This 2% differential may seem modest, but compounded over decades, it translates into substantially different wealth outcomes for investors.
The analysis becomes even more revealing when we examine recent periods using GoldBees and Nifty50 data. For holding periods of three years and beyond, Nifty50 consistently delivered superior average returns of around 11.5% compared to gold’s 8–10% range. With over 6,400 one-year rolling periods and more than 3,100 ten-year rolling periods analyzed over 18 years, the dataset provides robust evidence of equity’s superiority.
Understanding Rolling Returns vs. Average Returns
While the term average return indicates the simple mean performance of an investment over a given period, it tells only part of the story. It shows how much an asset grew on average but ignores when the investor entered or exited.
Rolling return, on the other hand, measures the average annual return over multiple overlapping time windows—for instance, every possible three-year, five-year, or ten-year holding period. This approach smooths out market volatility and provides a more realistic view of what investors would have actually experienced, regardless of their entry point. In simple terms, rolling returns answer the question: “If I had invested at any time during the last 35 years, how likely was I to earn positive returns over my chosen holding period?”
The Capital Protection Advantage
Perhaps the most surprising finding challenges the conventional wisdom about gold as a “safe” investment. Our analysis reveals that Nifty offers a remarkable 98.1% probability of capital protection for holding periods of three years or more. This means equity investors with a three-year horizon had an exceptionally high chance of not losing their principal investment.
In stark contrast, gold provided only an 84% chance of capital protection over the same three-year window. To achieve comparable safety levels of over 99%, gold investors needed to remain invested for a much longer period—at least seven years—to reach a 99.3% probability of capital protection.
This finding fundamentally reshapes the risk-return conversation. Equities, often perceived as riskier, actually offer superior capital protection over meaningful investment horizons when compared to gold.
The Global Perspective
The pattern holds true internationally as well. Comparing the S&P 500 against global gold prices, the benchmark index returned about 9.4% annually over the last 40 years, against just 5% for gold. Whether you’re an Indian investor or a global one, equities demonstrate their ability to deliver superior long-term returns.
The Inflation Hedge Myth
One of gold’s most persistent claims is its role as an inflation hedge. However, our data tells a different story. We found a –11.5% correlation between the U.S. Consumer Price Index and Gold (USD), and a mere –1.5% correlation between India’s CPI and Gold (INR). These negative correlations suggest that gold prices move largely independent of inflation in both markets.
Instead, gold prices react more to factors such as global interest rates, U.S. Treasury yields, movements in the U.S. Dollar, central bank buying patterns, and overall investor risk sentiment. While gold certainly spikes during macroeconomic crises—we’ve documented drawdowns ranging from –17% to –44% post-crisis—its relationship with inflation is tenuous at best.
Gold’s Rightful Place
This doesn’t mean gold has no place in a portfolio. During periods of extreme market stress and geopolitical uncertainty, gold often provides psychological comfort and portfolio diversification benefits. However, its role should be carefully calibrated.
Over long investment horizons, equities are demonstrably superior at both preserving capital and generating significant returns above inflation. Gold’s role is best kept as a modest hedge, ideally not exceeding 10–20% of a portfolio. Beyond this allocation, investors may be sacrificing potential returns without gaining proportional risk protection.
The Bottom Line
In September 2025 alone, gold ETFs witnessed record inflows — Rs 8,363 crore in India and $15 billion globally — fueled by the recent surge in gold prices. While these inflows underscore investors’ heightened concerns over market volatility and geopolitical tensions, they also highlight the opportunity cost of capital shifting away from risk assets.
For investors with time horizons of three years or more, our research provides clear evidence: equities offer better capital protection, superior returns, and more effective inflation hedging than gold. The data spanning 35 years across multiple market cycles supports this conclusion unambiguously.
Also read: Gold, silver or Nifty this Diwali? 35 years of data reveals the clear winner
As investors, our goal isn’t to chase recent performance but to build lasting wealth. The numbers speak clearly—equities, both Indian and global, remain the superior wealth builder for long-term investors willing to look beyond short-term market noise and gold’s timeless appeal.
(The author is Executive Vice President and Chief Portfolio Manager, OmniScience Capital)